By Terry Wood, Head of ETF Portfolio Management, EMEA at BMO Global Asset Management.
As a substitute risk-on asset class, over the longer term, global high yield bonds have provided equity-like returns with lower volatility than equities, especially when currency hedging is considered.
By James E. Ross, Chairman of the Global SPDR Business, State Street Global Advisors.
Because ETF investors have become more cost-conscious, a fund’s expense ratio and trading costs are always top of mind. Given the focus on due diligence, tracking error – which in some circumstances may increase costs – is becoming more heavily scrutinized.
The UK’s Financial Conduct Authority has come out in support of ETFs amidst a debate as to whether ETFs, particularly fixed income products, could exacerbate financial instability during periods of market stress. In an investigation the FCA found that while ETF primary markets are highly concentrated, particularly so for fixed income ETFs, evidence suggests that alternative liquidity providers step in during times of market stress, easing concerns about the durability and resilience of liquidity.
By William Sokol, Senior ETF Product Manager at VanEck.
Recent falling interest rates have led some investors to move towards a more conservative fixed income allocation, but are they missing out on opportunities for yield, particularly within the high yield universe?
BlackRock has rolled out three new share classes on SIX Swiss Exchange, providing access to different segments of the EUR and USD corporate bond markets while hedging currency exposure relative to the Swiss franc.
European fixed income specialist Tabula Investment Management has announced that its suite of UCITS ETFs is now registered for distribution in Spain. Combined with existing registration in Portugal, Tabula will now enjoy a robust Iberian presence.
Canadian asset manager Mackenzie Investments has launched the Mackenzie Emerging Markets Bond Index (CAD-Hedged) ETF (QEBH CN) on Toronto Stock Exchange. The fund, which is linked to a recently unveiled index from Solactive, provides currency-hedged exposure to US dollar-denominated debt from emerging market issuers. Michael Cooke, Senior Vice President and Head of ETFs, Mackenzie Investments, commented, “Our new ETF is a strong option for investors seeking to diversify their portfolios and access the impressive growth taking place in the bond markets of emerging countries.”
By Matthew J. Bartolini, Head of SPDR Americas Research, State Street Global Advisors.
Have you heard the myth that high yield ETFs are exacerbating market sell-offs? Yup, me too—far too many times. This blame game, repeated after almost every substantial market stumble, typically centres on the thesis that high yield ETFs are creating a systemic threat to the bond market by providing liquidity to an illiquid market. Let me set the record straight: this myth is misguided.
Tradeweb has reported strong net buying of fixed income ETFs on its European ETF marketplace in June, a month in which the platform experienced its third-highest total traded volume ever.
ITI Funds is set to launch the first ETF in Kazakhstan. The ITI Funds Russia-focused USD Eurobond UCITS ETF is prepped for listing on Astana International Exchange (AIX) and is expected to commence trading later in July under the ticker RUSB. The fund, which launched on LSE in February 2018 and is also available on MOEX, provides exposure to Russian sovereign or corporate dollar-denominated Eurobonds.