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CIP Quips

ETFs & Fixed Income

Did you know…

In recent years, fixed income ETFs have become increasingly more popular as a simple way to get exposure to the fixed income market without having to pay for the active management fee.  But did you know that in bond indexes that are weighted by market capitalizations, the issuer is weighted according to their debt appetite. 

Investors then hold bonds that the market has determined, by cap size.  Therefore, other than Treasuries, companies that are financially very deep in debt end up being the biggest component of your passive bond index fund  - not determined by their underlying value, duration, yield curve positioning, sector selection, debt service, or credit worthiness.  So in the end, investors end up monitoring bond defaults on their own.

Source: Eaton Vance & Morningstar as of 2/28/17

 

What are we thinking?

Credit analysis, yield curve positioning, and professional bond management are just some of the ways that active management can add more value over time. While they may not outperform the indices every year, wouldn’t you feel more comfortable knowing that an experienced professional is monitoring these risks versus having to monitor them on your own? 



This information is intended solely to report on investment strategies and opportunities identified by Roosevelt. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. References to specific securities and their issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Please contact us at 646-452-6700 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions, or if you would like to request a copy of our Code of Ethics. Our current disclosure statement is set forth on our Form ADV Part II, available for your review upon request, and on our website, www.rooseveltinvestments.com.

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The Roosevelt Investment Group, Inc. is an independent investment management firm that is not affiliated with any parent organization. The Roosevelt Investment Group, Inc. manages domestic equity, international equity, domestic fixed income, global fixed income, and balanced assets for primarily U.S. clients. The Roosevelt Investment Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission and notice filed in all 50 states.

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