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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.

 

A $4 billion investment advisor based in Washington, D.C. recently announced the launch of a new suite of US Treasury ETFs that will make it easier for investors to access the US Treasury market. F/m Investments' new US Benchmark Series will allow investors to own each “Benchmark” US Treasury in a single-security ETF. Each fund will hold the most current US Treasury security that corresponds to its stated tenor. The initial three ETFs are the US Treasury 10 Year ETF (UTEN), the US Treasury 2 Year ETF (UTWO), and the US Treasury 3 Month Bill ETF (TBIL). While Treasuries are very liquid securities, they can be hard to trade. This is especially true for investors who must roll them over frequently to maintain maturity. The new ETFs will hold each maturity's most current Treasuries. 


Finsum: A new suite of single bond ETFs will provide investors access to a maturity’s most current treasury.

For investors with assets in active bond mutual funds, there has never really been a time to implement tax-loss harvesting. Tax-loss harvesting is the process of selling securities at a loss to offset capital gains tax due on the sale of other securities. Until this year, investors had mostly experienced gains in their fixed income holdings tracing back to the 2008-2009 financial crisis. However, due to significant losses in fixed income this year, an opportunity has arisen for investors to transition their assets to ETFs through tax-loss harvesting. According to Morningstar Direct data, US fixed income funds have seen more than $205 billion in redemptions during the first half of the year. Sales in taxable bond ETFs, on the other hand, while slowing, still generated $53.8 billion in net inflows during the same period. This has set the stage for tax-loss selling out of mutual funds and into ETFs.


Finsum: Losses in active bond funds this year sets the stage for tax-loss harvesting into fixed income ETFs.

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