Could This ETF Be the Best Way to Play Rising Interest Rates in 2026?

Much to the dismay of the White House, immoderate corners of Wall Street, and plentifulness of retail investors, the Federal Reserve held involvement rates unchanged this past Wednesday, dashing hopes of a January complaint cut.

One gathering without a complaint chopped doesn't mean the cardinal slope is abruptly turning hawkish and that monetary tightening is imminent. But for the involvement of argument, let's see the anticipation that the macroeconomic situation rapidly shifts to the constituent that the Fed is backed into a country and indispensable rise rates.

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There's an exchange-traded money (ETF) for that, and it's the Fidelity Dividend ETF For Rising Rates (NYSEMKT: FDRR). Yes, this ETF protects successful the lawsuit that 10-year Treasury yields rise, but adjacent if that doesn't happen, the money offers utility.

This $660 cardinal Fidelity ETF follows an scale of the aforesaid name. That gauge is "designed to bespeak the show of stocks of ample and mid-capitalization dividend-paying companies that are expected to proceed to wage and turn their dividends and person a affirmative correlation of returns to expanding 10-year U.S. Treasury yields," according to the issuer.

Dispensing with the fiscal jargon, immoderate sectors tin thrive adjacent erstwhile those yields rise. Other sectors are considered rate-sensitive successful a antagonistic fashion. Historically, REITs and utilities person been successful the second class owed to their capital-intensive nature. So, it's not astonishing that the existent property and utilities sectors harvester for conscionable 4.1% of this ETF's roster.

The Fidelity rising rates ETF debuted successful September 2016, and portion that's not past successful money manufacture terms, those nine-plus years are instructive due to the fact that the Fed has chopped and raised rates implicit that time. For overmuch of that period, the cardinal slope pursued casual monetary policy, and yet the rising rates ETF has inactive delivered awesome show since its inception helped successful ample portion by important vulnerability to exertion stocks.

Of course, investors are close to inquire however a rising rates ETF performed amid Fed tightening. Good news: The Fidelity ETF answered that bell. Over the past 5 years, a play including 11 complaint hikes spanning 2022 and 2023, the Fidelity money was 1 of the best-performing dividend ETFs . In fact, conscionable 4 rivals, including different Fidelity product, bushed this dividend ETF implicit that period.