Belden: BulletShares Can Take On iShares
IU.com: A clear sign that laddering, or something like it, is going on?
Belden: Right. So we’re seeing two things, I would say. One is that, as we go into the maturity year, we’ve seen a great stability in the asset base—the assets have remained intact throughout the course of the year in which the BulletShares were maturing. But we’ve also seen that money come back upon that maturity, into varying maturities, within each BulletShares suite.
So whether you're rolling down the curve to the longest date of maturity, or you're actually just jumping into the nearest date of maturity, we’re seeing that kind of adoption continue. And January was our strongest sales month ever in BulletShares. So we’re excited about that.
IU.com: So the very people who got lump sums from their redemptions turned around and brought it right back into the same product with a different maturity?
Belden: And it’s anecdotal. It’s really tough to systematically track exactly what's happening. But we know enough of our clients to get a good indication that the money that was being sent out is coming back into the funds. At the end of December, we sent out $175 million. And we more than made up for that, in terms of the flows that we got back into the product in January. So we’re very encouraged by those results.
IU.com: And with regard to iShares, to ask a slightly thornier question, they clearly seem to be willing to compete on price, right?
IU.com: I’m wondering to what extent that’s a road that Guggenheim would think about going down to defend the BulletShares franchise?
Belden: Well obviously, it’s a space that we’ve established a strong penetration and position in. And we’re looking to maintain and actually grow that. We look at all of the variables that investors take into account when they're making their purchase decisions. Obviously, cost is a very important one. And they're on file with their product. And we’re looking to make sure that we continue to defend our value proposition to investors. And certainly, cost will be a part of that.
IU.com: What kind of things might we expect from Guggenheim as it relates to this new phase of more thoughtful and careful product development we’re seeing in the ETF industry?
Belden: We still believe there's a long road to go before fixed income is appropriately represented within the ETF wrapper. It got a late start relative to the equity product wrapper for ETFs. But we’ve seen dramatic growth within fixed income. And we all know fixed income, as an overall marketplace, is exponentially larger than the equity marketplace. So there's a lot of room to grow there.
Now, how effectively do you do that? Well, obviously, the fixed-income market has been much more opaque throughout its history as it relates to how you transact in that marketplace. And we really feel like ETFs have cast a new light—in terms of price discovery, and visibility, and transparency—into the fixed-income marketplace. And with that added exposure, we feel like the value proposition for ETFs and fixed income has even further been enhanced. So we’re looking at continuing to grow our business within the fixed-income marketplace.
Investors have fewer—but better—choices.
Sometimes what’s behind a very high dividend yield is truly surprising.
For VIX-related ETFs to work as that ‘magical’ hedge, you have to time the market. Good luck with that.
But this new product is different than other euro-hedged funds.