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    Exchange traded funds are transforming the way investors access the bond markets, but in today’s challenging environment portfolio managers are being much more selective. Sub asset classes which are higher yielding and can provide some form of cushion against the rise in interest rates are in demand, while liquidity concerns have resulted in greater scrutiny of fixed income ETFs.

    PWM Perspectives is sponsored by State Street but independently edited.

    Industry experts joined PWM in a roundtable discussion:

    Chris Bamford, Senior Fund Analyst, Barclays Wealth & Investments

    Lynn Hutchinson, Senior Analyst, ETFs, Charles Stanley

    Séamus Ó Ceallaigh, Director, Credit Suisse

    Tom Claridge, Director, Portfolio Management, Julius Baer

    James McManus, Investment Manager, Nutmeg

    Edward Malcolm, Head of UK Wealth, SPDR ETFs

    Ben Seager-Scott, Chief Investment Strategist, Tilney Group


    In discussion:

    ■ Navigating the 2018 fixed income markets - Despite the challenging environment, with monetary policy tightening and inflation rising, fixed income ETFs are increasingly popular, particularly in Europe, but investors are being much more selective and are looking for sub asset classes that are higher yielding and can provide some form of cushion against the rise in government bond rates.

    Using fixed income ETFs in portfolios - Fixed income ETFs are used to implement tactical calls or as building blocks in portfolios, but there is growing pressure on providers to reduce fees and expand their toolkit that would allow asset and wealth managers to better use these vehicles.

    ■ Catching up with equity ETFs - Fixed income ETFs were first launched in 2002, around ten years after equity ETFs, and despite remaining a smaller percentage of the total ETF assets, they are rapidly growing, but the topic of liquidity has resulted in more scrutiny on fixed income ETFs.

    ■ Finding value in fixed income - While most fixed income segments look unattractive today, some areas of the market, such as emerging market debt  and TIPS (Treasury Inflation Protected Securities) are attracting significant assets, but in case of a risk-off event flows may change.

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