Displaying items by tag: ETFs

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.

Providers of ETFs that invest based on principles of environmental, social, and governance (ESG) are facing headwinds from multiple sides. First, they are about to be hit with a batch of new rules from the SEC. Secondly, they have been put directly in the middle of a political battle between those for ESG and those who think it is just woke capitalism. On the SEC front, the agency recently published the results of two consultations. The first was on proposals to change the so-called Names Rule. The SEC wants to strictly define how a fund’s constituent investments should be reflected in its name. The second was on proposals for requirements on ESG disclosures for investment advisers and investment companies. On the political front, Florida passed a resolution in August that bans its pension fund managers from considering ESG with regard to their investing strategies. During the same month, Texas criticized BlackRock and nine European financial groups for boycotting the fossil fuel industry.

Finsum:ESG ETF providers are facing criticism on both the regulatory and political fronts.

Investors are shucking aside overpriced, actively managed funds and sinking money instead in less expense index ETFs, said Dave Nadig, financial futurist at research and consulting firm Vetta Fi., according to thinkadvisor.com.

Strong inflows have culminated from ETFs highlighted by dividend strategies, munis and high yield bonds, he continued.

Among most active investors, ETFs have emerged as the go to vehicle, Nadig continued. On top of that, for most investors, they’ve evolving into the default choice.

This year – in the eye of the worst worse financial markets in decades – the country’s $6.6 trillion ETF generated $375 billion in net inflows. And it’s been share and share alike as the wealth is spreading across the board. For example, positive inflows into equities, currencies and alternatives has reached into the billions of dollars, the site reported Nadig pointing out. 

“It’s been one of the circumstances where the entire ETF universe has caught a bid,” Nadig said.

A Fitch Ratings reports shows the likelihood that U.S. investors will continue to rachet up their fixed income exchange traded fund holdings, according to pioline.com.

On the heels of new guidelines kicking in in the Big Apple last December, Fitch indicated its rated 10 such ETFs. Doing so has helped ease the way for investors to maintain shares of them.