Watch now3:5103:51Vanguard, Blackrock market experts on what to expect in second halfETF EdgeInvestors may want to consider bracing for a weaker stock market performance over the next six months.
According to Vanguard's Roger Hallam, it's prudent for long-term investors to have sufficient exposure to fixed income in this environment.
"Our outlook for the second half of this year is that growth will slow," the firm's global head of rates told CNBC's "ETF Edge" on Monday.
Hallam predicts the labor market will continue to gradually cool while inflation rises.
Hallam expects the Federal Reserve will ultimately prioritize jobs and cut interest rates toward the end of this year to vide insurance. "We think that will vide a tailwind for bonds," he said.
"So, we're confident in the outlook for fixed income, and we think. Clients should be allocating to fixed income. "Vanguard is behind three U. Government bond exchange-traded funds debuting this week.
The launch includes the Vanguard Government Securities Active ETF (VGVT). Zoom In IconArrows pointing outwardsThe firm's spectus shows U. Treasurys hold the largest exposure in the new ETF.
The benchmark 10-year Treasury note yield started 2025 at 4. 57% and has since fallen to roughly 4. 4% as of Tuesday.
Meanwhile, BlackRock's Jay Jacobs sees a barbell apach as a valuable second-half strategy as a hedge against economic slowdown risks.
"I think we're still going to see a lot of money that's been in cash for a long time … start to inch their way back into the equity," the firm's U. Head of equity ETFs said in the same interview.
He expects buffer ETFs, which are designed to tect against the downside and still give a measure of upside performance, to benefit from the risk backdrop.
BlackRock offers six buffer ETFs, according to the firm's website, including is Large Cap Max Buffer Jun ETF (MAXJ).
The fund is up 5% so far this year and tracks the price return of the is Core S&P 500 ETF. "Our fund MAXJ recently reset, giving a cap of up to 7% exposure to the S&P over the next year.
A tool that is going to be very much in vogue for investors looking to get back into the," Jacobs said, adding investors will ly play offense and will continue to migrate toward strong macro themes such as artificial intelligence.
Jacobs also lists infrastructure as a key group.
"As we continue to see geo and fragmentation around the world impact, I think people are going to be looking at really powerful macro trends the growth of infrastructure in the United States as a way to place their bets in the equity," Jacobs said.
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