Displaying items by tag: Blackrock

Blackrock expanded its fixed-income ETF lineup with the launch of the BlackRock AAA CLO ETF (CLOA). The fund, which was launched on January 10th, seeks to provide capital preservation and current income by investing principally in a portfolio composed of U.S. dollar-denominated AAA-rated collateralized loan obligations (CLOs). According to Investopedia, a CLO is a bundle of loans that are ranked below investment grade. While the underlying loans are rated below investment grade, most CLO tranches are typically rated investment grade due to credit enhancements and diversification. CLOs have historically only been available to institutional investors, but Janus Henderson launched the first CLO fund in an ETF wrapper in October 2020. That fund, the Janus Henderson AAA CLO ETF (JAAA) was clearly able to find an audience since the fund currently has close to $2 billion in assets under management. This bodes well for CLOA, which has an expense ratio of 0.20%, six basis points cheaper than JAAA. Investors have been attracted to CLOs due to low volatility, low downgrade risk, and low correlations with traditional fixed-income assets. CLOA currently has a weighted average coupon of 5.40 and a weighted average maturity of 4.24 years.

Finsum: Blackrock launched an AAA CLO ETF to take advantage of investor CLO interest due to low volatility, low downgrade risk, and low correlations with traditional fixed income.

Last month, the Vanguard Group decided to drop out of the Net Zero Asset Managers initiative, whose members commit to making their investment portfolios emission-neutral by 2050. The decision by Vanguard emphasizes the notion that retail investors are less focused on ESG priorities than institutional investors. The fund giant said that 80% of its nearly $8 trillion in assets are in index funds, which typically attract retail investors. The rationale for the decision, according to Vanguard was that it was responding to the desire of its clients to provide "clarity" and make its independence clear. Vanguard's largest competitors, BlackRock and State Street rely more on institutional investors such as pension funds and foundations. Todd Rosenbluth, head of research at VettaFi told Reuters that “Institutional investors focus more on climate and other ESG priorities amid pressure to do so by clients, regulators and investment activists. BlackRock and State Street are appealing to an investment base that cares more about ESG." Both BlackRock and State Street have stuck with the Net Zero Asset Managers initiative. Rosenbluth also stated that “Many retail investors are also interested in matters like climate change, but prioritize them less in building retirement portfolios.” That matches a FINRA Investor Education Foundation study of retail investors last year that found only 9% of respondents held ESG investments.

Finsum:Many retail investors are interested in climate change, but prioritize them less in building portfolios, while institutional investors focus more on ESG amid pressure from clients, regulators, and activists.

While rising interest rates last year battered both stocks and bonds, the rise in rates brought higher yields to the fixed-income market. According to Dow Jones Market Data, the yield on the 10-year Treasury note rose 2.330 percentage points in 2022 to 3.826%, its largest annual gain on record. The two-year Treasury yields surged 3.669 percentage points to 4.399%, while the 30-year yield jumped 2.046 percentage points to end the year at 3.934%. These marked the largest annual increases ever for those notes. The jump in yields drove investors into fixed-income ETFs last year, with BlackRock's iShares dominating inflows. In a phone interview with Morningstar, Salim Ramji, BlackRock's global head of iShares and index investments, stated "We had record flows even in one of the worst fixed-income markets. We were twice the next competitor." Based on data from Morningstar Direct, iShares attracted around $100 billion in 2022, the most among U.S.-listed ETFs that invest in fixed income. Vanguard saw the second biggest fixed-income ETF inflows with around $49 billion, followed by State Street with about $21 billion. The most popular fixed-income ETF based on inflows last year was the iShares 20+ Year Treasury Bond ETF (TLT), which gathered around $15 billion.

Finsum: In an ugly year for fixed-income markets, bond ETFs continued to see strong inflows due to higher yields with Blackrock’s iShares leading the pack.

During a recent briefing, Blackstone's private wealth management solutions group explained that private equity and other alternatives have been well suited to perform during volatile times when traditional stocks and bonds have fallen. This has been certainly true this year as equities, government bonds, and most corporate debt have fallen as inflation and interest rates rise and recessionary concerns persist. Private markets and hedge fund strategies, on the other hand, have fared much better. However, the firm also believes that affluent investors are still under-allocated in alternative investments. According to the firm, affluent private investors typically only allocate about 5% to alternative investments. Joan Solotar, Global Head of Private Wealth Solutions at Blackstone told journalists at a briefing in London that “Investors remain under-allocated. Many advisors have found that if they hadn’t allocated to alternatives, then they underperformed. Some advisors, such as those working for decades without ever having broached the alternatives space, might lack the confidence to take the plunge.” Her colleague, Rashmi Madan, Head of EMEA for Private Wealth Solutions said the reason for this is due to a combination of burdensome administrative tasks and the difficulties investors have had accessing drawdown funds.

Finsum:Blackstone stated during a recent briefing that alternatives perform well in volatile markets when traditional securities falter, but affluent investors are still under-allocated.

With apparent eroding client interest, ESGs might be losing some of their bang, according to thinkadvisor.com. In the past several months, 31% of advisors reported taking questions about ESG or socially responsible investing from clients. That’s down from 39% who indicated as much last year and in 2020.

Thirty four percent of advisors were found to tap or recommend these strategies to clients this year,  according to the survey. While that’s an uptick of 2 percentage points from 2021, it receded from a high of 38% in 2020.

Investmentnews.com reported in June that, in recent years, while a burgeoning percentage of financial advisors folded ESG investments options into their business, more now indicated they intend shore back on suggesting such investments, according to a survey.

While financial advisor use or recommendation of environmental, social and governance or ESG investing strategies have moved consistently along over the past four years, according to prnewswire.com. However, during the next  12 months, it could slip in use, according to the 2022 Trends in Investing Survey, conducted by the Journal of Financial Planning and the Financial Planning Association, as provided to prnewswire.com by the Financial Planning Association.