Bonds: Total Market

Putnam recently announced the launch of five new transparent, actively managed exchange-traded funds, including three fixed-income ETFs that build upon the capabilities and experience of the firm’s Fixed Income team. The bond ETFs include the Putnam ESG Core Bond ETF (PCRB), the Putnam ESG High Yield ETF (PHYD), and the Putnam ESG Ultra Short ETF (PULT). As part of the announcement, Carlo Forcione, Head of Product and Strategy at Putnam stated, “We are enthused about extending our ETF product shelf into the actively managed fixed income and non-U.S. equity spaces.” PCRB invests in bonds of governments and private companies located in the United States that are investment grade in quality with intermediate- to long-term maturities with a focus on issuers that Putnam believes meet relevant ESG criteria. PHYD invests in bonds that are below investment grade in quality which are obligations of U.S. issuers and have intermediate- to long-term maturities. The fund will also focus on issuers that Putnam believes meet relevant ESG criteria on a sector-specific basis. PULT invests in a diversified portfolio of fixed-income securities composed of short-duration, investment-grade money market, and other fixed-income securities, with a focus on issuers that the firm believes meet relevant ESG criteria on a sector-specific basis.


Finsum:Putnam recently launched three actively managed bond ETFs, including the Putnam ESG Core Bond ETF, the Putnam ESG High Yield ETF, and the Putnam ESG Ultra Short ETF.

While bonds are generally known for their stability, 2022 marked a deviance from the norm. The question for advisors is, how should they approach 2023? Mariam Kamshad, head of portfolio strategy for Goldman Sachs personal financial management, and Guido Petrelli, CEO, and founder of Merlin Investor spoke to SmartAsset to provide some guidance. First advisors should expect a return to the norm. Kamshad said 2022 was an unusually bad environment for bonds with the Federal Reserve raising rates to a 15-year high. She believes that's unlikely to repeat and expects both yields and capital gains returns to stabilize. Second, advisors should pay attention to inflation and government bonds. Kamshad believes that inflation is still the biggest issue in the economy and expects it to continue slowing in 2023, which would likely slow interest rates. Her team considers duration risk a better bet than credit risk. Kamshad's team also recommends investors consider government bonds. The team expects intermediate Treasurys to outperform cash. They also expect municipal bonds to pick back up. Petrelli recommends following the unemployment rate and the quit rate as they are “good metrics for the strength of the economy overall and a window into where bonds are headed.” He believes a potential recession is one of the biggest questions facing the bond market. In a recession, Petrelli expects investors to favor short-term bonds.


Finsum:According to two portfolio analysts, advisors should expect a return to the norm for bonds, but they should also keep an eye on inflation, government bonds, and the jobs report.

Principal Asset Management recently announced that it is enhancing its fintech-enabled model portfolios by incorporating individual bonds as an option for the portfolios. The company collaborated with YieldX and Smartleaf Asset Management to offer the only full portfolio direct indexing solution, enabling advisors to expand the capabilities of direct indexing beyond equities to individual bonds. Principal launched fintech-enabled model portfolios last year in collaboration with Smartleaf to make it easy to construct and manage custom portfolios. As part of the announcement, Jill Brown, Principal's managing director of U.S. Wealth Platform, stated, “We are the first asset manager to work with YieldX to incorporate individual bonds into model portfolios, making the combinations of mutual funds, ETFs, individual equities, and now individual bonds available through our 37 model portfolios even more powerful.” Adam Green, CEO of YieldX added “Through the addition of capabilities from YieldX, advisors will now have the option to include individual fixed-income securities.”


Finsum:Principal collaborated with YieldX and Smartleaf to offer individual bonds as part of its direct indexing model portfolios.

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