Todd Rosenbluth Talks Fed, FI, and Morgan Stanley ETFs | ETF Trends

VettaFi’s head of research Todd Rosenbluth appeared on Yahoo Finance Wednesday to chat about the Fed’s latest rate hikes, as well as Morgan Stanley’s new suite of six ETFs. Morgan Stanley’s debut suite includes three ETF versions of indexed mutual funds from Calvert, a fourth with a thematic ESG approach, and two active strategies focused on equities and fixed income, respectively.

“They are the largest firm to not have an ETF presence, so we’re excited that they were launching ahead of VettaFi’s Exchange conference this weekend in Florida, with almost 2,000 registrants there,” Rosenbluth said.

“These ETFs from Morgan Stanley are under the Calvert brand, ESG oriented, advisors, respect the Calvert name, these products are relatively cheap, they have the scale advantages. Calvert under the Morgan Stanley brand, we think they’re one to watch in 2023.”

The Fed announced its latest rate hike to the tune of 25 basis points, with suggestions that there would be further hikes next month. The move boosted markets Wednesday, with markets closing higher following the news. For ETF investors, it also comes as investors are becoming more willing to take on interest rate risk, Rosenbluth shared.

According to a recent VettaFi survey, advisors have pivoted from prior hesitation towards fixed income, with more than half planning to take on interest rate risk in the next six months and just 14% planning to reduce risk given expectations that the Fed would slow its rate hikes and perhaps even cut later in the year.

“2022 we saw a strong year for fixed income ETFs, almost $200 billion flowed in, and we’ve seen a really strong start in January for fixed income ETFs demand,” Rosenbluth said. “What happened is that investors and advisors have pivoted, and they’re willing to take on more interest rate risk.”

“What that means is what we’re seeing is an ETF like the iShares 20+ Year Treasury Bond ETF (TLT), that ETF has been in strong demand with investors willing to take out that extra risk and earn that extra income,” Rosenbluth added, pointing to other strategies like the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) and the Vanguard Long-Term Corporate Bond ETF (VCLT) as fixed income strategies seeing strong demand given investors’ growing comfort with a more patient Fed.

For more news, information, and analysis, visit the Fixed Income Channel.