More investors may be looking into smart beta bond ETFs in a changing market environment, especially after a three-decade long bull rally in the fixed-income space and potential rising rate conditions ahead.
“Investors have traditionally used products that track the Bloomberg Barclays US Aggregate Bond Index as their core fixed-income allocation and, as we enter a new rate regime, investors may need to focus on the value of their investments and to meet their goals by avoiding overconcentration and minimizing interest rate risk,” according to Columbia Threadneedle Investments.
According to XTF data, there are 740 U.S.-listed enhanced or smart beta index-based ETFs with $625.3 billion in assets under management. However, there are only 35 smart beta fixed-income ETFs with $3.6 billion in assets, which leaves a lot of room for more growth.
For more information on alternative index-based strategies, visit our smart beta category.