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How to Profit from Rising Rates with ETFs

When rates climb, most investors think bonds will fall. Yet some exchange‑traded funds (ETFs) are built to thrive in that environment. These four funds focus on income, but they do it differently from the usual bond baskets.

1. Short‑Duration Corporate Bond ETF

• Strategy: Keeps a short‑duration schedule to adjust quickly when rates jump.
• Quality: Invests in high‑quality corporate debt to keep risk low.

2. Floating‑Rate Securities ETF

• Strategy: Targets floating‑rate loans whose interest moves with the market, so yields rise as rates climb.
• Diversification: Spreads bets across many issuers to avoid single‑company risk.

3. Municipal Bond ETF

• Strategy: Pulls from the municipal space, offering tax‑advantaged and often higher yields than Treasuries when rates rise.
• Selection: Chooses only the safest projects to keep defaults minimal.

4. Mortgage‑Backed Securities ETF

• Strategy: Focuses on mortgage‑backed securities, using a loss‑cap strategy that captures upside when rates push borrowing costs higher.
• Credit: Filters for strong credit quality.

Each of these funds offers a different way to benefit from higher rates. Investors should weigh the trade‑offs between yield, risk and liquidity before adding one to their portfolio.