Displaying items by tag: ETFs

When it comes to direct indexing, a little daylight seems to be peeking in.

As investors, young and old, flock to ETFs, you might say direct indexing’s keeping an eye out for its lane, according to blomberg.com.

Two hands on the wheel, of course.

Questions surface about whether investors have an inclination to dive into direct indexing in light of the burgeoning attraction to ETFs, notes new research from Schwab.

If you have an appetite for index funds and ETFs, but greater control over fund holdings and the possibility to outperform, direct indexing just might float your boat, according to schwab.com.

By paring down costs while stepping up access among investors to different segments of the market, index funds and ETFs have put an entirely new face on investing. That said, when it comes to direct investing, contrary to performance historically, make way for the fly in the ointment: when it comes to control over the fund’s individual holdings, control – perhaps of any sort – is nonexistent.

However, times, it seems, have changed. Limited, back in the day, to institutional and high-net-worth investors, today, direct indexing’s available to a wider range of investors. Why? Technological strides, which have coaxed down investment minimums.

Direct indexing, of course, is surging in popularity, according to barrons.com. While Fidelity, Schwab and Vanguard have initiated direct indexing products over the past year or so, direct indexing’s leveraged by only 12% of advisors. Not to pile on – but piling on – a survey showed, when it comes to direct indexing, half of advisors have too clue what it is. 

Um, someone say Wikepedia?

It might be a bit brisk north of the border, but at least some fixed income ETFs seem to be hot in Canada, according to moneysense.ca.

In the aftermath of around 20 years of essentially solid returns, as interest rates nudge yields up and drive down prices, bond portfolios are absorbing some body blows. the iShares Core Canadian Universe Bond Index ETF (XBB) – which missed the panel’s picks of best fixed income ETFs for portfolios – still dispenses broad exposure to investment-grade Canadian bonds.

“I’m not committed to bonds at all,” says panellist Yves Rebetez. “People are now seeing the truth in the descriptive ‘return-free risk’ that some have been pointing to for a while. This ‘return-free risk’ is a tongue-in-cheek play on that. Who wants to invest in risk, void of potential returns?”

Opting for cost efficient funds like ETFs in Canada and elsewhere, the variety of them is, well, substantial, according to wealthawesome.com. As last year wound down, there were 1,177 Canadian listed ETFs in Canada.

Canadian ETFS are available in every shape and size. Among that wide range of options, it’s key to buckle down on the best funds.

Most portfolios commonly carry fixed income or bond ETFs – particularly if risk doesn’t float the boast of those investors who are most risk repellant.

Want to talk logic? For a second? A combination of income exchange-traded funds are most, well, logical for a substantial chunk of investors.

In a recent article in FT Adviser, Lumin Wealth Investment Manager Elliott Frost wondered how much alpha left is in active fixed income. Frost believes that a fixed income allocation should include a strategic mix of active and passive management. He notes that active fixed-income managers have generally outperformed passive strategies in the fixed-income space due to several reasons. The first is that companies with the most debt typically make up the largest component of a fixed income market index, leaving the portfolio more exposed to unfavorable changes in credit. Another reason is the lack of risk mitigation. Passive managers cannot “dial up or dial down risk.” However, he noted that the alpha generated by active managers has been to some degree, due to a long-term overweight on credit. Frost believes that if we account for a manager’s credit exposure, fees, and other factor exposures such as volatility, there might not be much alpha left. This is why he recommends not putting “all your eggs in one basket” and incorporating a passive fixed index into a portfolio for cheap access to a liquid market.

Finsum: Lumin Wealth’s Elliott Frost wonders if there is much alpha left in active fixed income once a manager’s credit exposure, fees, and volatility are accounted for.

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.