Displaying items by tag: active management
According to research from JPMorgan, the shift from actively managed funds to passive index-tracking funds has accelerated this year. The move has been boosted by a jump in flows to bond and mixed-asset funds. The share of assets under management held in U.S. passive bond and hybrid funds rose from 23% of all equivalent U.S. fund assets at the end of 2019 to 28.5 % by August 2022. Peter Sleep, senior portfolio manager at 7 Investment Management told Financial Times that “Bond exchange-traded funds were now catching up with their more broadly adopted equity ETF counterparts as the offering had broadened and become more cost competitive.” Jane Sloan, head of iShares and index investing Emea at BlackRock, added that “Half of all inflows into global ETFs this year had been into bond ETFs.” She also noted that “More people are using ETFs to trade bonds as they move within fixed-income asset classes.” This explains why trading volumes in bond ETFs are up 35% since 2020 and 2021. Tax loss harvesting is another reason for the shift as it provides an incentive for investors to sell out of their actively managed fixed-income funds.
Finsum:Due to a combination of tax loss harvesting, ETFs becoming more cost competitive, and an increase in bond ETF trading, the shift from active to passive bond funds is accelerating.
Well, active management fits the bill in any environment, according to Nuveen.com, according to whom actively managed bond strategies can play a part in managing portfolio risk while abetting returns. Not a bad thing, it pointed out, especially these days, with percolating interest rates.
Mike Gitlin, head of Fixed Income for Capital Group, said: “Now is a good time for financial professionals and investors alike to consider active fixed income ETFs. We’ve deliberately built our three new active ETFs in categories that have historically been underserved by active ETF managers. We believe these will help investors manage short-term cash needs, generate tax-exempt income, and benefit from some of the best starting yields we’ve seen in credit in years.”
You might say today’s market conditions have been less than idyllic for fixed income investors. Might you? Anyway, at the same time, investors in equities are on the hunt for bonds to offset stock prices headed the wrong way, according to thestreet.com. Still, with planning and a grasp of available options, investors can find traction in bond markets that are transitioning.
NDVR, a Wealth Optimization firm, recently unveiled NDVR Unified Equity, an actively managed personalized indexing strategy. NDVR, which was created by a team of Quant Ph. D.s and technology innovators, offers a proprietary investing platform for high net worth investors that features personalized direct indexing and active factors such as Extended Market, Low Volatility, Momentum, Quality and Value, tax-loss harvesting, and Socially Responsible Investing. The Unified Equity strategy will target traditional alpha, tax alpha, and fee alpha through direct ownership of U.S. equities and is designed to deliver more aligned portfolios with greater efficiency than index funds and separately managed accounts. The strategy starts with a universe of 1,500 large-, mid-, and liquid small-cap stocks traded on U.S. markets. Investors can then create a portfolio using goals, requirements, and investing preferences in the NDVR Portfolio Lab. The NDVR Optimization Engine analyzes that plan and builds a custom portfolio that is optimized to deliver the growth and secured spending that was targeted by the investor.
Finsum: As direct indexing continues to proliferate, wealth optimization firm NDVR unveiled an active personalized direct indexing strategy that high net worth investors can customize through their platform
State Street Global Advisors is teaming up with Barclays’ research business to build and manage active products in systematic fixed income. While systematic equity strategies have been around for a while, the strategy is somewhat new to fixed income due to a lack of data. While most stock trades are easy to track, fixed-income trades are typically over-the-counter, with electronic platforms only handling a part of the business. This makes accessing and harvesting data in fixed-income markets more complex. However, that’s changing. Efficiency in the bond markets is increasing the viability of implementing systematic debt strategies. With fixed income, managers attempt to generate alpha through data analysis that uncovers asset mispricing, according to SSGA. This comes as the demand for systematic fixed income is increasing. According to a State Street survey of 700 investors, 91 percent of institutions are interested in using systematic fixed-income strategies over the next 12 months. The survey also showed that investors managing more than $10 billion were most interested in implementing these strategies using investment-grade and high-yield corporate securities.
Finsum: As demand for systematic fixed-income strategies heats up, State Street Global Advisors and Barclays are teaming up to build and manage active systematic fixed income strategies.
Sure, among investors, passive investment strategies still can yield exposure to broad market data, according to wellington.com.
Yet, for skilled active management, the new regime today, which is comprised of inflation and interest rates pointing north as well as an acceleration of dispersion across fixed income sectors and regions, is custom made for skilled active management, the site continued.
Considering that, among investors, the time now be just right to opportunistically position their portfolios.
Now, given the rebound of inflation’s largely a global matter, you might want to put the cookie cutter away. In Europe, inflation’s being fueled by catalysts that vary from the issue in the U.S. Distinct structural headwinds face each region – a divergence that, for investors, sparks possible opportunities.
In Europe, well, climbing inflation’s stems mainly from energy and food prices unfavorably tipping the scale. The spiraling price tags of these staples have been absorbed by businesses and consumers. Meantime, In the U.S., demand, more so, has been the impetus of recent pressures driven by inflation.
Their respective fixed income markets have priced in the duo threats of recession and sources of inflation in the euro area opposed to the U.S.
The brunt of the changes in interest rates potentially can be minimized through the active management of sensitivity to interest rates with duration positioning, according to gsam.com. Blunting sensitivity to rates changes could usher in positive returns in any rate environment.