State Street Global Advisors (SSgA), the investment management business of State Street Corporation (NYSE:STT) has launched two new fixed income strategies based on alternative-weighted indices that are designed to forecast a company’s financial strength. They also exclude debt issued by private companies and subordinated debt.
The vast majority of the 1,300+ exchange-traded products now available to U.S. investors are alike in that they offer static exposure to a specific asset class, whether it be stocks, bonds, commodities, volatility futures, or other “exotic” securities. While the composition of the underlying portfolios changes regularly, the type of exposure offered–whether it be soybean futures, large cap U.S. stocks, or inflation-protected bonds–remains generally stable. But a number of relatively new exchange-traded products differentiate themselves by offering “dynamic” investment strategies that have the potential to shift allocations between multiple asset classes depending on price trends, volatility, or other observable market conditions [see also Six Noteworthy ETF Innovations]. In other words, these ETPs offer low maintenance access to investment strategies that call for investors to switch their exposure between different assets depending on the market environment, in many cases providing a “hands off” solution that would be time consuming and/or expensive
If you're a conservative investor, building a bond portfolio could be as simple as identifying a sturdy core fund and possibly supplementing it with a short-term vehicle to help address short-term cash needs. But if you have a long time horizon for at least part of your fixed-income holdings, you can consider adding a component with a higher-risk profile but also potentially higher returns.
The higher costs and greater inconsistency of active funds have pushed an increasing number of investors towards trackers in recent years. However, many of those who hold passive funds have found they fail to replicate the performance of the index they are tracking – particularly in the longer-term.
Here are FE Trustnet’s pick of the most efficient tracker funds on the market:
Really interesting new paper from GMO. We did a lot of the same tests in-house on these option strategies. I was always curious why a put write ETF hasn’t launched….more later.
https://www.gmo.com/America/CMSAttachmentDownload.aspx?target=JUBRxi51IICgxQGN%2f1xyHiaie%2fmx5MIBM2cPT6L%2fPCmnjGmlT8oYTluMHXHW5igGYFr08suihsoZDsyNAe0JqH7sa9BOxuMafleqsRwi7Jvmn9X5nSF6srWCwVVRwAR8M%2bUfjcZrTH0%3d
FE Trustnet looks at some of the tactics investors can use to hedge against the current volatility.