Displaying items by tag: etf

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.

BlackRock launched a new series of fixed-income ETFs which allow access to buy-write investments on bond securities. iShares 20+ Year Treasury Bond BuyWrite Strategy (TLTW), Shares High Yield Corporate Bond BuyWrite Strategy ETF (HYGW), and the iShares Investment Grade Corporate Bond BuyWrite Strategy ETF (Cboe: LQDW) are all different variations of the new options available to investors. BR says buy-write strategies have been available to equity ETFs for a long time, but have not infiltrated fixed income. These options will give more exposure to yield in what has been one of the most difficult times for fixed-income investment in decades. This just adds to BR’s legacy of innovation and creativity in bond market ETFs.

Finsum: This is an interesting idea, and maybe if inflation is cooling quicker than expected bonds are too cheap. 

Fixed Income ETF: Bonds, Total Market, ETF, Treasuries

Fixed-income ETF volume is spiking as investors look to funds rather than individual bonds to fill their portfolio needs. The turnover rate spiked to $58 billion which topped the previous record from the start of the pandemic in March 2020. This is a huge signal that a generation of investors who have become familiar with equity ETFs are turning to the same vehicles for their bond market fix.  The most popular funds have been high yield funds such as HYG and JNK which saw $9 billion and $4 billion in trades respectively. Fixed income investors have said that the hyperactive market with daily trading presents an advantage from a price discovery standpoint as compared to individual bonds which might not even see trading on any given day. Undoubtedly, market turmoil is contributing to the high acquisition of bond ETFs.

Finsum: Bond demand is skyrocketing and they are returning to portfolios at a very high rate. 

In anticipation of last week’s interest rate increase, a spike in yields led to a record $58 billion traded in bond ETFs, according to ETF research firm VettaFi. The bulk of this trading was in the secondary market between stock sellers and purchasers. This was especially true in high-yield corporate bond ETFs. This is due to high-yield bonds typically being less sensitive to interest rates compared with Treasuries. While high-yield bonds carry higher credit risk, investors are seeking the greater return potential. The highest traded ETF was the iShares iBoxx High Yield Corporate Bond ETF (HYG), which saw $9 billion in trades. This increase in trading in fixed income ETFs has been at the expense of fixed income mutual funds, which are seeing strong outflows. In the current market environment, where many assets are down, high-fee mutual funds are seen as less attractive than low-cost ETFs. 

Finsum: Ahead of last week’s Fed announcement, a spike in yields resulted in a record trade in high yield bond ETFs at the expense of fixed income mutual funds.

Investors are flocking to active ETFs in search of more market alpha amid the volatility. Pickers' performance has been especially effective in high volatility, and Muni bonds are another great option. Outflows have been consistent from Muni bonds since 2021 but that tide is starting to turn as yields rise and investors need an inflation cushion. Moreover, their high credit scores and tax advantages are extremely attractive to high net worth investors. One option is Avantis Core Municipal Fixed Income ETF (AVMU) which is an active muni investment fund. The fund has a pretty low expense ratio (0.15%), and they also believe it can outperform in a rising yield environment.

Finsum: Yields are beginning to look more attractive, but remember how much of that is built-in inflation.