Historical lows. This year, they’ve besieged the Bloomberg Global Aggerate and Bloomberg U.S. Treasury indexes, according to etftrends.com.

As they put high risk assets in the market, investors are second guessing the role of fixed income in their portfolios. That’s where active managed funds can provide a boost.

Fixed income might not exactly be in the driver’s seat now, but when it comes to the bond market, investors can’t simply look the other way. Why not? Well, it’s not just the world’s largest securities market – and by a considerable margin – it’s also rode the wave of significant growth. And that’s both in terms of size and the number of issuers.

“Navigating the bond market is even more challenging for advisors this year as bonds fall in value,” said Todd Rosenbluth, head of Research at VettaFi. “However, the ability to tap into the expertise of experienced managers along with the liquidity benefits of an ETF has been compelling.”

Meantime, face it: many investors aren’t accustomed to the volatility and price drops prompted by dramatically growing interest rates this year, according to advisorscapital.com.

The upside? Yields on fixed income securities have really made out better than they have in years.

A niche? Hey, almost everyone has one. So why not fixed income ETFs – non-core fixed income, especially, which “play an expanded role in portfolio construction” for institutional investors, according to the results of a survey conducted by State Street Global Advisors, reported etfdb.com.

According to the report, The Role of ETFs in a New Fixed Income Landscape, of the 700 global institutional investors SSGA surveyed with an eye on upping their exposure to high-yield corporate debt over the next 12 months, 62% likely will do so through ETFs. In contrast, only 27% of investors significantly tapped into ETFs to build their allocations to non core fixed income like high yield last year.

“The increase from just over a year ago is remarkable,” the report said.

Among larger institutions, well, the momentum especially reverberates, according to etftrends.com. Sixty eight percent of respondents generating more than $10 billion in assets indicated they’re likely to leverage ETFs to erect new exposures to high yield corporate credit.

“Our conversations with investors have reinforced what we already knew – there is significant demand for more targeted fixed income products,” said Tony Kelly, an ETF industry leader. “Our initial product suites aim to create a full toolkit for high-yield investors looking to implement their specific views on the market, and we anticipate extending this approach to other fixed income asset classes.”

Yields on developed market government bonds have been soaring this year, as a result of higher inflation, sharp rate hikes, and quantitative tightening. The latter of which is what has traders nervous right now. The Federal Reserve is looking to increase the pace of winding down its nearly $9 trillion balance sheet, while the European Central Bank has also been looking to shrink its €5 trillion bond portfolio. Central banks built up their balance sheets with bond purchases to help provide a stimulus for the economy, but with the current high inflation, banks are now looking to sell those bonds. With the bond market already facing pressure due to the rate hikes, further quantitative tightening could make trading even more difficult by worsening liquidity and increasing volatility. The Bank of England has already been forced to delay its quantitative tightening due to turmoil in the UK bond market. That turmoil, which also spread to the U.S. and European bond markets, has only added to the liquidity and volatility concerns.

Finsum:An increase in Quantitative Tightening by central banks could lead to more volatility in the bond markets.

Innovator Capital Management recently launched its new Research & Investment Strategy hub containing model portfolios. The new site was built to provide advisors with a framework on how to construct portfolios with Defined Outcome ETFs. The site also provides market and economic data, and analysis and commentary with a focus on managing risk. Innovator’s Strategic Defined Outcome ETF Portfolios are designed to target varying levels of risk and return across the risk-reward spectrum. There will be five portfolios to start. This includes a Conservative model, a Balanced Alternative model, an All-World Hedged Equity model, a Controlled Growth model, and an Accelerated Growth. All the portfolios will consist of ETFs from Innovator’s Defined Outcome ETF lineup. The lineup, which has so far amassed over $8.8 billion in assets under management, includes Buffer ETFs, Accelerated & Stacker ETFs, and Floor ETFs. The Defined Outcome ETF portfolios will be free and rebalanced annually. An advisor can construct portfolios with custom allocations to specific Defined Outcome ETFs and then analyze the custom portfolio’s return and risk characteristics.

Finsum:Innovator Capital has launched a series of model portfolios allowing advisors to construct custom portfolios using the firm’s Defined Outcome ETFs.

According to retirement industry experts, the new DOL Fiduciary Rule is not expected to be released until the first quarter of 2023 due to two ongoing and related legal cases. The rule, which aims to create a universal fiduciary guidance standard for financial professionals, was previously expected to be released in December. The original Fiduciary Rule proposed under the Obama administration, was overturned by the Fifth Circuit Court of Appeals in New Orleans citing that the DOL's execution of the rule amounted to "an arbitrary and capricious use of regulatory power." Under the Trump presidency, the DOL released PTE 2020-02 in December 2020, allowing investment advice fiduciaries to receive payment in connection with rendering fiduciary investment advice. The Biden administration allowed that regulation to proceed and was expected to be published next month. However, the Federation of Americans for Consumer Choice (FACC) filed a lawsuit in federal court in Dallas claiming that the DOL does not have the jurisdiction to enlarge the list of advisors who are required to serve as fiduciaries for pension savings. Another lawsuit was filed by The American Securities Association in a federal court in Florida arguing that the rule breached the regulations requiring a period of public input.

Finsum:The release of the new Fiduciary Rule is facing additional delays as the DOL fights two separate, but related lawsuits.