Bonds: Total Market
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.
According to Refinitiv Lipper’s fund flows, fixed income ETFs saw a net $4.5 billion in weekly outflows for the week ending on August 24th, 2022. This marked the group’s first weekly outflows in nine weeks. This also corresponded with bond ETF’s third straight week of average negative returns. The bond types with the largest outflows included corporate high yield ETFs with $3.0 billion in outflows, corporate investment grade ETFs with $733 million in outflows, and government Treasury ETFs with $570 million in weekly outflows. Corporate high yield ETFs had their eighth largest weekly outflows to date, while corporate investment grade ETFs saw their first week of outflows in eight weeks. However, not all fixed-income ETFs saw outflows. International & global debt ETFs saw $101 million in inflows and government mortgage ETFs saw $15 million in weekly inflows. Those were the only two fixed-income groups to report inflows.
Finsum:With fixed income ETFs seeing their third straight week of negative average returns, bond ETFs see their first outflows in nine weeks.
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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 investors might feel lost in the current environment, but with yields starting to generate real income and prices ultra-low it might be the perfect buying opportunity. A new series of bond ETFs centered around treasuries was launched to capitalize on this unique time in the bond market. Slope Capital LLC and Genoa Asset Management LLC launched 10-year (UTEN.O), two-year (UTWO.O), and three-month (TBIL.O) dropped ETFs that will hold the most recent current Treasuries in the respective categories. Managers of the funds say this is well crafted precise tool for the fixed income investors that need a product like this. It gives new potential to bond investors in a precise way to tailor portfolios. There has been a flood into fixed income products as of late and funds are launching rapidly in response and will continue over the next half-decade.
Finsum: These tools can be utilized for investors wanting bond exposure, but not wanting to deal with the task of trading in the treasuries market and constantly updating
As the economy’s taken a wicked turn toward the dark side, the clamor for fixed income ETFs has parachuted, according to usnews.com.
Peng Cheng, JP Morgan strategist, explained that this includes retail investors, who hopped on the bandwagon last month, loading into credit ETFs like SPDR Bloomberg High Yield Bond ETF and the share iBoxx $ Inv Grade Corporate Bond ETF.
Earlier in the month, a new series of exchanged-traded funds launched, the US Benchmark Series. That will help ease they way for individual and institutional investors to trade the must updated individual benchmark U.S. Treasuries, which will shone a light on the maturing ETFs in the fixed income category, according to reuters.com. "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.