Want a 'short term defensive move' with up to 5% return? Buy this fund, says strategist

Published Mon, Oct 3 20227:21 PM EDT

It's been a volatile year for both stocks and bonds, with major Wall Street indexes just ending their worst month since March 2020 , and Treasury yields remaining elevated. For David Dietze, chief investment strategist at Point View Wealth Management, it's particularly noteworthy that the year has provided "almost no safe haven at all." That said, pockets of opportunity still exist, according to Dietze. "Short term defensive measures probably are warranted. I personally like short-dated corporate bonds, which are yielding close to 5%," he told CNBC's "Street Signs Asia" on Monday. He noted that this compares favorably to both the earnings yield on stocks and their dividends. Dietze said one way to get invested in the space was via an exchange-traded fund, naming the iShares iBoxx $ Investment Grade Corporate Bond ETF specifically. "[It] would be a very quick, convenient way to diversify your money over a wide range of highly-rated corporate bonds. And that way, it's … a short term defensive move. You're not, you know, taking a chance with any single bang," he said. The ETF has an average yield to maturity of 5.72%, as of Sept. 29, according to its factsheet. This is the average rate of return assuming an investor holds the fund until its maturity date. The ETF's 12-month trailing yield – the yield investors receive if they held the fund for the last 12 months – is at 3.07%. The fund has more than 2,400 holdings. These are the top 10 issuers of bonds in the ETF: The majority issuers in the fund are from the banking sector (24.49%), non-cyclical consumer (17.26%), communications (12.72%), and technology sectors (12.29%). Stock picks If investors are still interested in stocks, Dietze says that some energy and cyclical stocks still looked appealing. He noted that energy stocks could benefit from geopolitical risks, and cyclical stocks —including home builder and auto-related companies — may do well "upon the first sign of less hawkishness by the Federal Reserve." His top picks include ExxonMobil , American automotive retailer AutoNation , and moving and storage services firm Amerco .