Lingering doubts over escalation inflation and the response of the Fed aside, longer duration US Treasuries and investment grade corporate debt ETFS are the cat’s meow among European investors, according to etf.com.

As of the end of July, in Europe, fixed income ETFs attracted more than $4.2bn over the past three months, according to data from Bloomberg Intelligence.

Meantime, Fitch Ratings reported that, in all likelihood, U.S. insurers will continue, unabated, to up their fixed income exchange-traded fund holdings, according to pioonline.com.

Since last December – when new guidelines kicked in in The Big Apple -- Fitch indicated it has rated 10 such ETFs. It eased the way for insurers to hang onto shares of fixed income ETFs. Until Jan. 1, 2027, shares of an ETF, for the purpose of a domestic insurer’s risk based capital report, on the condition the ETF satisfies certain criteria, in a regulation adopted by the New York State Department of Financial Services. It became effective Dec. 15.

Invesco, which is the fourth-largest U.S. ETF firm based on total assets, recently filed for four actively managed fixed-income ETFs. The fund firm is currently best known for its index-based funds and custom index strategies. However, the company is looking to branch out by adding actively managed fixed income to its stable. In a series of regulatory filings, the firm filed for four ETFs, including the Invesco High Yield Select ETF, the Invesco Municipal Strategic Income ETF, the Invesco Short Duration Bond ETF, and the Invesco CLO Floating Rate Note ETF. The Invesco High Yield Select ETF will be run by a team of managers led by Niklas Nordenfelt who currently leads Invesco’s High Yield fixed income team and recently took over the Invesco High Yield mutual fund. The Invesco Municipal Strategic Income ETF will invest 50%–65% of its assets in low- to medium-quality municipal securities, which the company defines as bonds rated BBB. The Invesco Short Duration Bond ETF will utilize the Bloomberg 1-3 Year Government/Credit Index as a reference in designing the portfolio. The Invesco CLO Floating Rate Note ETF will primarily invest in collateralized loan obligations that have limited interest rate sensitivity and strong credit profiles.


Finsum:Invesco is looking to expand its ETF product line with the registration of four actively managed bond ETFs.

While rate hikes appear to be hurting stock and bond prices this year, the rise in yields has made short-term bond ETFs more attractive to yield-seeking investors. As the Fed continues to lift its benchmark federal funds rate to target inflation, bond rates have followed suit. This has been especially true for short-term bonds. In fact, short-term rates are even yielding more than longer-term rates in some cases. For example, the two-year Treasury note had a recent yield of 4%, which was higher than the 10-year Treasury note, with a yield of 3.58%. Plus, investors in short-term bonds are taking on less interest rate risk while getting paid more in interest. If rates continue to rise, bonds with shorter maturities are expected to fall less in price than longer-term bonds. That makes short-term bond ETFs an attractive option for income investors. For instance, the iShares Short Treasury Bond ETF (SHV), which holds Treasuries with maturities of less than a year, has a 30-Day SEC yield of 2.69%, while its price performance on the year is essentially flat.


Finsum:The Fed’s current interest rate policy has resulted in higher yields and less risk for short-term bond ETFs.

AllianceBernstein recently announced the launch of its first set of active exchange-traded funds. The funds, which trade on the NYSE, include the AB Ultra-Short Income ETF (YEAR) and the AB Tax-Aware Short Duration Municipal ETF (TAFI). YEAR is an actively managed ETF that aims to deliver higher levels of yield relative to cash or cash-like investments while aiming for capital preservation in all market cycles. TAFI is an actively managed municipal bond strategy that offers municipal bond investors a distinct complement to their core allocations providing the opportunity to help maximize after-tax income and returns using shorter maturity bonds and opportunistic exposure to treasuries and taxable bonds. The launch comes only seven months after the firm announced plans to build a global ETF business under Noel Archard, who joined the company in February as global head of ETFs and portfolio solutions. Archard commented on the launch, "Today's ETF launch is an exciting achievement for our firm. ETFs have evolved into an important execution tool across asset classes, and amidst the recent market volatility, we feel it is critical to offer our clients diversity and efficiency.”


Finsum:AllianceBernstein launched two active fixed ETFs as part of its plans to build a global ETF business.

BondBloxx Investment Management recently announced the launch of eight duration-specific U.S. Treasury ETFs. The funds, which trade on the NYSE Arca, offer investors a more precise, lower-cost way to get exposure to U.S. Treasury Securities. The ETFs track a series of indices developed by Bloomberg Index Services that include duration-constrained subsets of U.S. Treasury bonds with over $300 billion outstanding. The funds add to BondBloxx’s existing eleven products launched this year, including seven industry sector-specific high yield bond ETFs, three ratings-specific high yield bond ETFs, and one short-duration emerging market bond ETF. The new ETFs include the BondBloxx Bloomberg Six Month Target Duration US Treasury ETF (XHLF), the BondBloxx Bloomberg One Year Target Duration US Treasury ETF (XONE), the BondBloxx Bloomberg Two Year Target Duration US Treasury ETF (XTWO), the BondBloxx Bloomberg Three Year Target Duration US Treasury ETF (XTRE), the BondBloxx Bloomberg Five Year Target Duration US Treasury ETF (XFIV), the BondBloxx Bloomberg Seven Year Target Duration US Treasury ETF (XSVN), the BondBloxx Bloomberg Ten Year Target Duration US Treasury ETF (XTEN), and the BondBloxx Bloomberg Twenty Year Target Duration US Treasury ETF (XTWY).


Finsum:BondBloxx adds to its existing suite of ETFs with eight duration-specific U.S. Treasury ETFs giving investors lower cost exposure to U.S. Treasury Securities.

Investors are shucking aside overpriced, actively managed funds and sinking money instead in less expense index ETFs, said Dave Nadig, financial futurist at research and consulting firm Vetta Fi., according to thinkadvisor.com.

 

Strong inflows have culminated from ETFs highlighted by dividend strategies, munis and high yield bonds, he continued.

 

Among most active investors, ETFs have emerged as the go to vehicle, Nadig continued. On top of that, for most investors, they’ve evolving into the default choice.

 

This year – in the eye of the worst worse financial markets in decades – the country’s $6.6 trillion ETF generated $375 billion in net inflows. And it’s been share and share alike as the wealth is spreading across the board. For example, positive inflows into equities, currencies and alternatives has reached into the billions of dollars, the site reported Nadig pointing out. 

 

“It’s been one of the circumstances where the entire ETF universe has caught a bid,” Nadig said.

 

A Fitch Ratings reports shows the likelihood that U.S. investors will continue to rachet up their fixed income exchange traded fund holdings, according to pioline.com.

 

On the heels of new guidelines kicking in in the Big Apple last December, Fitch indicated its rated 10 such ETFs. Doing so has helped ease the way for investors to maintain shares of them.

Fidelity Investments is expanding its alternative offerings with a new private credit fund. According to Ignites, the company registered the Fidelity Private Credit Fund as a ‘40-Act fund structured as a perpetual-term business development company. The fund will be managed by Fidelity Diversifying Solutions, the company’s new alternative unit. The fund, which will focus on lending to smaller firms, is looking to raise between $100 million and $1 billion initially. The fund will allow investors who don’t necessarily meet the requirements needed to invest in private equity, venture capital, or hedge funds. However, it does require them to have a gross income of $70,000 per year or a net worth of $250,000. According to the fund’s prospectus, net fees for the fund will range from 4.89% for institutional shares to 5.74% for S-class shares. It will also have a performance fee of 12.5% each quarter exceeding 5% growth and 12.5% of cumulative realized capital gains from inception through each calendar year.



Finsum:Fidelity is expected to launch a new private credit fund for investors who typically don’t meet the requirements needed to invest in private equity or hedge funds.

A manager at Artemis believes now is the perfect time to consider active fixed income solutions. Grace Le, who co-manages the Artemis Corporate Bond Fund, told Financial Times that an active bond manager’s job is to protect their clients during uncertain times and that is exactly what we are experiencing now. She believes that the reversal of quantitative easing led to more volatility in bond markets, resulting in a “boon for active investors.” Investors are dealing with inflation, macroeconomic uncertainty, and the potential for a recession. Muzinich & Co's co-head of public markets Michael McEachern told the publication that active managers can invest in shorter-duration bonds less impacted by increasing rates and rotate into higher-quality credit that is less sensitive to the current environment. Managers can also avoid concentration in a portfolio and deploy carry trades, which means borrowing at a low-interest rate and investing in an asset that provides a higher return.


Finsum:According to two bond fund managers,investors should consider active fixed income in times of economic and market uncertainty. 

NEOS Investments, an investment firm specializing in options-based income solutions, launched three actively managed ETFs this week, including two fixed income ETFs designed to help advisors and investors navigate the current market environment. The NEOS Enhanced Income Aggregate Bond ETF (BNDI) generates monthly income from investing in a representative portfolio of the U.S. Aggregate Bond Market and implementing a data-driven put option strategy. The NEOS Enhanced Income Cash Alternative ETF (CSHI) generates monthly income from investing in a portfolio of 1–3-month Treasury Bills and implementing a data-driven put option strategy. Both ETFs, which now trade on the NYSE, utilize a put spread approach that involves selling short puts and buying long puts to generate option premiums to be distributed as income without taking on outsized risk.


Finsum:Options-based investmentfirmNEOSrecently launched two fixed income ETFsoffering investors a novel approach to monthly income.

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.

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