Aislinn Loder
speaker
55 appearances
2 recordings
1 series
first heard Feb 2019
last heard Mar 2019
Aislinn Loder’s voice in public audio — every appearance, attributed to the second.
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So they're safer and agency-backed on top of it.
It's very similar.
And he said they were looking at it last year and they just decided that they wanted to take some of the risk out of their fixed income portfolio and really restrict their risk to equities and make their fixed income side of their book as sort of bulletproof as it could be.
And so they were selling an ETF that buys corporate bonds.
and buying the Vanguard mortgage-backed securities ETF instead.
Yeah.
I mean, these ETFs, the iShares ETF has something on the order of $15, $16 billion, and this is a $6 trillion market.
The thing that's also making it popular is that it's a really convenient way for institutional investors to trade mortgage-backed securities and perhaps turn their mortgage-backed security portfolio that they already have and take that in and create ETF shares with it.
So it's easier to trade that than it is to trade a basket of MBS.
WSJ Your Money Briefing · Can a 'Smart' ETF Protect You From Market Turbulence? · 21 Feb 2019
podcast
Definitely.
ETF issuers have been trying for a while to get people to buy into strategic beta or smart beta or whatever you want to call it.
And these are funds that they might try to invest based on a factor like momentum or value or quality.
In this instance, what investors seem to be flocking to are funds that attempt to pick less volatile stocks, which would help in a turbulent market.
I wouldn't call them safe.
The idea is that they invest in some of the stocks that have been less volatile.
It doesn't necessarily make them safe, but they've outperformed the broader market over the past year, and they certainly did in the fourth quarter as well, which is why it's really gotten them on the radar.
But if you look so far this year, because the market's up, two of the more popular ETFs are lagging the S&P 500.
This concept of factor investing has been around for a while, and these ETFs have been around for years.
It's just that they came on the market during one of the longest bull runs in history.
So people haven't really seen a need to think about their downside risk in quite some time.
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