By Will Goldthwait, Portfolio Strategist, Global Cash and Fixed Income, State Street Global Advisors.
For investors who are still feeling cautious, ultra-short-term bond strategies may be an appropriate way to supplement cash positions. Such strategies can be used as an intermediate investment to increase the yield of a cash allocation.
Franklin Templeton has expanded its suite of actively managed fixed income ETFs in the US with the launch of a fund providing exposure to Treasury securities. The Franklin Liberty US Treasury Bond ETF (FLGV US) has listed on NYSE Arca and comes with an expense ratio of 0.09%. Patrick O’Connor, Global Head of ETFs for Franklin Templeton, commented, “The launch of FLGV further exemplifies our steadfast belief that active management is critical to achieving investor goals in fixed income.”
China-focused ETF issuer KraneShares has launched its first fixed income ETF in Europe: the KraneShares Bloomberg Barclays China Bond Inclusion UCITS ETF (KBND LN). The fund, which has listed on the LSE, provides exposure to renminbi-denominated bonds issued by China’s Ministry of Finance and policy bank bonds traded in the interbank bond market. Jonathan Krane, CEO of KraneShares, commented, “With attractive yields and low correlations relative to other government bond markets, China fixed income presents a compelling opportunity.”
Financial data giant Bloomberg has unveiled its first multi-asset indices. The Bloomberg US Multi-Asset Indices are constructed as a composite of one equity index and one fixed income index with a mix of fixed-weight, market-value-weighted and risk-parity-weighted weighting schemes. Dave Gedeon, Global Head of Equity and Strategy Indices at Bloomberg, commented, “We’ve seen the growing appetite for multi-asset offerings in the market and wanted to provide investors with a thoughtful and innovative solution, utilizing Bloomberg’s existing index offerings.”
DWS has introduced its first fixed income ETFs in the US to incorporate environmental, social, and governance (ESG) factors. The funds, which have been created by repurposing a trio of unloved existing listings, provide exposure to USD-denominated investment grade, high yield, and EM sovereign bonds. Luke Oliver, Head of Index Investing for the Americas at DWS, commented, “Our growing Xtrackers ETF suite continues to deliver ESG solutions across core benchmarks, which can help align client portfolios with business models at the intersection of shareholder and stakeholder value creation.”
Financial services giant BNY Mellon has launched five new ultra-low-cost ETFs to complement the trio of funds which signaled the firm’s debut as an ETF issuer two weeks ago. The new additions include two equity ETFs tracking international developed and emerging market stocks, and three fixed income ETFs covering US aggregate, short-term corporate, and high-yield bond exposures. In line with its inaugural ETFs, the new funds are amongst the lowest-cost in their categories, with the aggregate bond ETF listed with a management fee of zero.
By Matthew J. Bartolini, Head of SPDR Americas Research, State Street Global Advisors.
Central banks have returned to Great Financial Crisis-era monetary stimulus tools to reassure the market and inject much-needed liquidity. While the COVID-19 global pandemic is unprecedented, the policy responses are similar, and insights can be gleaned from the past.
RBC iShares has expanded and updated its suite of sustainability ETFs in Canada. The firm has launched three new socially responsible ETFs on Toronto Stock Exchange, rebranded four existing ETFs, and reduced the management fees on six. Pat Chiefalo, Managing Director, Head of iShares, BlackRock Canada, commented, “RBC iShares is committed to enabling investor choice by broadening our sustainable investing platform to include new products that will provide investors with advanced ESG screens.”
VanEck has announced changes to two single-country emerging market ETFs listed on NYSE Arca. Effective 1 May 2020, the funds, which currently track market-cap-weighted equity indices on Chinese large-caps and Indian small-caps, will adopt new indices provided by MarketGrader offering a fundamentals-based ‘GARP’ approach.
S&P Dow Jones Indices and IHS Markit have announced a strategic partnership that will see the firms collaborate a series of multi-asset indices. The partnership will focus on each company’s strengths, combining S&P DJI’s equity indices with IHS Markit’s fixed income benchmarks. Sophia Dancygier, Head of Indices at IHS Markit, said, “During these volatile market conditions, we are proud to unite the capabilities of the most authoritative equity and fixed income index providers.”