Investors are positioning portfolios ahead of predictions of short-term yields dropping and longer-term yields rising due to growth and reflation risks.
Investors are pivoting to strategies such as the Ossiam US Steepener UCITS ETF (SUTP) and Amundi US Curve Steepening 2-10Y UCITS ETF (STPU), aiming to capitalise on a steepening yield curve.
Additionally, portfolio managers are favouring government bonds over corporate credit, particularly shorter maturities, seeking to manage interest rate risk in a potentially slower growth environment.
Fixed income product innovation – such as the Fair Oaks AAA CLO UCITS ETF (FAAA) and fixed maturity ETFs – are offering more precise tools for managing interest rate risk, growing ever crucial amid the current rate climate.
BlackRock and AXA expand ETF ranges
This week BlackRock introduced two new US equity ETFs, the iShares Russell 2000 Swap UCITS ETF (RU2K) and the iShares Nasdaq 100 Swap UCITS ETF (N100). Both are swap-based and offer cost-effective access to small-cap and large-cap US equities, with RU2K looking to capitalise on the increased demand for small-cap equities.
Meanwhile, AXA IM unveiled two new ETFs focused on US Treasury bonds. The AXA IM ICE US Treasury +25Y UCITS ETF (ADLU) targets long-duration US Treasury exposure, while the AXA IM ICE US Treasury 0-1Y UCITS ETF (A01U) focuses on short-duration Treasury bonds.
With the products sitting at extreme ends of the curve, Olivier Paquier, global head of ETF sales at AXA IM said products complete the asset manager's range of bond ETFs.
More industry reshuffles
Allfunds has appointed Andrea Mattar as the global head of ETP distribution, ahead of the launch of its ETP platform in 2025. The firm previously said the it hopes the platform will “revolutionise” the distribution of ETPs in Europe.
Meanwhile, Invesco's Jim Goldie has been named chair of the European Fund and Asset Management Association's (EFAMA) ETF Task Force, who play a key role in addressing key regulatory and market challenges, such as the well documented transition to T+1 settlement cycles.
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