Displaying items by tag: ETFs

Faith-based ETFs remain niche but are expanding, with six launching this year and total assets now around $10 billion. These funds aim to align investments with religious values, though many end up resembling S&P 500 trackers with higher fees. 

Currently, there are 46 such ETFs in the U.S., 38 Christian, seven Muslim, and one Jewish, which have attracted about $832 million in inflows year-to-date. Some apply strict screens, like the Inspire 100 ETF (BIBL), which excludes firms tied to abortion, LGBT activism, or gambling, while others, like SPUS, filter out half the S&P 500 for Sharia compliance. 

By contrast, funds such as the JLens 500 Jewish Advocacy US ETF (TOV) and the Global X Catholic Values ETF (CATH) closely resemble mainstream products like Vanguard’s VOO, differing mostly in expense ratios. 

Finsum: Advisors must weigh whether these products are genuinely value-aligned investments or simply pricier versions of broad index funds.

Derivative income ETFs, built around covered call strategies, have surged in popularity as investors seek higher yields. These funds generate income by selling call options on stocks or indexes, with the trade-off being limited upside potential during strong market rallies. 

Yields can vary widely depending on how aggressively options are written, with higher payouts often signaling greater risk. The largest products in this space track benchmarks like the S&P 500 and Nasdaq, though smaller providers have introduced sector and single-stock versions. 

While income potential is attractive, investors should weigh opportunity cost, since these strategies often trail the broader market over time. 

Finsum: With interest rates likely to fall, option premiums, and thus fund income, may decline, but yields remain compelling compared to traditional dividend ETFs.

After the Federal Reserve’s first rate cut of the year, investors wonder how they can better position portfolios in a changing bond market. Thornburg’s Christian Hoffmann and VettaFi’s Todd Rosenbluth noted that while the bond market initially reacted positively, much of the impact was already priced in, and expectations for further cuts are stronger than anticipated. 

Hoffmann emphasized that the market is at an inflection point driven by both economic data and potential changes in the Fed’s composition under political pressure. He argued investors should remain overweight duration and prepare for the possibility of a more dovish Fed with tools such as yield curve control. 

Against this backdrop, Hoffmann highlighted the role of active management, pointing to Thornburg’s Core Plus Bond ETF (TPLS) for flexible core exposure and its Multi-Sector Bond ETF (TMB) for income diversification. 

Finsum: Active funds could provide solutions in an uncertain rate environment, echoing the adage: “Don’t fight the Fed.”

Advisors facing heightened U.S. market volatility are increasingly turning to global infrastructure ETFs as a way to diversify portfolios and hedge against policy risks. Structural growth drivers like demographic shifts, and supportive government policies, such as Germany’s recent multi-billion-dollar funding initiatives are supportive. 

The sector also has a history of resilience during inflationary periods, as infrastructure companies provide essential services that can pass costs on to consumers. One option is the BNY Mellon Global Infrastructure Income ETF (BKGI), which actively invests in global infrastructure firms with strong cash flows, balance sheets, and growth prospects. 

BKGI aims to deliver a forward yield of 6% or higher by focusing on dividend-paying companies, with about one-third of assets in U.S. holdings and the rest diversified across Europe and beyond. 

Finsum: Infrastructure exposure offers low correlation with U.S. equities, especially when considering outside options. 

The iShares Core US Aggregate Bond ETF (AGG) tracks the Bloomberg US Aggregate Bond Index, giving investors broad exposure to investment-grade U.S. bonds. Its portfolio is heavily tilted toward Treasuries, which now make up about 47%, far higher than the category average, and this emphasis helps reduce credit risk. 

Roughly 75% of its assets carry AA or AAA ratings, insulating investors from credit shocks but limiting return potential since the fund cannot hold high-yield bonds. While the ETF’s safety focus mutes drawdowns, its longer duration makes it more sensitive to interest rate swings, which has led to higher volatility in some periods. 

Over the past 20 years, its conservative profile and low fees have helped it slightly outperform peers while weathering downturns like the 2020 COVID market shock better than most. 

Finsum: With the Fed most likely cutting rates this next cycle, this could help this fund which had suffered in rate hike cycles.