Latest news with #TMXVettaFi
Yahoo
04-08-2025
- Business
- Yahoo
Can Buffered ETFs Reshape Portfolio Management?
Financial advisors love the nuance. Investors love the guardrails. With an estimated 11,000 Americans entering retirement every day, financial advisors are leaning hard into the fast-evolving buffered ETF category to offer a more predictable investment ride for seniors and cautious investors. Introduced seven years ago when issuers employed options strategies to limit downside losses in exchange for caps on upside returns, the overall buffered ETF space has grown to $70 billion and includes more than a dozen ETF issuers, according to TMX VettaFi. Buffered ETFs, which are also called defined-outcome strategies because they have preset issue and maturity dates, have emerged as one of the most innovative areas of the ETF space. The innovation, which includes a wide range of downside protection and upside performance parameters, is part of the reason the category took in more than $8 billion during the first half of 2025. But the rapid evolution is also the reason financial advisors need to stay nimble while allocating client assets into these strategies. READ ALSO: Women Advisors Now Make Up 24% of Workforce. There's a Long Way to Go and Art Might Be Beautiful, but Where Does it Fit in Portfolios? We Can Buff That Out In the most basic terms, a buffered ETF will track a broad market index like the S&P 500 and limit the downside loss to a certain percentage while capping the upside return at a certain percentage. But the key is that these ETFs are typically issued monthly and have maturity dates that can range from a few months to a year. In order to receive the full benefit of the guardrails, investors need to hold the ETF for the full duration. And nuances beyond that basic example abound because issuers are constantly innovating. For some ETFs, the downside limit includes protecting the investor from the first 10%, leaving exposure beyond that point. With that structure, if the underlying index was down 15% over the full period, the investor would only suffer a 5% loss. Up, Up and Away. Creativity is also prevalent on the upside caps, which are set based on multiple factors, including market volatility, interest rates and the cost of the options being used. For example, the TrueShares Structured Outcome July ETF (JULZ) does not place limits on the upside return of the underlying S&P 500 during the period, but due to the cost of the options the fund uses, it only pays about 87% of the index return to investors whether the return is low, high or somewhere in the middle. Another example of where this category is heading comes from Innovator ETFs, which offers a kind of hedged downside protection that will pay investors if the underlying index declines. The Innovator Equity Dual Directional 15 Buffer ETF (DDFL) will take almost 50% of the performance on the upside. But if the index is down 15% during the period, the investor will be up 15%, thanks to the inverse performance capture. 'The main reason these products are so popular is we're seeing a move away from the traditional stock and bond portfolio,' said Matt Kaufman, global head of ETFs at Calamos Investments. 'This is about advisors being able to deliver certainty to their clients,' he added. 'The sky's the limit in terms of innovation because there are infinite ways to carve up exposures to a broad underlying index.' Can You Stop Correlating? Brian Storey, head of Multi-Asset Strategies at Brinker Capital Investments, cites the highly correlated market performance of 2022 as an example of why buffered ETFs are gaining appeal among financial advisors and investors. 'Stocks and bonds both delivered negative returns, and that shook the faith of many investors that core bonds could effectively serve as the ballast in their portfolios,' he said. 'This dovetailed with a period of significant innovation and product proliferation in the ETF industry.' The increased correlation between traditional stock and bond allocations is what steered Clark Randall, director of financial planning at Creekmur Wealth Advisors, toward buffered ETFs. 'We have been using buffered ETFs for quite a while in place of fixed income, which has become much higher correlated to equities over the past few years,' he said. 'We have found that buffered ETFs are not as volatile as equities, and they outperform fixed income.' Todd Rosenbluth, head of research at TMX VettaFi, is also seeing a pattern of advisors using buffered ETF strategies as replacements for core portfolio holdings. 'These products are good for people who want equity exposure, but are nervous about the markets,' he said. While Rosenbluth gives ETF issuers credit for providing plenty of detail on their websites about the respective upside and downside limits, he advises: 'These products work best when they are held for the entire period they are set for.' Liquid Diet In essence, even though buffered ETFs have preset maturities, they have daily liquidity, which is something that could trip up less sophisticated inventors. 'I love buffered ETFs, but there is a steep learning curve if you don't buy and hold them, which I don't,' said Paul Schatz, president of Heritage Capital. 'There are nuances in when to sell after the asset rises near the cap and falls near the buffer,' he added. 'There are many ways to use these products, and some behave more like bond proxies.' Brinker Capital's Storey said the pace of evolution in the buffered ETF space requires increasing advisor due diligence. 'One of the drawbacks is that, under the hood, these ETFs are still fairly complex structured products,' he said. 'Without adequately understanding the risks, an investor could just read the headline and not fully appreciate the ways in which the ultimate outcome could deviate from the expectations.' The best thing about buffered ETFs is the 'non-reliance on diversification and the ability to calibrate in deterministic fashion to a desired risk tolerance,' said Ron Piccinini, head of investment research at Amplify. The tradeoff is more work for the advisor because buffered ETFs effectively create a more dynamic portfolio. 'The main negative is that advisors have to manage distance-to-caps during the life of the investment,' Piccinini said. 'If the underlying index rallies and is 1% below the cap, the investor has almost no upside left and is exposed to downside all the way down to the original risk protection level.' Pay Up. Of course, all the sophisticated portfolio engineering required to create those more predictable outcomes doesn't come cheap. Investors can expect to pay expense ratios in the range of 50 basis points or more, which is hefty when considering there are ETFs offering long-only exposure to the S&P 500 Index for just a few basis points. 'You are paying a premium for the ability to control your destiny and for confidence that you will not get hurt in the market,' said Rosenbluth of TMX VettaFi. If investors think that markets will rise over the next 12 months, these are not the products for you, he added. 'But if you're nervous, then it's worth paying the price.' This post first appeared on The Daily Upside. To receive financial advisor news, market insights, and practice management essentials, subscribe to our free Advisor Upside newsletter. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Mint
04-08-2025
- Business
- Mint
Emerging ETFs Snap Winning Streak as Tariffs Weigh on Inflows
(Bloomberg) -- Investors yanked cash out of exchange-traded funds that buy emerging market stocks and bonds last week, snapping nine weeks of inflows that reached $15.9 billion, amid renewed concern over the impact of President Donald Trump's tariff war. Outflows from US-listed emerging market ETFs that invest across developing nations as well as those that target specific countries totaled $1.11 billion in the week ended Aug. 1, compared with gains of $2.36 billion in the previous week, according to data compiled by Bloomberg. India led the reversal in flows, losing $298.2 million last week following withdrawals of $607 million from iShares MSCI Emerging Markets ex China. The almost $10 billion iShares MSCI India ETF recorded outflows of $21 million, marking the first weekly drop since April. This comes after Trump hit the South Asian nation with a 25% tariff last week, threatening additional penalties for its oil and military purchases from Russia. He criticized India for being a member of the 10-nation BRICS bloc, which he described as anti-US, and referred to both India and Russia as 'dead economies.' The MSCI India ETF dropped further on Monday after Trump announced 'substantially' higher tariffs on India. He didn't say how big the increase would be. 'Investor concerns about higher US tariffs on India and other emerging markets led to redemptions,' said Todd Rosenbluth, head of research at TMX VettaFi. 'The risks of owning exposure to emerging markets has increased and for many is too much to stomach.' An official in New Delhi told Bloomberg News on Friday that the nation expects US trade negotiators to visit the country later this month to continue talks on a bilateral deal. The comment came before Trump's latest threat to hike the tariffs still further. India's currency, the rupee, is expected to remain one of Asia's worst performers in the second half of the year, with analysts at Deutsche Bank AG and Barclays Plc forecasting the currency will drop to new record lows by the year-end amid muted foreign inflows and headwinds from US tariffs. 'In the near term, the 'handshake' nature of trade deals agreed so far means that tensions could resurface as the details are negotiated. Friday's punitive tariffs on a range of nations — including Switzerland — mean further urgent discussions lie ahead,' according to Ulrike Hoffmann-Burchardi, CIO Americas and global head of equities at UBS Global Wealth Management. Note: Figures are calculated by country weight using flows to US-listed ETFs. Bloomberg updated the screening criteria in November 2024. Use Bloomberg screening tools to create custom filters. Click here for Bloomberg's ETF screening applications. Click here for BI's Weekly Emerging Markets Fixed-Income Strategy Chart Pack Following are tables detailing net flows for emerging-market ETFs in US dollars. The data include the holdings-weighted allocations from multi-country funds, as well as country-specific funds. Latest and historic flows are allocated using latest fund weightings (figures in USD millions unless otherwise stated): Click here for Bloomberg's ETF Excel library. Europe, Middle East & Africa More stories like this are available on
Yahoo
18-06-2025
- Business
- Yahoo
Fidelity, Franklin Prep Solana ETFs with Staking
In the crypto ETF world, there's a lot at stake. Eight asset managers have filed or refiled Solana ETF trusts with the Securities and Exchange Commission over the past several days. The barrage of filings suggest that the regulator has been in talks with the firms about their proposals. Amended documents often indicate that companies are incorporating changes that the SEC wants to see — and the development hints that spot Solana ETFs may be approved relatively soon. 'Crypto filings generally see some back-and-forth conversation with the SEC, but it seems like Solana ETFs have a high probability of being approved within the next few months, according to precedent set by previous crypto products,' said Roxanna Islam, head of sector and industry research at TMX VettaFi. READ ALSO: BlackRock Dumps 14 Funds, Many Being Sustainable Products and What the Israel-Iran Conflict Means for Sector ETFs The recent filings have been updated to allow the proposed Solana ETFs to stake a portion of their shares. Staking, in which owners pledge tokens that are used to help secure the network, allows owners to get rewards in the form of more Solana. While the SEC recently expressed concerns with a pair of proposed Ethereum and Solana ETFs that would use staking, the agency's Division of Corporation Finance has also commented that staking does not amount to a securities offering under the Securities Act of 1933. The proposed Solana ETFs come from a variety of issuers: Five that would trade on the Cboe BZX Exchange include products from Fidelity, VanEck, Franklin Templeton, Bitwise, and 21Shares. The Grayscale Solana ETF would trade on NYSE Arca, while the Coinshares Solana ETF would trade on the Nasdaq. The Canary Marinade Solana ETF did not specify which exchange it would use. Stake Through the Heart: 'Ethereum ETFs were denied staking when they were first launched, but since then have filed for staking approval,' Islam said. 'While the SEC has not yet approved staking for Ethereum ETFs, it's possible it could potentially be approved alongside Solana ETFs.' This post first appeared on The Daily Upside. To receive exclusive news and analysis of the rapidly evolving ETF landscape, built for advisors and capital allocators, subscribe to our free ETF Upside newsletter.
Yahoo
11-06-2025
- Business
- Yahoo
WisdomTree Branches Out to Private Credit
WisdomTree is adding blockchain to the growing world of private credit funds. The company filed with the Securities and Exchange Commission last week for the latest flavor of private credit exposure in the form of a mutual fund. The nuance of the proposed product, compared with the few Investment Company Act of 1940 private credit funds out there, is tokenization — it would be part of WisdomTree's digital trust. Shareholders would need to have digital wallets, such as one provided by WisdomTree, in order to invest. The product, WisdomTree Private Credit and Alternative Income Digital Fund, would be passively managed, investing in registered closed-end companies and real estate investment trusts. 'Because private investments have surged in popularity recently, it makes sense that more retail investors are interested in accessing the space,' said Roxanna Islam, head of sector and industry research at TMX VettaFi. 'And generally, retail investors are more comfortable with open-ended funds like ETFs and mutual funds.' READ ALSO: Weight-Loss Drug ETFs Generate Skinnier Returns Than Expected and Asset Managers Aren't Playing the Dual Share Class Waiting Game WisdomTree, whose business is rooted in exchange-traded funds and which launched its digital trust in 2022, has the majority of its $84 billion in US-listed fund assets in ETFs. Products like the recently launched SPDR SSGA IG Public & Private Credit ETF and the ER Shares Entrepreneur Private-Public Crossover ETF 'offer a more direct way to access private investments in an ETF wrapper, but this remains a niche space with a small amount of net inflows,' Islam said. Typically, investors have accessed private credit via closed-end funds like interval funds and business development companies, which are better equipped to handle liquidity constraints, she noted. 'The attraction here is really just a little bit of yield juice for participating in the US shadow banking sector,' Dave Nadig, a financial futurist and ETF writer, said of potential demand for private credit in the form of public funds. 'I'm not sure the extra juice is worth the still-untested liquidity waters of the squeeze, as it were.' Additionally, the investment thesis of the proposed WisdomTree fund may not stand out from competitors, he noted: The Bondbloxx Private Credit ETF, which launched last year, represents $130 million. Virtus Private Credit Strategy ETF, started in 2019, represents $55 million. Chained to the Block: WisdomTree declined to comment on the proposed fund, given that it is in registration. The fund's blockchain aspect, 'is a bit of a distraction,' Nadig said. 'WisdomTree is, indeed, out front with this dual-track transfer agency process, and I applaud them for it, but see it as largely a science experiment while we really figure out crypto regulations.' This post first appeared on The Daily Upside. To receive exclusive news and analysis of the rapidly evolving ETF landscape, built for advisors and capital allocators, subscribe to our free ETF Upside newsletter. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-05-2025
- Business
- Yahoo
Investors Going 'Back to Basics' With Risk: Murphy
Wall Street's bets that the US-China trade truce marks the end to an all-out tariff war that had threatened a global recession spurred a stock rally on Monday, while sinking defensive corners of the market from bonds to gold and haven currencies. On "Bloomberg ETF IQ", Scarlet Fu and Katie Greifeld speak with Cinthia Murphy, investment strategist at TMX VettaFi. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
