JPMorgan, iShares expand fixed-income ETF offerings, expert explains
ETFs continue to grow at a rapid pace, with iShares and JPMorgan expanding its ETF offerings. VettaFi Head of Research Todd Rosenbluth sits down with Yahoo Finance Live to talk about new ETF offerings and inflows into the fixed-income space.
"We have seen a need and interest in income — fixed-income ETFs have been punching above their weight this year," Rosenbluth says. "Roughly 40% of the overall flows in the first nine months of the year have gone into fixed-income ETFs. They represent roughly 20% of the overall ETF pie."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
RACHELLE AKUFFO: Well, the markets are down, but there might be a bright spot growing. There were 69 new ETFs hitting the market last month. For more on the ETF boom, Todd Rosenbluth, VettaFi Head of Research is joining us now. Thank you for joining me in this morning. So break this down for us. Obviously, when you have this raft of ETFs coming to market, it could be hard to decipher which ones are the most promising here. Where do you see the most upside in this rush that we're seeing in ETFs?
TODD ROSENBLUTH: Yeah. So we have over 3,000 ETFs trading in the United States today. There's a lot of them. There's a lot of good ones. We're continuing to see new ones come out on a monthly basis at VettaFi, and we're trying to track the coverage. What's exciting to me about what we're seeing in September is that we have some established asset managers that are continuing to build out their lineup.
So we've seen iShares expand their fixed income, Universe. We've seen JPMorgan expand their options-based equity-oriented ETFs. We've seen Capital Group that has a suite of active ETFs bring new products out to market. I think we're going to go into some of those in depth. But it's just exciting to see some of these large asset managers further commit to the ETF marketplace.
AKIKO FUJITA: Yeah. Todd, to what extent have we seen this demand increase as a result of the choppiness we've seen in the market? We've heard so many of analysts that have come on the show to say, look, it is about diversification. ETFs offer that.
TODD ROSENBLUTH: Yeah. So there's a couple of key trends that are happening in the US and certainly in the US ETF marketplace. We've seen a need and interest in income. Fixed income ETFs have been punching above their weight this year. Roughly 40% of the overall flows in the first nine months of the year have gone into fixed income ETFs. They represent roughly 20% of the overall ETF pie.
So it's exciting to see iShares, which is actually having a stronger year for fixed income flows globally than they did last year. $82 billion globally has gone into iShares' ETFs. They've expanded their tips suite of products. So inflation-protected securities, they now offer individual maturity or products that are available for investors that want to manage their duration. So that's exciting. From a defensive standpoint, the market is still volatile.
We've seen JPMorgan launch an ETF in September. The ticker is HELO. I would pronounce it as hello. Just take out one of the Ls that's there. This leverages some of their active management capabilities and use of options that they've had a strong presence in the mutual fund market. But also with the ETFs like JEPI and JEPQ, this new ETF from JPMorgan is more downside protection-oriented. So we're excited about that in the marketplace.
RACHELLE AKUFFO: And in terms of who is investing, the sort of demographics, are you seeing more institutional investors that are also taking on ETFs versus, say, retail investors who are a little more cautious about going in for individual stocks?
TODD ROSENBLUTH: We are. We're seeing institutional adoption of ETFs continue to pick up, whether that's insurance companies, that's hedge funds, that's other institutional investors. There's a lot more use cases for ETFs than there were beforehand. And now because of the efficiency, the liquidity that ETFs provide, we're certainly seeing it within the fixed income marketplace.
But as firms, in particular, Capital Group that I mentioned earlier, they expanded their lineup of ETFs. Active management is something they're known for. They now have an additional five products that came to market in September. These are institutional level managers. You now can tap into them and benefit from the ETF marketplace.
AKIKO FUJITA: Before we let you go, Todd, we got to get another pick from you. You mentioned the fixed income ETFs that have really seen some significant inflows. But nearly 70 products on the market in the last month alone. So what's another one that you think investors should pay close attention to?
TODD ROSENBLUTH: Well, I guess I'll go with something that's a little bit more established. We've seen strong interest in MUB, which is a municipal bond ETF. This has got a long history. But it's just exciting to see investors turn towards the ETF wrapper. MUB is the iShares municipal bond ETF, very low cost, very well-diversified for tax-efficient and tax-minded investors.
AKIKO FUJITA: It's not every day we talk about fixed income and muni bonds. But that's exactly where we are right now. Todd Rosenbluth, VettaFi Head of Research joining us as part of our ETF report brought to you by Invesco QQQ. Great to talk to you today.
