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FWDB vs. ETF Alternatives
The investment objective of the AdvisorShares Madrona Forward Global Bond ETF (FWDB) seeks investment results that exceed the price and yield performance of its benchmark, the Barclays Capital Aggregate Bond Index. FWDB is sub-advised by Madrona Funds, LLC (Portfolio Manager). The Portfolio Manager seeks to achieve this objective by selecting a diversified portfolio of fixed income exchange-traded products (ETPs), including but not limited to, exchange-traded notes (ETNs), exchange-traded currency trusts and exchange-traded commodity pools. FWDB invests in at least 12 distinct global bond classes that cover the entire global investable bond universe. The Portfolio Manager constructs FWDB’s portfolio using a weighted allocation system based on historic yield curve analysis and a mean reversion strategy.
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- In Your Portfolio: A Guide to International and Emerging Market Government Bond ETFs
- Asset Class Performance: Bonds, Global & Regions
Tuesday, Dec 312:30 PMGreat rotation: Gross and Gundlach see outflows
Tuesday, Dec 312:30 PM| 3 Comments
- The great rotation out of fixed income continues with Bill Gross' Total Return Fund (ETF version is BOND) seeing net outflows for the 7th consecutive month in November, losing $3.7B to bring AUM to $244B. Jeff Gundlach's DoubleLIne Total Return Fund lost $811M last month, bringing assets down $3.9B YTD to $33B.
- Broad fixed-income ETFs: AGG, BOND, BND, BSV, BIV, BLV, SCHZ, LAG, SAGG, ILTB, ISTB, GBF, GVI, FWDB, MINC, GIY
Saturday, Nov 239:00 AMInvestor behavior: Same as it ever was
Saturday, Nov 239:00 AM| 35 Comments
- The financial crisis changed nothing, writes Vanguard's Fran Kinniry: Investors continue to chase returns, and have lately been jettisoning fixed income for stocks. Driven by the 4th greatest bull market on record - a cumulative return of 198% since the bottom - global equity allocation for investors has increased to 57% from 38%, and vs. the 20-year median of 51%.
- It's probably time for the typical investor (one with an equity-heavy portfolio) to maintain a prudent allocation by directing new cash flows into bonds, while selling stocks - the exact opposite of where money is flowing today.
- "Rebalancing usually seems counterintuitive at the time when it promises to be most effective," says Finniry. "It can be difficult to implement from a behavioral standpoint and requires incredible discipline." With equities partying and the near-universal belief of higher interest rates on the way, who could blame an investor for not wanting to sell stocks and buy bonds.
- "It is very common following significant gains in the equity markets for investors to question the benefits of rebalancing," but it's never "different this time;" instead it's the "same as it ever was."
- Broad fixed income ETFs: AGG, BOND, BND, BSV, BIV, BLV, SCHZ, LAG, SAGG, ILTB, ISTB, GBF, GVI, MINC, FWDB, GIY
- Broad equity ETFs: VTI, PRF, SCHB, USMV, VV, SCHX, ITOT, ONEQ, IYY, NYC, JKD, EXT, EQL, FVI, EUSA, EEH, SPXH, TRSK, FSE, FSU, PXLC, FWDD, TOTS, FNDB, ALTL
Wednesday, Nov 1312:14 PMBond fund crash coming?
Wednesday, Nov 1312:14 PM| 1 Comment
- "Equities are roughly linear, debt isn't," reminds Citi's Matt King as he warns of a massive debt bubble. He posts a chart (slide 4 of presentation) of Lehman's stock price vs. bond price in the time leading up to the collapse - the stock price declined steadily over a 2-year period, while the bond trundled along until it went from about 70 cents to the dollar to zero in an instant.
- Developed economies are as dependent on credit growth as they ever were, he argues, and the debts of the last cycle have not been written off, but instead covered up. What's more the "illness" of credit dependence has spread to emerging markets.
- Conclusion: "Buy the best seats, but sit near the exit," another way of saying he prefers uncrowded high beta trades (stocks) to crowded low beta trades (fixed income).
- Relevant ETFs: PRF, VV, SCHX, JKD, EQL, EEH, TRSK, SPXH, FSE, PXLC, FSU, FWDD, ALTL, AGG, BOND, BND, BSV, BIV, BLV, SCHZ, LAG, SAGG, ILTB, ISTB, GBF, GVI, MINC, FWDB, GIY
Thursday, Oct 102:00 PMShort-duration SPDR bond ETF launches
Thursday, Oct 102:00 PM| Comment!
- The SSgA Ultra Short Term Bond ETF (ULST) started trading this morning - according the the prospectus this ETF seeks to provide current income consistent with preservation of capital and daily liquidity through investments in short duration, high quality bonds across the market.
- With an expense ratio of .20%, ULST is in the middle of the ultra short market expense scale with investor favorite, MINT, costing .35% while the also popular BIL charges just .13%.
Thursday, Jan 312:14 PMWisdomTree's (WETF) latest (pdf) is the actively managed Global Corporate Bond ETF (GLCB). Unique in that it can invest in any corporate bond listed anywhere in the globally, GLCB charges 0.45%. Competing ETFs: Passive IBND (ER 0.55%) has significantly less emerging market and high yield exposure but has a similar intermediate duration. Active FWDB (ER 1.26%) is more similar geographically and credit grade-wise but mixes in non-corporate fixed income. RAVI (ER 0.25%) and MINT (ER 0.35%) are both actively managed but have much shorter durations and minimal high yield exposure. RAVI has no emerging exposure. |Thursday, Jan 312:14 PM| Comment!