3 Great ETFs to Buy Before the Fed Cuts Interest Rates
#Morningstar #InetrestRateCuts #ETFInvesting
Diving headfirst into bonds isn’t the only option.
00:00 Introduction
01:28 iShares Total Return Active ETF BRTR
02:35 Avantis US Small Cap Value ETF AVUV
03:23 iShares Advantage Large Cap Income ETF BALI
Interest rate cuts appear to be on the horizon. Morningstar’s Senior US Economist Preston Caldwell predicted the first cut of 25 basis points will occur during the Federal Reserve’s meeting on Sept. 17, 2025. He expects another 25-basis-point cut during the Fed’s meeting in December.
Fed fund’s futures tell a similar story. The CME’s 30-day Fed fund’s futures prices reflect an 85% chance of a rate cut in September with the likeliest outcome of 50 basis points of total cuts come year-end. That 50 basis points is mostly priced into the market, so don’t expect major price changes if the likeliest outcome prevails.
Interest rate predictions are helpful but subject to change. Top of mind for the Fed is inflation and employment. The Fed’s expected interest rate path could change as new economic information reveals itself. Everything points to 25 to 75 basis points of rate cuts by year-end, but even that wider range is uncertain. Where we land at this point in 2026 and beyond becomes even less predictable, but current futures prices and our current estimate reflect a steady diet of rate cuts for the next couple years.
What to watch from Morningstar.
4 Promising Active ETFs https://youtu.be/9fFZ-aMb3Ws?si=TcfIdVbfBnddr_xf
3 Great ETFs for Rebalancing Your Portfolio in 2025 https://youtu.be/mjdMQwo8J3Y?si=J0WJlGqrKzmSDdym
3 Great New Vanguard ETFs https://youtu.be/8UZyjg15B28?si=f1ycznb7a1Zs81Qv
3 Top International ETFs for 2025 and Beyond https://youtu.be/ZjqwjCKozjw?si=gsG3yV63In9K5p8J
Read what our team is writing.
Bryan Armour https://www.morningstar.com/people/bryan-armour
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