Our feature this week sees Gill Wadsworth investigating how the UK gilts (UK government bonds) market, and its associated ETFs, have withstood recent market volatility. Investors in the UK facing political shenanigans, rising interest rates and increasing inflation have traditionally seen gilts as a safe haven investment, but Refinitiv data revealed that big name ETFs have seen years of gains disappear during October with iShares’ GBP1.1 billion Core UK Gilts UCITS ETF returning -25.12 per cent in the year to 19 October while the SPDR Bloomberg UK Gilt UCITS ETF is down -26.18 per cent.
As is increasingly the case, ETFs with gilt exposure have been working efficiently during the recent volatility, with Gina Miller of SCM Direct saying: “Once again ETFs have shown their resilience and pricing transparency in volatile markets”.
Steve Dunn, head of ETFs at abrdn, says that this is the time to look at commodities. “Despite the volatile market environment, palladium has outperformed the other precious metals by a healthy margin in 2022,” he says.
Having spent last week in New York talking with the industry there, the outstanding observation was that despite falling and volatile markets in both equities and fixed income, ETFs in the US stand to have their second largest year of inflows on record. The ETF industry is proving, again, its ability to stand up to market volatility, and to rapidly adapt to market conditions. The rise of active ETFs was another key theme in conversations with practitioners in the US.
Next week will see publication of our ETF Express US Awards Special report which will bring you the views of our winners in the awards, both from the issuer and service provider perspectives.
Beverly Chandler, Managing Editor
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Companies in this issue
Aptus Capital Advisors
Tabula Investment Management