Smart Beta In Fixed Income ETFs Slowly Takes Root

December 22, 2016

Charts courtesy of StockCharts.com

New And Novel

Despite the challenges to growth, there are exciting new flavors of smart beta popping up in fixed-income ETFs.

Among the 30 or so fixed-income ETFs that came to market this year, there have been a few interesting new takes worth mentioning. A pair of IndexIQ funds launched last May, the IQ Enhanced Core Bond U.S. ETF (AGGE) and the IQ Enhanced Core Plus Bond U.S. ETF (AGGP), come to mind.

The strategies are among the first to apply momentum factor to fixed income in a multifactor weighting scheme that ultimately looks to provide higher allocation to fixed-income classes that show higher momentum.

Both AGGE and AGGP are fund of funds offering wide ranging exposure in terms maturity, region, as well as investment grade and high yield.

And for two ETFs that are only seven months old, AGGP today has $211 million in assets while AGGE is hovering at $80 million.

These two funds are just a glimpse into the potential for innovation in this segment—something many expect to see going forward, particularly as issuers respond to investor demand for new approaches to fixed-income investing in a new era of rising rates.

For a complete list of ETF launches, detailing all fixed-income ETF newcomers, check out our ETF Watch. And for a comprehensive list of smart-beta ETFs, see our smart-beta ETFs channel.

Cinthia Murphy at [email protected]

 

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