ETF Express Newsletter 02.06.23

Fixed income ETFs in your toolbox

Our interview this week is with Henry Timmons and Michael Contopoulos of Richard Bernstein Advisors who called for the investing world to understand the power of the fixed income ETF.
Timmons believes that bond ETFs are not entirely understood by the investment community. "Hopefully advisers and managers will understand that they can be a helpful tool in one’s toolbox and help people to understand what one can do through a fixed income ETF which you might not be able to do in the underlying security," Timmons says.
Contopoulos says that what drives returns tends to be macro not micro. "Macro variables drive returns as individual stocks within a sector, style, even region tend to be correlated. Fixed income is the same. What matters most is getting your quality and duration right. Having the ability to meaningfully shift those exposures without needing to sell individual illiquid bonds could deliver meaningful alpha to a portfolio."
This week also saw the launch of the third ETF Express podcast, in association with TrussEdge, entitled The Beauty of ETFs. Laurent Kssis of CEC Capital, and known to many of you for his work with crypto ETPs, and Ernst Knacke of Shard Capital gathered to discuss institutional use of ETFs, with Kssis (no question where his loyalty lies) declaring that the beauty of ETFs is that: "you can have effectively a rules-based strategy at low cost."
For his part, Knacke explained that his firm uses ETFs "whenever we can". For Knacke, liquidity risk is a key factor and, in the US, he is keen on the semi-transparent model which allows active managers to shield their investment portfolios. "The 40 Act market will undergo significant change in the next decade," he predicts.
Listen now: The beauty of ETFs
I will be speaking and chairing a number of ETF sessions at Informa’s Impower Fund Forum in Monte Carlo 27th and 28th June, 2023.
The agenda is here, and I am very pleased to be able to offer my readers a 10 per cent discount on tickets, using this link or this discount code FKN3253EMSPK.

Beverly Chandler, Managing Editor
For live updates please follow us on Twitterand LinkedIn.