The following are new investments that those saving and or living in retirement might consider for their portfolios. We've included commentary from advisers about the investments, as well.
Invesco has launched the BulletShares 2028 Corporate Bond ETF(BSCS) and the BulletShares 2026 High Yield Corporate Bond ETF (BSJQ). The Invesco BulletShares 2028 Corporate Bond ETF seeks to track the investment results (before fees and expenses) of the Nasdaq BulletShares USD Corporate Bond 2028 Index. The Invesco BulletShares 2026 High Yield Corporate Bond ETF seeks to track the investment results (before fees and expenses) of the Nasdaq BulletShares USD High Yield Corporate Bond 2026 Index.
According to Steven Gattuso, a senior portfolio manager at Courier Capital, Invesco's Bulletshares series have the benefit of combining the characteristics of a single bond of a specific maturity date with the diversification of a portfolio of bonds found in a fund.
"Each of these ETFs 'mature' or liquidate on Dec. 31 of the year quoted in the fund," says Gattuso. "Bulletshares create these ETFs for each year so that you may assemble a ladder of bond funds with specific maturity dates in either investment grade/corporate bond or below investment grade/high yield securities."
Given that these two funds have longer-term maturity dates of 2028 and 2026, investors will be taking on significant interest rate risk, especially as interest rates move, says Gattuso.
"While the funds purchase securities with effective maturity dates close to the maturity date of the fund the ETF share price will fluctuate with interest rates," he says. "In addition, when these funds are within six to 12 months of their liquidation date they will begin to increase their cash position as maturing bonds will not be reinvested into new securities."
At maturity, Gattuso says the funds will pay out the net asset value of the portfolio, which may be more or less than the targeted liquidation price. "This is where they would differ most from an individual bond," he says. "Regardless of price changes during the term of the fund a single bond is expected to pay 100% of the face value at maturity whereas these funds will also have embedded the gains and losses of the bonds in the portfolio so they may pay more or less than 100% of the face value of all the bonds in the fund."
Specifically, Gattuso says the BulletShares 2028 Corporate Bond ETF is inexpensive at a fee of 0.10% while the Invesco BulletShares 2026 High Yield Corporate Bond ETF is more expensive at 0.42%. "These funds are best used by investors who do wish to ladder their fixed income or have a need/liability at the end of those specific years and do not mind price fluctuations in the interim years," he says.
JPMorgan Asset Management has launched the the JPMorgan BetaBuilders Canada ETF (BBCA), which is linked to the Morningstar Canada Target Market Exposure Index and the JPMorgan BetaBuilders Developed Asia-ex Japan ETF (BBAX), which is designed to replicate the performance of the Morningstar Developed Asia Pacific ex-Japan Target Market Exposure Index.
According to Gattuso, the two new funds from JP Morgan provide international equity access to two specific regions. "Both of these funds are passive, meaning that they are simply market-cap weighted in each of their specific geographies," he says.
The first is a single country exposure to Canada. "The Canadian economy is one that is heavily exposed to financials and commodities, specifically energy," says Gattuso. "These exposures are mirrored in the portfolio which is concentrated and has approximately 40% representation in financials and 20% to energy."
An investor in this fund, he notes, carries the risk of a single country exposure as well as business cycle exposure of those two specific sectors. "In addition, the Canadian economy has been showing signs of stress," says Gattuso. "The impact of a revised or canceled NAFTA as part of the U.S. tariff policy would also impact them significantly as one of the largest U.S. trading partners."
The second fund, he says, is similar in that it is targeted international equity exposure but, instead of one country this one is a region -- specifically the Asia Pacific region. "When one thinks of the APAC region emerging markets and China usually come to mind," says Gattuso. "This particular fund though invests in the developed countries of the region -- not the emerging markets -- i.e., no China."
In addition, he says this fund excludes Japan, the largest developed economy in the region -- most likely due to the fact that it would dominate the other countries. "What you are left with are the countries/regions of Australia, Hong Kong SAR, Singapore and New Zealand," says Gattuso. "While each of these specific countries have their own economic and political risks they are all affected by China wither directly or indirectly."
While this fund is less concentrated than the Canada fund since we have more countries this market cap weighted passive fund is still rather concentrated, he says. "About 85% of the fund consists of Australia and Hong Kong stocks and financials represent about 38% of the portfolio," says Gattuso. "Hong Kong carries with it the additional political risk of its current status with China."
Of note, he says both funds currently have a fee waiver which brings their costs down to 0.19% but both also do not hedge their local currency back to the U.S. dollar so the currency fluctuations will most likely bring additional volatility.
Goldman Sachs has filed for five ETFs that would base investments on distinct themes. The Goldman Sachs Motif Data-Driven World ETF, the Goldman Sachs Motif Finance Reimagined ETF, the Goldman Sachs Motif Human Evolution ETF, the Goldman Sachs Motif Manufacturing Revolution ETF and the Goldman Sachs Motif New Age Consumer ETF would select investments from indexes managed by Motif Investing. SmartBrief/ETF
JPMorgan Chase has requested SEC approval of an ETF designed to deliver high income by purchasing a mix of investment-grade and below-investment-grade bonds. The JPMorgan Core Plus Bond ETF would be actively managed, relying on managers' risk-reward analysis. SmartBrief/ETF
Eve Capital has rebranded the Wearable ETF, an exchange-traded fund focused on wearable technology, as the Tactile Analytics AR/VR Virtual Technologies Fund. The overhauled ETF selects investments from the EQM Tactile AR/VR Virtual Technology Index, which includes companies likely to benefit from the growing acceptance of augmented reality and virtual reality. SmartBrief/ETF Trends
REX Shares has added leveraged and inverse exchange-traded notes to its MicroSectors system to help investors manage risk to shares of Facebook, Amazon, Apple, Netflix and Google parent Alphabet. The MicroSectors FANG+ Index 2X Leveraged ETNs, the MicroSectors FANG+ Index -2X Inverse Leveraged ETNs and the MicroSectors FANG+ Index Inverse ETNs have an expense ratio of 0.95%. SmartBrief/ETF Trends
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