Practical insights on ETFs, bonds and global markets for long-term investors – curated from fund managers, index providers and market analysts, with a link to every original source.
TopicsETF ListFixed IncomeEquityEconomic and Industrial AnalysisPortfolio PlanningDividendMulti Asset
Canadian markets and country-specific exchange traded funds are enjoying their best first half year since the financial crisis, as investors have jumped back into cyclical plays with the economy rebounding. Year-to-date, the iShares MSCI Canada ETF (EWC) has increased 21.6% and the JPMorgan BetaBuilders Canada ETF (BATS: BBCA) , the largest ETF dedicated to Canada’s market, has advanced 21.7%.
Our view on emerging-market bonds is less optimistic after Federal Reserve policymakers indicated in mid-June that they may raise short-term interest rates sooner than previously expected. Although we had previously suggested investors consider overweighting emerging-market (EM) bonds relative to a benchmark target allocation, we now have a neutral view on EM bonds.
Fundamental Context In the first quarter of 2021, more than half of dollar volume in ETF trading by insurance companies was in fixed income ETFs. This is impressive as the asset class represented 35% of year-end 2020 assets.
Intermediate exposure can give fixed income investors the positioning sweet spot when it comes to duration. Two Vanguard funds to consider are the Vanguard Intermediate-Term Treasury Index Fund ETF Shares (VGIT) and the Vanguard Interim-Term Corporate Bond ETF (VCIT) .
The universe of dividend exchange traded funds is sizable and still growing. From the perspective of choice, that’s a positive, but locating the right payout funds to meet client needs can be a daunting task for advisors. WisdomTree’s Global Dividend Model Portfolio eases that burden, and does so with a mix of the issuer’s and third party products, as well domestic and international fare.
With the S&P MidCap 400 Index up almost 17% year-to-date, it’s hard to argue with the returns offered by mid cap equities. However, after that run for middle-class equities, investors may want to consider elevating quality in the asset class.
Value stocks and related exchange traded funds climbed Wednesday as major indices closed out the quarter near record highs, following a rally in the growth style over July. “We’ve seen a significant preference for cyclicals through May, and in June we’ve seen a major preference shift to growth, or ‘tech-plus stocks,’” Tim Ghriskey, chief investment strategist at Inverness Counsel, told Reuters.“It’s been a dramatic change.”
Income-minded investors should consider ETF strategies that provide consistent dividend growth at a rate that exceeds inflation. In the recent webcast, Yield vs Growth: How to Fight Inflation with Dividends , Matthew Page, Portfolio Manager, SmartETFs, warned that economists are projecting a median inflation forecast of 2.9% for 2021, followed by 2.3% for 2022, and 2.1% for 2023, all above the Federal Reserve’s 2% target.
As investors reach the halfway mark of 2021, it’s clear that some dividend strategies have performed than others. So far in 2021, the best-performing non-leveraged dividend ETFs were the Cambria Shareholder Yield ETF (SYLD) , which increased 43.24%; the VanEck Vectors Energy Income ETF (EINC) , which rose 38.50%; and the Invesco KBW High Dividend Yield Financial ETF (KBWD) , which is up 29.08%.
Big banks are raising dividends, amid news that the June U.S. consumer confidence data hit its highest level since the coronavirus pandemic began. Banks have also passed their stress tests, heightening expectations for robust economic growth in Q2.
Share repurchase programs were among the investment victims of the coronavirus pandemic as companies looked for efficient avenues to rapidly conserve cash. As has been widely noted, neither the COVID-19 bear market nor subsequent recession were as bad or as lengthy as were expected.
Crigger: In the Midyear Market Outlook, T. Rowe predicts we’ll see a “sequenced,” versus a “synchronized” recovery. Could you elaborate on what that entails? Dillon: For us, 2020 was all about the pandemic, while 2021 is all about the vaccines.
Commodities have literally been a hot commodity in the capital markets given inflation fears midway through the year, and investors can capture this upside and hedge inflation with the Invesco DB Commodity Index Tracking Fund (DBC) .