Ben Seager-Scott, head of multi-asset funds at Evelyn Partners, has said shortcomings in bond ETF product development have been exposed now that “fixed income is back in a big way”.
Speaking to ETF Stream, Seager-Scott said ETF investors are well served when it comes to broad exposure to fixed income, however, less so when targeting areas such as credit and duration.
Fixed income has been one of the biggest plays this year, flows hit record highs at €31bn in H1, according to Morningstar, with rising interest rates once again creating an attractive environment for the asset class.
“Before, when we needed some sort of allocation we were pretty well served, now that fixed income is back in a big way some of the shortcomings out there are starting to come through,” Seager-Scott said.
“In terms of broad exposure, it is pretty simple to get access but when you want some specificity we do not have a great product suite, part of that is a function of the indices available.
“When it comes to targeting things like credit and duration, we do not really have any credit options out there, you are lumped with whatever happens to be in the index.”
Last week, BlackRock unveiled a range of fixed maturity corporate bond ETFs to the European market, adding to the suite of bond strategies available to investors on the continent.
Also speaking to ETF Stream, Jose Garcia-Zarate, associate director for passive strategies at Morningstar, discussed why investors are starting to move up the duration curve.
“Inflation is still current but investors are positioning their portfolios for what is coming next, and a lot of investors are already betting on a peak to the rise interest rates in the US, UK and the eurozone,” he said.
