Professional Wealth Managementt

Home / Custom / Landing pages / The rise of fixed income ETFs / The rise of fixed income ETFs

THE RISE OF FIXED INCOME ETFs

    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.

    Related articles

    PWM_Perspectives_Series_logo_RGB
    From Asset Allocation / ETFs November 2, 2017

    The changing role of ETFs in private client portfolios

    PWM’s Perspectives debate brought together some of Europe’s leading wealth managers to discuss the use of ETFs in private client portfolios and how their phenomenal growth is shaping the wealth management landscape.

    Fergus Slinger, iShares
    From Asset Allocation / ETFs August 23, 2017

    Going gets tough for squeezed middle in European ETF battleground

    The European ETF market is dominated by a handful of huge players and a long tail of smaller firms. Is it ripe for consolidation?

    Katie Nixon, Northern Trust
    From Asset Allocation / ETFs August 23, 2017

    Smarter products allow private banks to deploy ETFs strategically

    Private bankers are attracted by the potential of smart beta strategies to outperform the market over time 

    John Beck, Franklin Templeton
    From Asset Allocation / Fixed Income October 24, 2017

    Look further afield to make fixed income pay

    With all eyes on the direction of central banks’ monetary policies, investors continue to be frustrated by government bond yields, though there are attractive returns to be found in other areas of the market

    Jane Sloan, iShares
    From Asset Allocation / ETFs February 21, 2018

    Smart beta strategies start to gain traction

    The ETF industry is growing in size, with previously niche areas such as fixed income and smart beta reaching a wider audience than ever before

    ETFs right rail