ETF bond

  • India Bonds Set to Join EM Bond Index

    India will join the EM local currency benchmark in 2024, after JP Morgan announced the inclusion of specific local currency bonds from India to its GBI-EM suite of indices. The integration, the biggest reconstitution since China’s in 2020, will expand the index yield, extend duration, and shift regional exposure towards Asia. The move will draw an expected $20-$40 billion of near-term inflows, boosting India’s economy and providing the government with a new financing source.

  • Why Investors Are Dumping Corporate Bond ETFs

    ETF investors have embraced the rise in interest rates, directing $142 billion to fixed-income ETFs, constituting 41% of total inflows for U.S.-listed ETFs this year. Notably, treasury bond ETFs like the iShares 20+ Year Treasury Bond ETF and iShares 0-3 Month Treasury Bond ETF gained significantly. However, corporate bond ETFs see outflows due to perceived risk and the prospect of minimal extra returns compared to treasuries.

  • FTSE Russell, Tradeweb to Develop Fixed-Income Products in Europe

    Tradeweb and FTSE Russell are partnering to enhance fixed-income index pricing and trading commodities. The collaboration aims to widen pricing across an extensive range of FTSE Russell administered securities. The arrangement also includes closing prices, which merge Tradeweb’s electronic platform activities to align with real trading levels. Over time, FTSE Russell intends to incorporate Tradeweb’s pricing into its fixed-income indexes.

  • Income Opportunities in Bonds and Beyond

    Amidst market volatility and uncertainty, alternative income strategies have grown attractive. These include ultra-short exposures, options-based strategies, dividend enhancement, and closed-end funds. Investors validate the potential safety these alternatives could provide against interest rate hikes. Key market insiders include Garrett Paolella of NEOS and Christian Magoon of Amplify ETFs, who’ve favorably endorsed these strategies.

  • Chart of the Week: Bonds in Focus

    Amid geopolitical and policy uncertainties, advisors are preferring bond investments, as seen by Global ETFs’ 42% share of US market net inflows in early 2023. In an upcoming VettaFi Symposium, industry leaders will discuss varying aspects related to bond allocation strategies and active fund opportunities.

  • Is Fixed Income ETF Sentiment Shifting?

    VettaFi is emphasizing fixed income this October with a series of webcasts and an Income Strategy Symposium. The company’s Explorer dataset indicates that interest is shifting towards U.S. corporate bonds, away from Treasury bonds. There has been strong demand for high-quality safe-haven ETFs, with increased flows to municipal bond and active ETFs. Despite substantial net outflows from high-yield ETFs, VettaFi sentiment data suggests investors are becoming more interested in corporate bonds for 2024.

  • JPMorgan Looks to Actively JBND the Rules of Bond Investing

    J.P. Morgan Asset Management (JPMAM) has launched the JPMorgan Active Bond ETF (JBND), aiming to deliver total return from a managed portfolio of U.S. investment-grade bonds. JBND, focused on securitized debt, seeks to outperform the Bloomberg US Aggregate Bond Index in a three- to five-year market cycle. The fund joins a growing suite of active ETFs from JPMAM, which has seen rising interest and nearly $1 billion inflows to the JPMorgan Equity Premium Income ETF (JEPI) in the past month.

  • TLH: Duration Still Dangerous

    The iShares 10-20 Year Treasury Bond ETF (TLH) continues to be a risky duration bet amid the likelihood of a sustained higher interest rate environment and possible further hikes. The impact of higher rates, particularly on corporate earnings and restructuring efforts, will only start being substantial from 2024 onwards. TLH remains an efficient bond ETF option, but now is not the time to go long duration due to persistent inflation and a tight job market.

  • Chart of the Week: Benefits of Active and Passive Bond Funds

    Bond ETFs comprise 20% of industry assets, with over 40% share of net inflows. Many advisors prefer active or mixed strategies to core bond allocation. Various benefits of passive and active core bond funds are highlighted; the former includes low costs and broad market exposure, while the latter often simplifies decision-making by outsourcing to experts. Specific ETFs and their performance are also discussed, such as Vanguard Total Bond Index ETF and iShares Core Aggregate Bond ETF.

  • SLQD: No Good Reason To Own This ETF

    The iShares 0-5 Year Investment Grade Corporate Bond ETF (SLQD) primarily invests in short-duration corporate bonds, limiting both credit and duration exposure. As a result, SLQD has historically generated a mere 1.6% return p.a., not sufficiently countering inflation. The ETF is deemed unfavorable for its inability to deliver robust returns under various economic conditions – economic robustness leading to inflation and raised interest rates, economic weakening leading to wider credit spreads, or a recession.

  • LQD: Investors Should Start Accumulating

    The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) has declined over 28% since late 2021 but offers an attractive yield near 6%. The fund’s portfolio consists of low default risk, investment-grade corporate bonds, which have historically outperformed U.S. treasuries. Despite being likely to decline in economic recessions, the LQD’s downturns are usually temporary, making it appealing for potential capital appreciation and interest income.