Displaying items by tag: active management

Sure, among investors, passive investment strategies still can yield exposure to broad market data, according to wellington.com. 

Yet, for skilled active management, the new regime today, which is comprised of inflation and interest rates pointing north as well as an acceleration of dispersion across fixed income sectors and regions, is custom made for skilled active management, the site continued.

Considering that, among investors, the time now be just right to opportunistically position their portfolios.

Now, given the rebound of inflation’s largely a global matter, you might want to put the cookie cutter away. In Europe, inflation’s being fueled by catalysts that vary from the issue in the U.S. Distinct structural headwinds face each region – a divergence that, for investors, sparks possible opportunities.

In Europe, well, climbing inflation’s stems mainly from energy and food prices unfavorably tipping the scale. The spiraling price tags of these staples have been absorbed by businesses and consumers. Meantime, In the U.S., demand, more so, has been the impetus of recent pressures driven by inflation.

Their respective fixed income markets have priced in the duo threats of recession and sources of inflation in the euro area opposed to the U.S.

The brunt of the changes in interest rates potentially can be minimized through the active management of sensitivity to interest rates with duration positioning, according to gsam.com. Blunting sensitivity to rates changes could usher in positive returns in any rate environment.

Skilled active management? The cocktail of ballooning inflation, interest rates and dispersion across fixed income sectors basically is giving managers the proverbial chance to strut their stuff, according to -wellington.com.

That’s why now might be an idyllic chance for investors to put their portfolios in a space to opportunistically position their portfolios.

Their individual fixed income markets have priced in the gulf in threats of recession and inflation in the euro area opposed to the U.S, the site continued. Dating back to the dawn of the Ukrainian invasion, compared to the U.S., credit spreads in the euro area have gotten wider.

This year, investor trepidations over fixed income performance have maintained their momentum, according to wellsfargo.com. Among top questions in the minds of income investors:

1. What is happening to bonds so far in 2022?

2. Why continue to invest in bonds?

3. Why is the Fed garnering so much attention this year?

4. What should investors expect from the remaining three Fed meetings of this year?

5. What does Fed quantitative tightening mean?

6. What do you mean when you say, “financial conditions in the economy are tightening”?

7. Should we be worried about liquidity in bond markets?

8. What is the shape of the U.S. Treasury yield curve telling us?

In a recent article in FT Adviser, Lumin Wealth Investment Manager Elliott Frost wondered how much alpha left is in active fixed income. Frost believes that a fixed income allocation should include a strategic mix of active and passive management. He notes that active fixed-income managers have generally outperformed passive strategies in the fixed-income space due to several reasons. The first is that companies with the most debt typically make up the largest component of a fixed income market index, leaving the portfolio more exposed to unfavorable changes in credit. Another reason is the lack of risk mitigation. Passive managers cannot “dial up or dial down risk.” However, he noted that the alpha generated by active managers has been to some degree, due to a long-term overweight on credit. Frost believes that if we account for a manager’s credit exposure, fees, and other factor exposures such as volatility, there might not be much alpha left. This is why he recommends not putting “all your eggs in one basket” and incorporating a passive fixed index into a portfolio for cheap access to a liquid market.

Finsum: Lumin Wealth’s Elliott Frost wonders if there is much alpha left in active fixed income once a manager’s credit exposure, fees, and volatility are accounted for.

Invesco, which is the fourth-largest U.S. ETF firm based on total assets, recently filed for four actively managed fixed-income ETFs. The fund firm is currently best known for its index-based funds and custom index strategies. However, the company is looking to branch out by adding actively managed fixed income to its stable. In a series of regulatory filings, the firm filed for four ETFs, including the Invesco High Yield Select ETF, the Invesco Municipal Strategic Income ETF, the Invesco Short Duration Bond ETF, and the Invesco CLO Floating Rate Note ETF. The Invesco High Yield Select ETF will be run by a team of managers led by Niklas Nordenfelt who currently leads Invesco’s High Yield fixed income team and recently took over the Invesco High Yield mutual fund. The Invesco Municipal Strategic Income ETF will invest 50%–65% of its assets in low- to medium-quality municipal securities, which the company defines as bonds rated BBB. The Invesco Short Duration Bond ETF will utilize the Bloomberg 1-3 Year Government/Credit Index as a reference in designing the portfolio. The Invesco CLO Floating Rate Note ETF will primarily invest in collateralized loan obligations that have limited interest rate sensitivity and strong credit profiles.

Finsum:Invesco is looking to expand its ETF product line with the registration of four actively managed bond ETFs.

AllianceBernstein recently announced the launch of its first set of active exchange-traded funds. The funds, which trade on the NYSE, include the AB Ultra-Short Income ETF (YEAR) and the AB Tax-Aware Short Duration Municipal ETF (TAFI). YEAR is an actively managed ETF that aims to deliver higher levels of yield relative to cash or cash-like investments while aiming for capital preservation in all market cycles. TAFI is an actively managed municipal bond strategy that offers municipal bond investors a distinct complement to their core allocations providing the opportunity to help maximize after-tax income and returns using shorter maturity bonds and opportunistic exposure to treasuries and taxable bonds. The launch comes only seven months after the firm announced plans to build a global ETF business under Noel Archard, who joined the company in February as global head of ETFs and portfolio solutions. Archard commented on the launch, "Today's ETF launch is an exciting achievement for our firm. ETFs have evolved into an important execution tool across asset classes, and amidst the recent market volatility, we feel it is critical to offer our clients diversity and efficiency.”

Finsum:AllianceBernstein launched two active fixed ETFs as part of its plans to build a global ETF business.