On this week’s episode of ETF Prime, host Nate Geraci was joined by VettaFi Head of Research Todd Rosenbluth and Senior Industry Analyst Kirsten Chang to discuss year-to-date ETF flows and the challenges within fixed income investing. Afterward, Geraci is joined by etf.com Senior Vice President and Editor-in-Chief Kristin Myers to highlight etf.com’s upcoming awards ceremony.
A New Role
To begin this week’s episode, Geraci asked Chang to go over her background and new position at VettaFi. Chang highlighted her extensive experience working at CNBC for over a decade, reporting on the rapid rise of the ETF market. In her new role, she explained she will be working on a wide variety of assignments. These include content writing, moderating webcasts, and other crucial aspects of ETF research. “It’s great to be a part of the team now,” Chang said.
Leaders in Flows
To start, Geraci asked both Chang and Rosenbluth to weigh in on ETF flows for the first quarter of 2024, citing Chang’s recent post on the topic. She noted that actively managed ETFs witnessed record inflows within the first quarter of the year. Additionally, Chang said that covered call products were also seeing strong net inflows, citing the JPMorgan Equity Premium Income Fund (JEPI) and the JPMorgan NASDAQ Equity Premium Income ETF (JEPQ) as notable examples.
Chang was not surprised to see covered call strategies remain in demand. She said that valuations have been stretched due to the market trading near all-time highs. As long as the market uptrend perseveres, Chang believed investors seeking to remain “want to keep collecting those call premiums to generate that additional income.”
Geraci then asked Rosenbluth to weigh in on any flows stories standing out to him. Rosenbluth highlighted that some State Street Global Advisors funds saw good success in the first quarter. In particular, the SPDR Portfolio S&P 500 ETF (SPLG) and SPDR S&P 500 ETF Trust (SPY) both brought in strong results. “I think it’s just great to see State Street have the success that it had in the first quarter,” he added.
Gold ETFs on the Rise
Geraci then spoke to Chang about her recent article on gold ETFs. Specifically, he expressed surprised in the State Street study cited in her post, which found that millennials are embracing gold ETFs as an investment option. Geraci had expected millennials to embrace bitcoin more as an investment option. Chang agreed that the findings were surprising. However, she noted that while traditional investors may prefer gold bullion, the ETF platform has made the asset class more accessible to younger generations. “It’s encouraging to see more millennials favoring gold ETFs as their preferred risk diversifiers,” Chang added. On the topic of bitcoin, she noted that with more spot bitcoin ETFs heading to market, young investors may prefer them as a tactical investment.
Fixed Income Worries
Geraci then asked Rosenbluth to touch on some of the challenges investors are facing in the fixed income space. Rosenbluth began by highlighting VettaFi’s upcoming Fixed Income Symposium. He noted that the symposium will feature nine different sessions, bringing in experts to cover a wide variety of topics, including credit and duration risk, the merits of active management, and what to expect from the Federal Reserve.
Looking at the fixed income market, Rosenbluth noted that 10-year Treasury yields faced a significant one-day drop after the CPI report found that inflation has remained hotter than expected. However, he added that advisor perspectives and data show that intermediate-duration, investment-grade products have remained popular. “Taking on too much credit risk is not being recognized within this marketplace,” Rosenbluth said.
Geraci later asked Chang to weigh in on active fixed income ETFs. She noted that some remain skeptical of active ETFs. But active interest will persist as more money continues to flow from mutual funds to ETFs. “In particular, given these very tight credit spreads, and the Fed likely pushing off rate cuts, we’ll probably see more demand for fund managers who can generate that incremental income through actively managed fixed income ETFs,” Chang added.
Upcoming Awards
Finally, Geraci brought on Kristin Myers, senior vice president and editor-in-chief of etf.com. She discussed the website’s upcoming awards ceremony this week. Myers noted that the awards will highlight a wide variety of funds and fund issuers throughout the ETF space. Along with a slew of awards for industry players, she stated that the night also presents “a really nice opportunity for everyone in the industry to meet some new folks, the people that they’ve already known before and get a chance to really mingle and have a really nice night of fun.” Myers added that this year’s awards saw a record number of nominations across 17 different categories.
Listen to the entire episode of ETF Prime, featuring Todd Rosenbluth, Kirsten Chang, and Kristin Myers:
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