Markets
Investors were offloading ultra-short-term bond ETFs in a hurry ahead of the Fed’s most recent rate hike. The Federal Reserve’s announced its fourth-straight 75 basis-point interest-rate hike on Wednesday. Ultra-short-term bond ETFs, which are considered cash-like, saw some of the largest inflows this year as the Fed raised rates. However, it appears that investors have now had a change of heart. The iShares Short Treasury Bond ETF (SHV), which tracks U.S. Treasury bonds with maturities of one year or less, saw $2.5 billion in outflows on Tuesday in the fund’s largest one-day outflow on record, according to Bloomberg data. SHV wasn’t alone as a host of other ultra-short-duration funds also saw massive withdrawals earlier in the week. The record outflows suggest that traders believe rising Treasury yields may have topped out and they no longer need the safety that short-term bond ETFs provide. They are either open to more risk with longer duration bonds or are preparing for a potential recession.
Finsum:Ultra short-term bond ETFs are seeing massive outflows as traders extend into longer-duration bonds ahead of a potential recession.
Following its February launch of five equity ETFs and one fixed-income ETF, Capital Group recently launched three active fixed-income ETFs on the New York Stock Exchange. The three new funds include the Capital Group Short Duration Income ETF (CGSD), the Capital Group Municipal Income ETF (CGMU), and the Capital Group U.S. Multi-Sector Income ETF (CGMS). CGSD is a short-duration income fund that pursues high-quality income with low-interest rate sensitivity. CGMU is a core municipal fund that pursues tax-exempt income consistent with capital preservation while seeking total return, and CGMS is a diversified U.S. multi-sector income fund that pursues a high level of current income and the opportunity for capital appreciation. Mike Gitlin, head of fixed income for Capital Group said the following about the three funds, “We’ve deliberately built our three new active ETFs in categories that have historically been underserved by active ETF managers including multisector bond, municipal national intermediate bond and short-term bond. 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.”
Finsum:To meet underserved areas of the fixed-income market, Capital Group launched three actively-managed bond ETFs.
Stocks and bonds during the first half of the year?
Kerplunk. Scientifically speaking, of course.
That’s where balancing could come in handy, according to morningstar.com. Investors who abided by strategy dictated by discipline wouldn’t have taken as big a hit, according to morningstar.com.
Of course, rebalancing doesn’t come with any guarantees when it comes to generating an improvements on returns, results this year show why maintaining a tight rein on risk isn’t such a bad idea.
As an investor, whether you’ve been around the block a few times or are wet behind the ears, your priorities probably vary widely, according to smartasset.com.
Thinking about building a portfolio from scratch? Well, you might want to try this instead: you’ll be assigned a pre built model portfolio by many advisors.
Also consider that most investment advisors keep close tabs on and review their model portfolios to make sure they’re achieving their benchmarks and doing their thing at level that are proper. But that doesn’t happen at the snap of a snap of the fingers; instead the process entails rebalancing each portfolio, which your ability to maintain the asset allocation that was designated.
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Fretting over salting away enough cash for retirement against the backdrop of the helter skelter ride, courtesy of the stock market?
Yeah, it’s a thing.
In the dawning days of September, the S&P 500 index of stocks saw almost 24% fly out the window, according to Sandy Wiggins, of ACG Wealth Management in Midlothian, appearing on wtvr.com. Bonds, what’s more, typically, regarded as a safer option than stocks, also hit the skids. Through that month, Bloomberg US Aggregate – the main bond index – kissed away 14.6%.
“It’s a scary time for investors, especially those who have retired or are planning to in the next few years,” Wiggins said, reported wtlocal.com. “However, the key to successful long-term investing is to keep fear from making decisions in such difficult times. Investor psychology is such that greed in good times and fear in bad lead to overreaction and bad decisions.
“First, realize that timing the market is a losing strategy,” Wiggins continued. “By timing the market, we mean moving from stocks to cash or something else conservative with the expectation of going back when things feel better. The best demonstration of the folly of market timing is to examine the impact on returns by staying invested and missing the best return days.”
Following two years online, October 28-30, the Esports and Gaming Summit took place again onsite. Organized by Gariath Concepts, the event’s renowned as the largest Gaming Convention in Southeast Asia. “At Globe, we are very happy and excited to be part of ESGS this year. In line with our Game Well Played campaign, we have activities in our booth and throughout the entire ESGS event area that promotes multiple products, experiences, and most of all, opportunities to do good,” said Rina Azcuña-Siongco, head of Globe’s Get Entertained Tribe, during a press conference ahead of the summit.
Yet, all might not be peaches and cream on the ESG front. In recent posts, Kevin LaCroix, an attorney and executive vice president, RT ProExec, indicated ESG has a fundamental flaw: it’s void of definition, leading to what he characterized as “sloppy thinking,” according to dandodiary.com.
These ESG related trepidations are explored in a recent post on the Harvard Law School Forum on Corporate Governance. Leveraging cybersecurity as an example, Douglas Chia of Soundboard Governance LLC, illustrates one of the “biggest flaws” of ESG is “the subjective open-endedness of what counts as E, S, or G.”
Historical lows. This year, they’ve besieged the Bloomberg Global Aggerate and Bloomberg U.S. Treasury indexes, according to etftrends.com.
As they put high risk assets in the market, investors are second guessing the role of fixed income in their portfolios. That’s where active managed funds can provide a boost.
Fixed income might not exactly be in the driver’s seat now, but when it comes to the bond market, investors can’t simply look the other way. Why not? Well, it’s not just the world’s largest securities market – and by a considerable margin – it’s also rode the wave of significant growth. And that’s both in terms of size and the number of issuers.
“Navigating the bond market is even more challenging for advisors this year as bonds fall in value,” said Todd Rosenbluth, head of Research at VettaFi. “However, the ability to tap into the expertise of experienced managers along with the liquidity benefits of an ETF has been compelling.”
Meantime, face it: many investors aren’t accustomed to the volatility and price drops prompted by dramatically growing interest rates this year, according to advisorscapital.com.
The upside? Yields on fixed income securities have really made out better than they have in years.