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Thursday, 11 May 2023 14:30

Active Fixed Income Funds Outperforming

In an article for VettaFi’s Modern Alpha channel, Nick Peters-Golden discussed the outperformance of active fixed income funds in the first quarter of 2023. The entire sector has had strong performance since the end of last year primarily due to decelerating inflation, rising recession odds, and the banking crisis. 

As a result, fixed income ETFs saw $52 billion of inflows in the first quarter which is more than 60% of the total $80 billion in ETF inflows. Within the fixed income ETF universe, active bond funds have outperformed as they have been able to take advantage of market volatility and concentrate on shorter-term maturities which have outperformed. 

One example is the Kingsbarn Tactical Bond ETF which invests across the credit and duration spectrum in global bond ETFs and Treasuries. This is an outperformer among active bond funds with a 6.2% return YTD. Another outperformer is the First Trust TCW Securitized Plus ETF which invests primarily in mortgage-backed securities that are comprised of private securities and government-sponsored debt. This fund is up 5.2% YTD. 

Finsum: Active fixed income funds have outperformed in 2023 and been the recipient of the bulk of ETF inflows.

In an article for iShares, Karen Veraa CFA discussed the opportunity in fixed income ETFs, following the selloff in bonds last year. She notes that assets migrated to the space as investors wanted to reduce risk in their portfolios while taking advantage of attractive yields. 

Due to the Federal Reserve’s low rate policies over the last decade, bonds were overvalued and offered paltry yields. This contributed to weakness in the asset class in 2022. But, conditions are turning more favorable as inflation has peaked, recession odds are climbing, and Fed fund futures showing increasing chances of a Fed easing cycle commencing sometime in the second-half of the year. 

While the crisis among regional banks is contributing to economic worries, the ‘flight to safety’ into bonds and fixed income ETFs was an indication that the asset class offers diversification benefits. 

Another reason to like fixed income ETFs is that opportunities to earn income are substantially higher. Between 2013 and 2021, the only place to earn more than 4% income was with riskier high-yield and emerging market debt. Now, over 70% of fixed income securities are yielding more than 4%. 

Finsum: Fixed income ETFs are particularly attractive at the moment given increasing economic worries and generous yields across the sector.

Thursday, 11 May 2023 14:27

Inside or out?

For what could be a host of reasons, your firm has an opening. Perhaps a facelift in executive leadership?

Well, you could try Indeed,

First, though, ask yourself: should you fill the gig from the inside or out? Sure, if you stick with your internal resources, he or she already knows the company – and your business, not to mention its clients and team, according to That said, some from the outside could arrive with fresh ideas.

Factors to keep in mind when considering going outside:

Internal employees may lack the leadership ability

It’s time for a shake up

Removing top talent from the competition

As for remaining inside:

Save time and money

Your firm is already on the right track

Retention and morale

During the first quarter of the year, Avantax reported more than $228 million in newly recruited assets, according to

That’s in light of sustained interest on the part of independent financial professions and accounting firms intent on expansion.

Seem to you as if ESG’s lost a bit of its zest? You could just about be granted a mulligan for feeling that way, according to

Then again, you might believe that, among some leaders, the rapid momentum’s taking five.

Here’s the bottom line: when any landscape altering thought process toward business like ESG surfaces, it can find its apex faster than a speeding bullet. Looking at the bigger picture, however, the mission critical relevance of sustainability and ESG in modern business and the corporate juice it sparked last season should be sent to separate corners.

A survey commissioned by Ernst & Young gauging the priority business placed on sustainability and ESG initiatives confirmed what many figured: ESG remains in the crosshairs of American execs. It also appears to pay dividends, heading every agenda.     

During the past year, investment decisions based on ESG factors hasn’t exactly been looked upon fondly, according to

Factors such as the Ukraine invasion and inflation have fueled the negativity.

No matter; sustainability investing decidedly will remain a thing, abetting the segue to a future that’s not only greener, but struts greater sustainability.

In an article for ETFTrends’ Direct Indexing Channel, James Comtois shared some thoughts from Vanguard executives about direct indexing. In essence, the company sees it as having a bright future and offering significant benefits in the terms of tax-loss harvesting.

With traditional ETFs, investors aren’t able to reap the benefits of tax-loss harvesting. However, direct indexing allows investors to get the benefits of an ETF like diversification and low costs, but they can also sell securities at a loss to offset taxable gains in profitable securities. Subsequently, the sold securities can be replaced with securities that have similar factors to maintain diversification.

These benefits also compound with more frequent scans. So, daily or weekly scans will lead to better outcomes than monthly or quarterly scans. Previously, there were constraints to more frequent scans as an advisor couldn’t monitor portfolios so frequently. But with automated, direct indexing strategies, these services are available to a wider swathe of investors. Overall, more frequent scanning can add between 20 and 100 basis points to a portfolio.

Finsum: Direct indexing offers specific benefits to investors especially when compared to investing in ETFs.


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