Touchstone Investments, which is known for its Distinctively Active® funds, recently announced the launch of its fourth actively managed ETF, the Touchstone Ultra Short Income ETF (TUSI). The fund, which started trading on the Cboe BZX, seeks maximum total return consistent with the preservation of capital by primarily investing in a diversified portfolio of investment grade fixed income securities. Its portfolio is managed to maintain an effective duration of one year or less under normal market conditions. Managers for TUSI buy fixed-income securities believed to be attractively priced relative to the market or similar securities. The launch follows three actively managed ETFs launched during the summer including the Touchstone Strategic Income Opportunities ETF (SIO), the Touchstone US Large Cap Focused ETF (BZX), and the Touchstone Dividend Select ETF (DVND). Each ETF has a corresponding mutual fund that shares a similar investment strategy. All four ETFs are sub-advised by Fort Washington Investment Advisors. 

Finsum:Touchstone Investments recently launched the Touchstone Ultra Short Income ETF, its fourth actively managed ETF launch this summer.

According to Refinitiv Lipper’s fund flows, fixed income ETFs saw a net $4.5 billion in weekly outflows for the week ending on August 24th, 2022. This marked the group’s first weekly outflows in nine weeks. This also corresponded with bond ETF’s third straight week of average negative returns. The bond types with the largest outflows included corporate high yield ETFs with $3.0 billion in outflows, corporate investment grade ETFs with $733 million in outflows, and government Treasury ETFs with $570 million in weekly outflows. Corporate high yield ETFs had their eighth largest weekly outflows to date, while corporate investment grade ETFs saw their first week of outflows in eight weeks. However, not all fixed-income ETFs saw outflows. International & global debt ETFs saw $101 million in inflows and government mortgage ETFs saw $15 million in weekly inflows. Those were the only two fixed-income groups to report inflows.

Finsum:With fixed income ETFs seeing their third straight week of negative average returns, bond ETFs see their first outflows in nine weeks. 

Few probably are pounding away for a repeat performance of the bond markets in the first half of the year. But an upbeat perspective among investors is warranted, according to corporate.vanguard.com. And, why, pre tell, is that? Bonds are on the precipice to dispense a spike in real income and restart their role of diversifying portfolios.

Even so, however, the road ahead is sprinkled with a plethora uncertainties and variables. The upshot: among other things, for another season, inflation seems bound to remain abnormally high.

At the same time, unlike the recent past, corporates, municipals, high yield, and emerging markets pose plenty of chances for growth.

Bloomberg Barclay’s US Aggregate Bond Index plunged 8.8% since January, according to fidelity.com. That was its steepest drop off in 40 years. What’s up? Investor trepidations over rising interest rates and the fear it could put a dent in the price tag on bonds. That usually translates into a drop in bond prices and rising bond yields.

However, it also could be where opportunity knocks. The Fed’s plan to revert rates to “more historically normal levels” could tee up a chance in bonds for may of those with an eye on income, principle protection and diversification in the second half of the year and more.

Like easy? Launched earlier in the month, sole and institutional investors will experience an easier process to trade the most current benchmark U.S. Treasuries thanks to a new series of exchanged traded funds, according to reuters.com. It sheds on the maturing ETFs within the fixed income terrain.

While treasuries, of course, are among the bevy of the world’s most liquid securities, particularly for investors who need to frequently roll them over to sustain the maturity, trading them can be plodding.

"This gives (investors) a tool to say, we really want to focus on how we execute our investment strategy, as opposed to how effectively we trade Treasury bonds," said F/m President Alex Morris.

The new ETFs, which will eventually include more maturities, as well as options, will make it easier for people managing bond portfolios in a precise way, said Dave Nadig, director of research at ETF Flows.

"I put this in the category of sharp tools in the drawer," he said. "For most investors, I don't think it's relevant. For investors that need this product, it's a godsend."

Meantime, it’s largely been coming up roses for fixed income ETFs. Their ranks have swelled, piquing the interest of fresh investors, according to thestreet.com.

And talk about a high ceiling. Last month, the ETF industry hit a worldwide high of $862 billion in assets under management, shattering records. As of July 31 in this country, 706 ETFs from 22 providers drew $582 billion.

No, it seems the investment industry isn’t singularly focused on, well, the old bank account. Turns out that over the past few years, environmental, social, and governance or ESGs infiltrated and lassoed the conscious of the country – including the investment landscape, according to loma.org.

Of the $51.4 trillion assets professionally managed in the U.S. as 2019 wound down, $17.1 trillion represented sustainable investing assets, estimated The Forum for Sustainable and Responsible investment.  

ESG 1.0 was marked by a top down approach to the implementation of ESG policies, according to forbes.com. Those policies don’t include a method by which to quantifiably gauge their effect. Those companies boasting a desire to satisfy consumer interests or taking a run at reversing public perception could forward their initiatives stemming from ESG with few methods available through which to fact check. 

Investors see that one of the foremost challenges of the decade encompasses resolving the climate crisis, the site continued. From 2020 to 2021, the ESG experienced a doubling in funds – a trend expected to extend into the future.  ESG assets will tip $30 trillion by 203, according to predictions in a report from Broadridge Financial Solutions.