Displaying items by tag: ETFs

According to Sage Advisory in its recently released fourth annual stewardship report, ETF issuers offered much less manager disclosure and transparency regarding their ESG activities compared to their responses in the previous year’s report. The financial firm said that ETF firms had a “distinct change in tone” and “restrained language” in their responses to the survey. The firm attributes the drop in transparency to pending regulation in Europe and from the SEC that would require issuers to define ESG investments more clearly. Regulators are looking to crack down on firms that government agencies believe are overstating their fund’s ESG credentials, also known as greenwashing. The survey covered seven areas of stewardship such as proxy voting, climate and governance, and had a total of 69 questions. Based on its report, the firm believes that fines and proposed regulations could have both positive and negative consequences. The positive is that greenwashing could become less common, while the negative is that a lack of transparency could become an issue.

Finsum:As a result of pending regulations, ETF firms are becoming less transparent regarding their ESG activities.

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.

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.