VettaFi Head of Research Todd Rosenbluth discusses fixed income and international equities with “Chuck Jaffe” on this bonus “ETF of the Week” podcast.wealth life,
Rosenbluth told Jaffe that Vitafi is seeing “really strong interest in international equities,” with international equities bringing in nearly $30 billion at the start of the year, while U.S. equity ETFs brought in nearly $6 billion during the same period. saw the outflow of Therefore, VettaFi asked the investment community what they think about developed international markets and what will happen next year.
International Investment: A Better Option
during a march webcast Hosted by VettaFi, advisory attendees were asked how they believe developed international markets will perform relative to the US going forward. most respondents (54%) said they believe international equity ETFs will outperform the US in the coming year, while roughly a quarter said they expect a similar level of performance for both markets. Only 21% said they believed the US would outperform international markets.
“International investing seems like a better option for many investors,” Rosenbluth said.
And with that information provided by financial advisors, VettaFi discovered some investment ideas. is the largest of Vanguard FTSE Developed Markets ETF (VEA)which is slightly larger than iShares Core MSCI EAFE (IEFA),
“I think investors should be paying more attention to VEA because it’s more widely diversified,” Rosenbluth said. “VEA… has exposure in Canada that you would not get in an EAFE-based market. Therefore, VEA is a good way to get exposure [international equities],
And while most international equity ETFs tend to be more index-based, Rosenbluth also wanted to highlight one actively managed ETF. This much Harbor International Compounders ETF (OSEA) With only fewer than 40 stocks of fast-growing, high-quality companies, Rosenbluth believes that “people who believe in active management should definitely take a closer look.” must be seen from.”
Rosenbluth explained that investors are becoming more comfortable with active management in ETF wrappers.
“We’ve seen an increase in the adoption of actively managed ETFs,” he said. They account for about 5% of the overall ETF market. Last year they were about 15% of total ETF inflows. As of February, they were closer to 40%.
Growing interest in (short-term) fixed income
Another area VettaFi is focusing on is fixed income, an asset class investors are increasingly turning to this year — particularly shorter-term products.
“We’ve seen investor interest in relatively safe fixed-income products,” Rosenbluth said, citing short-term Treasury ETFs. Vanguard Short-Term Treasury ETF (VGSH) And this SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) which are popular.
Rosenbluth also noted that while we may see the Federal Reserve stop raising its rates earlier, there are still a lot of concerns about higher yield or longer-dated Treasuries.
“I think there is too much risk in going out during the period,” he said. “We are likely to see more volatility in the fixed income market, and I think investors would rather earn 4% through short-term Treasury ETFs than take on that interest rate risk.”
four bulls and a bear
Later in the interview, Rosenbluth offered his thoughts on a few ETFs about which listeners requested more information. The first of these was ETF Invesco S&P 500 Equal Weight ETF (RSP)in which Rosenbluth shared his “bullish” views on this “good opportunity”.
“I would be bullish on this ETF because we are looking at individual, specific stock issues, and you get the benefits of diversification,” Rosenbluth said. “Therefore, better than being a heavyweight in your portfolio, RSP is an alternative to gain exposure to the S&P 500 in a more diversified way.”
the audience also wanted to know about Horizon Kinetics Inflation Gainer ETF (INFL), is an actively managed ETF that invests in companies that can benefit from consistent inflation. While we’ve seen the CPI and PPI numbers come down a bit, “inflation is still up for a while,” according to Rosenbluth.
“I think… exposure to companies in the energy and materials sector can provide a great value, so INFL is a good ETF,” he added.
in the subject Alerian MLP ETF (AMLP)“It’s a nice suite of positions in the energy market,” Rosenbluth said.
“These are high quality energy infrastructure companies that have to pay dividends,” he said. “It’s a high quality way to get energy exposure. AMLP is a great ETF.
Rosenbluth too Vanguard Tax-Exempt Bond ETF (VTEB)Which he thinks would be a good “bonus position” for certain fixed income ETFs, which he recommended in an earlier episode.
“VTEB is a very low cost ETF, well diversified and very liquid,” he said. “It’s a great way to gain exposure to the municipal bond marketplace, which is holding up quite well.”
And after going four on four in terms of buy recommendations, that changed with the fifth and final ETF Rosenbluth was asked about: SPDR Portfolio High Yield Bond ETF (SPHY), While it has the advantage of being cheap, investors should not be comfortable taking on too much credit risk.
“In this environment, I think investors are looking for the relative safety of investment grade corporate bonds and Treasuries and are less comfortable taking on that credit risk,” he said, adding: “I think the income risk There are better ways to get by.”
Listen to the bonus episode here:
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