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NEWSLETTER

Fixed income ETFs in your toolbox

Our interview this week is with Henry Timmons and Michael Contopoulos of Richard Bernstein Advisors who called for the investing world to understand the power of the fixed income ETF.

Timmons believes that bond ETFs are not entirely understood by the investment community. “Hopefully advisers and managers will understand that they can be a helpful tool in one’s toolbox and help people to understand what one can do through a fixed income ETF which you might not be able to do in the underlying security,” Timmons says.

Contopoulos says that what drives returns tends to be macro not micro. “Macro variables drive returns as individual stocks within a sector, style, even region tend to be correlated. Fixed income is the same. What matters most is getting your quality and duration right. Having the ability to meaningfully shift those exposures without needing to sell individual illiquid bonds could deliver meaningful alpha to a portfolio.”

This week also saw the launch of the third ETF Express podcast, in association with TrussEdge, entitled The Beauty of ETFs. Laurent Kssis of CEC Capital, and known to many of you for his work with crypto ETPs, and Ernst Knacke of Shard Capital gathered to discuss institutional use of ETFs, with Kssis (no question where his loyalty lies) declaring that the beauty of ETFs is that: “you can have effectively a rules-based strategy at low cost.”

For his part, Knacke explained that his firm uses ETFs “whenever we can”. For Knacke, liquidity risk is a key factor and, in the US, he is keen on the semi-transparent model which allows active managers to shield their investment portfolios. “The 40 Act market will undergo significant change in the next decade,” he predicts.

Listen now: The beauty of ETFs 

I will be speaking and chairing a number of ETF sessions at Informa’s Impower Fund Forum in Monte Carlo 27th and 28th June, 2023.

The agenda is here, and I am very pleased to be able to offer my readers a 10 per cent discount on tickets, using this link or this discount code FKN3253EMSPK.


Beverly Chandler, Managing Editor

For live updates please follow us on Twitter and LinkedIn.

LATEST NEWS

The Luxembourg House of Financial Technology (LHoFT), together with PwC Luxembourg and with the active support of the Association of the Luxembourg Fund Industry (ALFI), have jointly announced the publication of the second edition of the Crypto-Assets Management Survey, entitled “Crypto-Assets in Luxembourg: Persistence Amidst Headwinds”. 
“The beauty of ETFs is that you can have effectively a rules-based strategy at low cost” says Laurent Kssis, head of CEC Capital, in discussion with Ernst Knacke, Head of Research at Shard Capital in our May outing for Off the Record, the ETF Express podcast series, brought to you in partnership with Truss Edge, providers of front, middle and back-office software and services to ETF issuers. The pair discuss the institutional and wealth approach to using ETFs.
Henry Timmons, director of ETFs and Michael Contopoulos, director of fixed income at Richard Bernstein Advisors are on a mission to convey the message that bond ETFs are effectively replacing the underlying bond market in setting price discovery for fixed income assets.

Global ETF launches

Slightly quiet on the launches front this week, with two ESG offerings, one from Xtrackers offering a Nordic region equity ETF aligned with the Paris agreement.

US ETF Launches

One new ETF offering was launched for the week, each with a distinct value proposition for investors.  Detailed below are the respective launches from each asset manager.

Canada ETF LAUNCHES

A summary of the Canadian ETF launches that occurred in May 2023.
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