Vanguard Total Bond Market ETF (NASDAQ: BND)

에 대한 최신 뉴스 Vanguard Total Bond Market ETF (NASDAQ:BND)

Vanguard Total Bond Market ETF

Bloomberg Barclays U.S. Aggregate Float Adjusted Index measures the performance of a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States-including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities-all with maturities of more than 1 year. All of its investments will be selected through the sampling process, and at least 80% of its assets will be invested in bonds held in the index.

Analyst Color

Broad U.S. Equity ETFs

Analyst Ratings

ETFs

폭발적인 ETF들의 성장이 금융 환경을 재편하고 있으며, 운용 자산이 현재 15조 달러의 이정표에 가까워지고 있다. 최근 분석에서 JP모건의 전략가 니콜라오스 파니기르초글로(Nikolaos Panigirtzoglou)는 이러한 엄청난 변화의 의미를 자세히 조사하면서 ETF가 투자자 행동, 유동성 패턴 및 심지어 시장 위험까지도 어떻게 재정의하고 있는지를 조명했다.

ETF들이 15조 달러에 가까워지며 미국 시장을 재편하는 10가지 방법

Government

Bonds

Politics

BNDX

GOVT

SPAB

iShares Trust Barclays 20+ Year Treasury Bond Fund

VCIT

VCSH

안정성을 위해 채권 및 채권 ETF를 찾는 투자자들은 도널드 트럼프 대통령 당선인의 관세 접근 방식으로 인해 수익률 상승 압박을 가할 수 있으므로 변동성이 높아질 수 있다.

연준의 금리 인하와 트럼프의 재정 정책이 충돌하면서 채권 ETF가 하락

FlexShares Core Select Bond Fund

Quadratic Deflation ETF

NEOS ETF Trust NEOS Enhanced Income Aggregate Bond ETF

BANCO DE SABADELL SA ORD by Banco De Sabadell SA

Banco de Sabadell SA

BANCO DE SABADEL UNSP/ADR by Banco De Sabadell SA

Vanguard Total World Bond ETF

Vanguard Total International Bond ETF

The Vanguard S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VOO#NYSE">VOO</a>) has shattered records, crossing $100 billion in annual inflows this year, a historic high for any ETF over the same period. 
Data from ETF.com shows that the fund witnessed $101.07 billion in fresh money from investors, more than the combined inflows of its two closest competitors: iShares Core S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IVV#NYSE">IVV</a>) with $59.2 billion and SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) with just $22.9 billion.&nbsp;
In the multi-trillion-dollar exchange-traded fund industry, this trend is sparking debate over whether SPY, the world's largest ETF, is now on the brink of losing its long-standing crown.
<h3 class="wp-block-heading">$VOO Poised To Become The World&#8217;s Largest ETF Next Year </h3>
Despite SPY still holding the title of the world's largest ETF, with $620 billion in assets under management (AUM), the gap between it and VOO — currently at $579 billion — has narrowed to $41 billion.
&#8220;That means that there is a very real possibility that VOO overtakes SPY as the world's largest ETF as soon as next year,&#8221; commented Sumit Roy, senior analyst at ETF.com. 
&#8220;But even if that happens, SPY's slide down the ETF leaderboard might not stop there. IVV is also nipping at its heels, with $565 billion in AUM,&#8221; he added. 
<h3 class="wp-block-heading">World&#8217;s 10 Largest ETFs by AUM</h3>
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>ETF Name</th>
<th>AUM ($ bn)</th>
<th>Expense ratio</th>
</tr>
</thead>
<tbody>
<tr>
<td>SPDR S&amp;P 500 ETF TRUST</td>
<td>620.26</td>
<td>0.09%</td>
</tr>
<tr>
<td>Vanguard S&amp;P 500 ETF</td>
<td>579.35</td>
<td>0.03%</td>
</tr>
<tr>
<td>iShares Core S&amp;P 500 ETF</td>
<td>559.64 </td>
<td>0.03%</td>
</tr>
<tr>
<td>Vanguard Total Stock Market (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTI#NYSE">VTI</a>)</td>
<td>460.11</td>
<td>0.03%</td>
</tr>
<tr>
<td>Invesco QQQ Trust, Series 1 (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>)</td>
<td>310.27 </td>
<td>0.20%</td>
</tr>
<tr>
<td>Vanguard Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VUG#NYSE">VUG</a>)</td>
<td>151.13 </td>
<td>0.04%</td>
</tr>
<tr>
<td>Vanguard FTSE Developed Markets ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VEA#NYSE">VEA</a>)</td>
<td>135.42</td>
<td>0.06%</td>
</tr>
<tr>
<td>Vanguard Value ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTV#NYSE">VTV</a>)</td>
<td>133.31</td>
<td>0.04%</td>
</tr>
<tr>
<td>Vanguard Total Bond Market (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>)</td>
<td>119.17 </td>
<td>0.03%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Data: ETF.com</figcaption></figure>
<h3 class="wp-block-heading">Expense Ratio: A Critical Factor For VOO&#8217;s Institutional Inflows</h3>
A key driver of VOO's success is its rock-bottom expense ratio of 0.03%, less than a third of SPY's 0.0945%. 
These differences have significant implications, especially for institutional investors managing billions.
A retail investor putting $5,000 into VOO at the start of the year would pay only $1.50 in annual expenses, while the same investment in SPY would cost $4.73 – basically an irrelevant difference. 
In sharp contrast, an institutional investor allocating $5 billion to VOO would pay just $1.5 million in fees, compared to $4.73 million with SPY—a staggering $3.23 million difference.
This simple example may explain that expense ratio differences are a huge driver of wholesale <a href="https://www.benzinga.com/etfs">investor flows into ETFs</a>.
Read Now:
<ul>
<li><a href="https://www.benzinga.com/24/11/42148340/black-friday-cyber-monday-deals-on-wall-street-why-buying-walmart-or-amazon-before-the-holidays-might-backfire">Why Walmart, Amazon Stock Could Stumble This Holiday Season</a></li>
</ul>
Image:

Equities

Large Cap

Vanguard's S&P 500 ETF Hits $100 Billion Inflows In 2024: Is SPY's Crown At Risk?

The explosive <a href="https://www.benzinga.com/etfs">growth of ETFs</a> is reshaping the financial landscape, with assets under management now nearing the $15 trillion mark. 
In a recent analysis, JPMorgan strategist Nikolaos Panigirtzoglou delves into the implications of this seismic shift, spotlighting how ETFs are redefining investor behavior, liquidity patterns, and even market risks. Here are his top 10 takeaways that every investor should know.
1. Retail Sentiment Is Driving Volatility Panigirtzoglou notes that the growing dominance of ETFs has made retail investors more influential in driving market sentiment. Unlike institutional investors, retail traders tend to have shorter time horizons, leading to sudden, amplified shifts in market trends when sentiment swings.
2. Longer Rallies, Sharper Corrections The analyst highlights how ETFs encourage momentum-driven markets, fueling prolonged rallies during bullish periods. However, during market reversals, the absence of active management safeguards can result in sharper corrections and increased volatility.
Read Also: <a href="https://www.benzinga.com/24/11/42097545/feds-bowman-warns-on-inflation-risks-signals-neutral-rate-may-be-closer">Fed&#8217;s Bowman Warns On Inflation, Says Neutral Interest Rates May Be Closer &#8216;Than We Currently Think&#8217;</a>
3. Big Money Flows Into Large-Caps Most ETFs are market-cap-weighted, which means they funnel disproportionate capital into large-cap stocks. Panigirtzoglou warns this trend could inflate valuations for mega-caps while crowding out smaller companies, risking capital misallocation.
Companies such as Nvidia Corp, Apple Inc, and Microsoft Corp each currently command over $3 trillion in market cap on the U.S. stock markets.
4. Liquidity Rushes to the Closing Bell As ETFs rebalance towards the end of trading sessions, liquidity has increasingly clustered during these periods. Around one-third of S&amp;P 500 trades now occur in the final 10 minutes of the day, Panigirtzoglou points out, creating a feedback loop of concentrated activity.
5. Concentrated Risks in a Few ETFs The rise of giant ETFs like the SPDR S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) and the Invesco QQQ Trust, Series 1 ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) has introduced systemic risks. Panigirtzoglou argues that their scale and importance rival those of equity futures, making the market vulnerable to large, single-product flows.
6. Algorithmic Traders Are Thriving Bond ETFs, in particular, have bolstered electronic and algorithmic trading, says Panigirtzoglou. Non-bank market makers now dominate liquidity provision in fixed-income markets, capitalizing on high-volume, low-margin trades.
Popular bond ETFs, such as the iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>) and the Vanguard Total Bond Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>), are among the largest and most liquid bond market ETFs traded in the U.S.
7. Index Changes Have Outsized Effects Panigirtzoglou emphasizes how ETF-driven flows have magnified the impact of index rebalancing. Stocks entering major indices see outsized gains, while those removed face steeper declines than fundamentals might justify.
8. Corporate Governance Takes a Hit With passive funds dominating, Panigirtzoglou sees a decline in corporate activism. Unlike active managers, passive funds have little incentive to push for governance changes, which could diminish oversight.
9. Market Efficiency Is Declining The shift toward passive investing reduces opportunities for arbitrage, Panigirtzoglou argues, leading to more persistent mispricings. While this could lure active managers back, their ability to extract alpha has waned.
10. Passive Investing's Limit May Be Near Panigirtzoglou suggests there may be a natural ceiling for passive investing. If market inefficiencies grow too large, active managers could stage a comeback, attracting capital back from ETFs to actively managed funds.
The ETF revolution has undoubtedly democratized investing, but Panigirtzoglou warns that its rapid rise comes with unintended consequences. 
From concentrated liquidity to increased systemic risks, the landscape is evolving in ways that demand vigilance. 
As ETFs near the $15 trillion milestone, will passive dominance plateau, or is its impact just beginning?
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/24/11/42107863/us-futures-head-lower-as-nvidia-reports-slowdown-in-quarterly-revenue-growth-expert-says-market-weakness-is-perfectly-normal-but-late-november-is-still-possible">US Futures Head Lower As Nvidia Earnings Fail To Impress Investors: Expert Says Market Weakness Is &#8216;Perfectly Normal,&#8217; But Late November Rally Is Still Possible</a></li>
</ul>
Image created using artificial intelligence via Midjourney.

10 Ways ETFs Are Reshaping US Markets As They Near $15 Trillion

Investors looking to bonds and bond ETFs for stability may face heightened volatility due to President-elect Donald Trump's approach to tariffs could put <a href="https://www.benzinga.com/topic/treasury-yields">upward pressure on yields</a>.
What Happened: Bond yields continue to climb after the Fed's 25-basis-point rate cut on Thursday. With the 10-year Treasury yield reached 4.34% in response to market speculation around Trump's fiscal agenda.
This shift complicates the Federal Reserve's efforts to ease borrowing costs, a concern for individual bondholders and bond ETFs investors. The backdrop of tax cuts and anticipated tariffs could limit the Fed's <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/11/41814589/why-trumps-boost-to-treasury-yields-inflation-expectations-may-weaken-feds-efforts-">ability to cut rates deeply</a>.
Also Read: <a href="https://www.benzinga.com/24/11/41886697/two-ideas-famed-stock-market-forecasters-agree-on-for-2025">Why Trump&#8217;s Win Has 2 Market Experts Betting On Small Caps, Financials</a>
Since mid-September, Treasury yields have surged by over 70 basis points, putting additional pressure on bond prices and impacting major bond ETFs. BofA Global Research has adjusted its outlook, with Treasury yields now projected in the 4.25%-4.75% range, Reuters reports. This rising yield environment creates challenges for bonds, as higher yields correspond to declining bond prices, which could erode returns for investors in bond ETFs.
Why It Matters: According to Reuters, the Committee for a Responsible Federal Budget estimates that Trump's proposed fiscal policies will add approximately $7.75 trillion to the national debt in a decade. Economists, banks and analysts have all warned that the <a href="https://www.benzinga.com/personal-finance/24/09/40961812/economists-warn-trumps-plans-for-tax-cuts-tariffs-and-deportation-could-trigger-skyrocketing-inf">plans will worsen inflation</a> and make debt unsustainable.
Bond ETFs, which offer exposure across various segments of the bond market, are likely to feel the impact of these fiscal pressures as bond yields trend higher.
Increased yields may lead to more appealing income for bond ETF investors but could also heighten risks related to price declines as yields continue to rise.
On Monday, 10 prominent bond ETFs were mainly trading lower:
<ul>
<li>Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>): $72.93, down 0.22%.</li>
<li>iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>): $98.26, 0.25% lower.</li>
<li>SPDR Portfolio Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPAB#NYSE">SPAB</a>): $25.34, down 0.3%.</li>
<li>iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>): $109.60, 0.23% lower.</li>
<li>Vanguard Short-Term Corporate Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VCSH#NASDAQ">VCSH</a>): $78.30, down 0.09%.</li>
<li>iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>): $91.93, down 0.6%.</li>
<li>Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VCIT#NASDAQ">VCIT</a>): $81.47, 0.22% lower.</li>
<li>iShares U.S. Treasury Bond ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/GOVT#BATS">GOVT</a>): $22.72, down 0.24%.</li>
<li>SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>): $97.02, down 0.05%.</li>
<li>Vanguard Total International Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BNDX#NASDAQ">BNDX</a>): $49.94, up 0.09%</li>
</ul>
With rising bond yields and fiscal expansion under Trump, bond ETFs could continue to see volatility. 
Bond investors may need to weigh the attraction of higher yields against potential declines in bond prices, particularly in high-yield and long-term Treasury segments, where market shifts are expected to be most pronounced.
Read Next:
<ul>
<li><a href="https://www.benzinga.com/government/regulations/24/11/41885777/how-trumps-tax-cuts-tariffs-animal-spirits-could-shape-sp-500-earnings">How Trump&#8217;s Tax Cuts, Tariffs, &#8216;Animal Spirits&#8217; Could Shape S&amp;P 500 Earnings</a></li>
</ul>
Photo: Shutterstock

Bond ETFs Slide As Fed Cuts Clash With Trump's Fiscal Agenda

Americans receiving <a href="https://www.benzinga.com/personal-finance/24/09/40800774/gen-xs-looming-retirement-crisis-is-worse-than-they-realize-expert-compares-it-to-being-handed-a">Social Security payments</a> may see less of an increase next year, according to a nonprofit group that represents senior citizens.
The Social Security Administration is poised to announce its yearly cost of living adjustment (COLA) for payments to 71 million Americans in the middle of next month, effective in January 2025. The government agency handed out a 3.2% increase for this year last October.
The Senior Citizens League expects a 2.5% increase for next year, based on inflation falling from 2.9% in July to <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/09/40815794/fed-is-all-clear-for-launch-on-cutting-rates-as-inflation-falls-to-lowest-point-in-">2.5% in August</a>.
By law, the annual inflation adjustment is based on the average inflation during July, August, and September&nbsp;as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Read Also: <a href="https://www.benzinga.com/personal-finance/24/09/40817544/report-warns-of-16-500-annual-social-security-benefit-cut-for-dual-income-couples-by-2033">Report Warns of $16,500 Annual Social Security Benefit Cut for Dual-Income Couples by 2033</a>
The Bureau of Labor Statistics averages the CPI-W for these three months and then compares it with the same time frame from the previous year. The percentage difference between the two is the COLA, payable for checks received in January 2025. 
The league says the expected 2.5% increase will not be enough for seniors to meet the higher cost of living. 
Nearly 80% of senior households report that their monthly budget for essential items like food, housing, and prescription drugs had increased over the last 12 months, according to a 2024 survey taken by the organization. Almost two-thirds &#8212; 63% &#8212; say they&#8217;re worried that their income won&#8217;t be enough to cover these basic costs in the coming months.
&#8220;Ensuring that seniors have enough to feed and house themselves with dignity is a major reason why we advocate for a minimum COLA of 3%,&#8221; said Shannon Benton, the league&#8217;s executive&nbsp;director.&nbsp;
She said about two-thirds of seniors rely on Social Security for more than half of their monthly income, and 28% depend on it entirely.
Retirement Stocks
Dividend-yielding, retirement-oriented stocks, typically selected for their risk-averse nature, experienced mixed performance by midday trading on Monday.
<ul>
<li>Coca-Cola Co (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KO#NYSE">KO</a>) gained 0.92% to $72.06.</li>
<li>Anhueser Busch InBev (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BUD#NYSE">BUD</a>) slipped 0.41% to $64.63.</li>
<li>Dominion Energy, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/D#NYSE">D</a>) rose 1.07% to $58.78.</li>
<li>Microsoft Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>) slipped 0.19% to $429.78.</li>
</ul>
Retirement ETFs
Exchange-traded funds that are well suited for retirement trended upward on Monday.
<ul>
<li>Vanguard High Dividend Yield ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VYM#NYSE">VYM</a>) rose 0.41%.</li>
<li>IShares MSCI EAFE ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EFA#NYSE">EFA</a>) gained 0.34%.</li>
<li>Vanguard Total World Stock ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VT#NYSE">VT</a>) edged up 0.53%.</li>
<li>IShares Cohen &amp; Steers REIT ETF ((BATS: <a class="ticker" href="https://www.benzinga.com/stock/icf#BATS">ICF</a>) went up 0.20%.</li>
<li>Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) inched up 0.21%.</li>
</ul>
Retirement Plan Stocks
Financial service firms that offer retirement plans were also on the upswing on Monday.
<ul>
<li>The Charles Schwab Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SCHW#NYSE">SCHW</a>) picked up 2.5% to $63.67.</li>
<li>Wells Fargo &amp; Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/WFC#NYSE">WFC</a>) gained 1.89% to $53.78.</li>
<li>JPMorgan Chase &amp; Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JPM#NYSE">JPM</a>) gained 1.47% to $201.33.</li>
</ul>
Read Now: 
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<li><a href="https://www.benzinga.com/personal-finance/24/09/40695081/we-should-not-just-be-dependent-upon-the-payroll-tax-to-fund-social-security-says-retirement-exp">&#8216;We Should Not Just Be Dependent Upon The Payroll Tax&#8217; To Fund Social Security, Says Retirement Expert Teresa Ghilarducci</a></li>
</ul>
Photo: Shutterstock

News

iShares Trusthen & Steers Realty Majors Index Fund

MSFT

SCHW

Social Security Payments Set For 2.5% Increase Next Year; Retirement-Oriented Dividend Stocks Like Coca-Cola, Wells Fargo See Gains

Bond traders predict that the Federal Reserve&#8216;s<a href="https://www.benzinga.com/government/24/06/39506407/6-biggest-us-banks-ramp-up-buybacks-undeterred-by-stress-tests"> interest-rate cuts </a>will go well beyond what the agency has forecast for the next nine months.
Traders in the U.S. rates options market expect a much higher 3 percentage points worth of cuts by March. This dwarfs the Fed&#8217;s recent projections of just 25 basis points of reductions by the end of 2024 and a total 125-basis-point cut by the end of next year, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-06-25/bond-traders-boldly-bet-on-300-basis-points-of-fed-cuts-by-march?cmpid=BBD062624_OUS&amp;utm_medium=email&amp;utm_source=newsletter&amp;utm_term=240626&amp;utm_campaign=openamericas&amp;sref=TBDibEcD">reported</a>.
Options-market activity related to the secured overnight financing rate over the past three sessions show a significant upside if the Fed reduced its key rate by 300 basis points to 2.25% by next year&#8217;s first quarter.
Also Read: <a href="http://Bank Stocks Trend Upward As Fed Shares Possible Changes To Bank-Capital Overhaul">Bank Stocks Trend Upward As Fed Shares Possible Changes To Bank-Capital Overhaul</a>
This scenario would allow traders to hedge other investments, but it is an unlikely outcome unless the U.S. economy plummets into recession.
Investors have been keeping a close eye on economic data and remarks by Fed officials for any clues on the timing of eventual Fed easing while hedging against extreme rate cuts and other tail-risk outcomes.
Price Action:  iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>) slipped 0.36% by early-afternoon trading on Wednesday, while Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) declined 0.40%. Vanguard Total International Bond ETF (BNDX) slid 0.43%.
Now Read: <a href="https://www.benzinga.com/real-estate/24/05/38647920/homebuyers-get-mixed-news-from-freddie-mac-and-the-federal-reserve">Homebuyers Get Mixed News From Freddie Mac And The Federal Reserve</a>
Image: Shutterstock

Federal Reserve

Markets

Bond Traders Expect Much Deeper Interest Rate Cuts Than Projected

Markets are expecting the neutral rate &#8212; a theoretical rate that remains stable due to full employment and stable inflation &#8212; to stay higher than policymakers are forecasting. What does this mean for bond <a href="https://www.msn.com/en-us/money/markets/bond-etfs-unfazed-by-fed-decision-to-keep-rates-steady/ar-BB1ob69W">exchange-traded funds</a>?
A higher neutral rate may limit the Federal Reserve&#8217;s ability to cut interest rates, possibly causing headwinds for bonds, <a href="https://www.bloomberg.com/news/articles/2024-06-23/how-long-will-high-rates-last-bond-markets-say-maybe-forever?srnd=homepage-americas&amp;sref=TBDibEcD">Bloomberg </a>reports. 
Forward contracts on the five-year interest rate in the next five years — a proxy for the market's view of where U.S. rates might land — have stagnated at 3.6%. That is down from last year's peak of 4.5%, but it's still more than one full percentage point higher than the average over the past decade and above the Fed's own estimate of 2.75%.
This indicates the market is pricing in a much more elevated floor for yields, according to Bloomberg. This may limit bond performance, which might hamper investors&#8217; hopes for the kind of bond rally that saved them late last year.
Also read: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/06/39420979/us-economy-in-state-of-unstable-equilibrium-study-finds">US Economy &#8216;In State Of Unstable Equilibrium,&#8217; Study Finds</a>
Investor sentiment is rising steadily, but a Bloomberg gauge of Treasury returns was down just 0.3% in 2024 as of Friday, after shedding 3.4% for the year at its low point. Benchmark yields are down about half a percentage point from their year-to-date peak in April, Bloomberg reported.
The true level of the neutral rate, also known as R-Star, may take an upward trend that would reverse a decades-long downward drift on expectations for large and protracted government budget deficits and increased spending on battling climate change.
Further gains in bonds may require a more pronounced slowdown in inflation and growth to prompt interest rate cuts more quickly and deeply than the Fed currently envisions. A higher neutral rate would make this scenario less likely, according to Bloomberg.
Economists expect&nbsp;data next week&nbsp;to show that the Fed's preferred gauge of underlying inflation slowed to an annualized rate 2.6% last month from 2.8%. 
That is the lowest reading since March 2021, but it still exceeds the Fed's goal for 2% inflation. And the unemployment rate has been at or below 4% for more than two years, the best performance since the 1960s.
Price action: iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>) was up 0.01%, the Vanguard Total Bond Market Index Fund (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) was down 0.04% and the Vanguard Total International Bond Index Fund (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BNDX#NASDAQ">BNDX</a>) slipped 0.12% at the time of publication Monday.
Read Next:
<a href="https://www.benzinga.com/economics/macro-economic-events/23/12/36438336/investor-optimism-tested-navigating-2024-bond-markets-uncertain-terrain">Investor Optimism Tested: Navigating 2024 Bond Market&#8217;s Uncertain Terrain</a>
Photo: Shutterstock

Media

Market's Higher Neutral Rate Expectations May Challenge Bond ETFs

The European Central Bank is universally <a href="https://www.benzinga.com//node/39029946">expected to cut interest rates for the Euro area this week</a>.
Cutting back on interest rates for the first time in two decades can be seen as a positive sign for the dwindling European economy, which has been hit by slow growth and poor demographic patterns.
Average inflation in Euro area countries has been mostly on a downward trend since last year, reaching an annual 2.4% in both March and April, down from a peak of 10.6% in October 2022.
The measure, however, is very dynamic within the block, with figures as low as 0.4% for Lithuania and as high as 4.9% in Belgium.
The ECB commenced its latest rate hike cycle in July 2022. Key ECB interest rates, the European counterpart for the federal funds rate, was hiked a total of 10 times and now stands at 4%. The same rate has been kept steady since September of last year.
June's cut will bring the rate down by 25 basis points to a floor of 3.75%.
Yet the steady pace towards the ideal measure of 2% annual inflation might be hitting a roadblock this month, as Eurostat, the block's main statistics office, is estimatfing that May's inflation has gone up to 2.6%, above estimates of 2.5%.
If the measure is confirmed, it won&#8217;t interfere with plans to lower interest rates. It might influence a decision by the ECB to pause rates during July and slow the speed of rate cuts down the line.
Bloomberg Economics has <a href="https://www.bloomberg.com/news/articles/2024-06-01/central-banks-latest-world-rate-paths-set-to-diverge-with-ecb-s-first-cut?sref=TBDibEcD">forecast</a> a pause in July and further cuts in September, October and December.
Read Also: <a href="https://www.benzinga.com/news/24/05/38951699/eu-approves-3-5b-in-frozen-russian-assets-for-ukraine-janet-yellen-has-a-plan-to-increase-amount-by">EU Approves $3.5B In Frozen Russian Assets For Ukraine: Janet Yellen Has A Plan To Increase Amount By Over 10X</a>
<h3 class="wp-block-heading">What This Means For US</h3>
Timing for the EU's latest inflationary cycle is in line with the U.S.'s wave of price increases. Both territories have been subject to the same variables. Energy prices, for example, are affected by the Ukraine/Russia war.
Yet the block's inflation is easing faster than in the U.S.
<a href="https://www.benzinga.com/markets/equities/24/05/38842603/us-inflation-falls-as-expected-in-april-bolsters-fed-rate-cut-bets">Yearly U.S. inflation was 3.4% in April</a>, down from 3.5% in March. 
On Friday, the Fed's preferred measure for inflation, the Personal Consumption Expenditure, was released for the month of April, showing <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/39110198/feds-preferred-inflation-gauge-matches-estimates-personal-income-spending-slow-mo">a steady course, with a 2.7% annual rise as compared to the previous year</a>.
In a Monday interview, Minneapolis Fed President Neel Kashkari advocated for maintaining the current Fed funds rate in the U.S. for a longer period <a href="https://www.benzinga.com/24/06/39131539/feds-neel-kashkari-advocates-for-no-interest-rate-cut-until-we-get-a-lot-more-data-to-convince-us-am">to avoid the risk of jeopardizing U.S. economic prosperity</a>.
The EU's decision will further widen the gap with the cost of borrowing in the U.S., where the federal funds rate now stands at between 5.25% and 5.5%.
Canada is also expected to slash rates this week, in a decision to be confirmed on Wednesday, also widening the gap of borrowing cost across the Northern border, putting further pressure on the Fed to begin slashing rates sooner rather than later.
Canada's annual inflation rate also shows a better trajectory than its American counterpart, having dropped to 2.7% in April, down from 2.9% in March.
An upcoming <a href="https://www.benzinga.com/topic/jobs-report">jobs report</a> this Friday will further inform the Fed in its upcoming decisions. Economists are estimating the creation of 190,000 jobs in May.
<h3 class="wp-block-heading">Stocks And Other Assets To Watch </h3>
Fixed-income securities like government bonds tend to go up as interest rates are slashed.
Their prices will likely be affected by expectations around upcoming rate cuts in the U.S.
Last week, Bank of America chief investment strategist Michael Hartnett said <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/39116124/bank-of-america-strategist-shifts-to-bonds-stock-sell-off-prophecy-on-benign-inflat">he's bullish on bonds for the second half of the year as expectations</a> on rate cuts grow and may even become realized.
He said to "buy any dip in bond prices," while recommending to "sell the first cut" for stocks.
While there are many ways to <a href="https://www.benzinga.com/money/how-to-buy-bonds">buy government bonds</a>, investors can also access the bond market by purchasing bond ETFs like iShares Core US Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>) and Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>).
<h3 class="wp-block-heading">Real Estate</h3>
The real estate market has been <a href="https://www.benzinga.com//node/39110330">one of the worst hit by the recent wave of rate increases</a>, as the cost of borrowing for both commercial and personal building and renovation has skyrocketed.
Expectations on rate cuts could turn out to be a lifeline for the sector, which is covered by ETFs like Vanguard Real Estate Index Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VNQ#NYSE">VNQ</a>), Schwab US REIT ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SCHH#NYSE">SCHH</a>) and Real Estate Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLRE#NYSE">XLRE</a>).
Now read: <a href="https://www.benzinga.com//node/38934737">EU Enacts World&#8217;s First AI Regulation, First Compliance Trigger Will Aim To Tackle AI Systems That Pose &#8216;Unacceptable&#8217; Risk</a>
Shutterstock image.

Sector ETFs

Eurozone

General

Real Estate

SCHH

XLRE

Pressure Mounts On Fed As Eurozone, Canada Plan Interest Rate Cuts This Week

Investors are growing increasingly concerned about the potential impact of the <a href="https://www.benzinga.com/news/24/04/38104382/serious-debate-needed-to-avert-2025-us-debt-crisis-warns-wharton-expert">mounting U.S. debt</a> on the bond market, with the issue expected to take center stage as the presidential election approaches.
What Happened: The U.S. government&#8217;s debt is expected to balloon, potentially overshadowing an anticipated bond rally. This is due to the ongoing large fiscal deficits, which show no signs of abating ahead of the presidential election, Reuters reported on Friday.
Investors are already adjusting their portfolios to mitigate potential losses if Treasury yields surge due to supply and demand imbalances. There are also concerns that the uncertainty surrounding the necessary debt for deficit spending could destabilize the $27 trillion Treasury market, a cornerstone of the global financial system.
Despite the focus on the Federal Reserve&#8217;s potential interest rate cuts, analysts and investors anticipate that fiscal concerns will become more pronounced as the election nears. Both President Joe Biden and Republican candidate Donald Trump have not made reducing deficit spending a priority, according to the report.
See Also: <a href="https://www.benzinga.com/news/24/05/38955491/mohamed-el-erian-and-bitcoin-critic-peter-schiff-highlight-golds-soaring-prices-and-market-momentum?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Mohamed El-Erian And Bitcoin-Critic Peter Schiff Highlight Gold&#8217;s Soaring Prices And Market Momentum: &#8216;Just Sit Tight And Enjoy The Ride&#8217;</a>
Why It Matters: The concerns over rising U.S. debt come amid a broader financial landscape marked by significant shifts. On May 16, disinflation hopes began reshaping Treasury yields, with expectations of Federal Reserve rate cuts influencing market trends.
This shift contributed to an optimistic sentiment about <a href="https://www.benzinga.com/general/macro-notification/24/05/38880563/disinflation-hopes-reshape-treasury-yields-major-trend-5-bond-etfs-poised-to-rally-on-">potential rallies in bond ETFs</a>, such as the Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) and iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NASDAQ">EMB</a>).
Additionally, the <a href="https://www.benzinga.com/news/earnings/24/05/38916165/nasdaq-s-p-500-futures-keep-head-above-water-ahead-of-fed-speeches-analyst-says-market-boosting-the">S&amp;P 500 and Nasdaq futures</a> showed resilience ahead of key Federal Reserve speeches, indicating a market buoyed by optimism. This positive sentiment was reflected in the performance of major indices like the Invesco QQQ Trust, Series 1 (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>), and SPDR S&amp;P 500 (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>).
Read Next: <a href="https://www.benzinga.com/news/earnings/24/05/38960399/wall-street-braces-for-subdued-start-ahead-of-nvidia-earnings-fed-minutes-analyst-cautions-about-gu?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Why Nasdaq, S&amp;P 500 Futures Are Flatlining Wednesday</a>
Photo by Austin Distel on Unsplash
This story was generated using <a href="https://www.benzinga.com/author/benzinga-neuro">Benzinga Neuro</a> and edited by <a href="https://www.benzinga.com/topic/Pooja-Rajkumari" target="_blank" rel="noreferrer noopener">Pooja Rajkumari</a>

Macro Economic Events

Economics

iShares JPMorgan USD Emerging Markets Bond Fund

Investors Fear Mounting US Debt Could Overshadow Bond Rally Ahead Of Presidential Elections

A major trend shift is unfolding in the bond market, as key Treasury yields are currently testing the support of the crucial 200-day moving average, following the release of benign economic data that has cemented investor bets on <a href="https://www.benzinga.com/markets/equities/24/05/38842603/us-inflation-falls-as-expected-in-april-bolsters-fed-rate-cut-bets">Federal Reserve rate cuts.</a>
Last month, the inflation rate calculated using the consumer price index (CPI) came in at 3.4% compared to the same month last year, down from 3.5% in March, and in line with the forecasted 3.4% increase. The &#8220;core&#8221; inflation rate, which excludes volatile energy and food prices, also matched estimates, falling from 3.8% to 3.6%.
April's inflation reading has raised hopes that the disinflation trend may restart after three consecutive higher-than-predicted CPI readings in the first quarter. 
In his recent comments, Federal Reserve Chair Jerome Powell downplayed concerns about a possible hike in interest rates, signaling that the next adjustment would likely be a reduction. However, he emphasized this cut might come later than the markets initially anticipated.
Money markets are currently factoring in a 50 basis point reduction in interest rates by the end of the year, with a 70% chance for the Federal Reserve to begin its loosening cycle in September.
<h1 class="wp-block-heading">Treasury Yields Eye 200-Day Moving Average Support</h1>
The yield on the benchmark 10-year Treasury note traded at around 3.36% on Thursday, hitting an intraday low of 3.31%, temporarily sliding below the 200-day average positioned at 3.33%. 
Similarly, yields on both 2-year and 30-year Treasury notes are currently testing the support of the 200-day average.
The 200-day moving average is a widely watched technical indicator that helps investors gauge the long-term trend of a security or index. 
When Treasury yields fall below this level, it often signals a bearish or downward trend, suggesting that investors are seeking safer assets amid expectations of a slowing economy or lower interest rates. This shift can create a more favorable environment for bond prices, which move inversely to yields.
Here&#8217;s a snapshot of the current yield levels compared to their 200-day moving averages, as well as their 2024 high-to-low range. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Maturity</th>
<th>Current Yield</th>
<th>200-day Moving Average</th>
<th>2024 Peak</th>
<th>2024 Low</th>
</tr>
</thead>
<tbody>
<tr>
<td>2 year</td>
<td>4.78%</td>
<td>4.75%</td>
<td>5.05%</td>
<td>4.12%</td>
</tr>
<tr>
<td>5 year</td>
<td>4.39%</td>
<td>4.35%</td>
<td>4.75%</td>
<td>3.75%</td>
</tr>
<tr>
<td>10 year</td>
<td>4.36%</td>
<td>4.33%</td>
<td>4.74%</td>
<td>3.82%</td>
</tr>
<tr>
<td>30 year</td>
<td>4.50%</td>
<td>4.48%</td>
<td>4.85%</td>
<td>4.07%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated as of May 16, 2024 (11:45 a.m. EDT) </figcaption></figure>
<h1 class="wp-block-heading">Chart: Inflation Data Casts Doubt On 10-Year Treasury Yield&#8217;s 2024 Rising Trend</h1>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1024x495.png" alt="" class="wp-image-341796" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read Also: <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/38873168/us-inflation-data-prematurely-released-by-accident-yet-traders-missed-golden-oppo">US Inflation Data Prematurely Released By Accident, Yet Traders Missed Golden Opportunity</a>
<h1 class="wp-block-heading">Bond ETFs Set To Rally</h1>
The shift in Treasury yields has set the stage for a rally in bond ETFs, especially those focused on long-duration bonds. 
Here are five bond ETFs poised to benefit from rising expectations of Fed rate cuts:
<ol>
<li>iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>): This ETF tracks long-term U.S. Treasury bonds and is particularly sensitive to changes in interest rates. With long-dated yields falling, TLT could see sharp gains as it moves inversely to yields. In reaction to April&#8217;s inflation data, it rose 1.4% on the day.</li>
<li>Vanguard Total Bond Market Index Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>): A broader option, BND includes a mix of short-, medium-, and long-term bonds. Its diversified approach makes it a stable choice as market sentiments shift. Following the latest inflation statistics, BND inched 0.6% higher.</li>
<li>iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>): As rate cut expectations strengthen, investment-grade corporate bonds could see price increases. LQD offers exposure to this segment.</li>
<li>SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>): Higher risk and higher reward, JNK covers the high-yield, or &#8220;junk,&#8221; bond market. Rate cuts often boost these bonds as investors hunt for yield.</li>
<li>iShares J.P. Morgan USD Emerging Market Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NYSE">EMB</a>): As Treasury yields retreat and the Fed hints at a slower pace for rate hikes, emerging markets bonds could benefit from increased investor appetite for higher-yielding assets. Notably, EMB rose 1.1% on Wednesday, positively reacting to inflation data. </li>
</ol>
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/38850154/economists-react-to-inflation-retail-sales-the-soft-landing-narrative-is-still-a-po">Economists React To Inflation, Retail Sales: &#8216;The Soft Landing Narrative Is Still A Possibility But Not A Guarantee&#8217;</a>
Photo: Shutterstock

Macro Notification

Specialty ETFs

Treasuries

Econ #s

Movers

Disinflation Hopes Reshape Treasury Yields' Major Trend: 5 Bond ETFs Poised To Rally On Fed Rate Cuts

The bond market is showing new signs of unpredictability as expectations over Fed rate cuts <a href="https://www.benzinga.com/opinion/24/03/37938028/exclusive-interest-rates-rode-the-elevator-up-but-analyst-predicts-theyll-take-the-stairs-coming-dow">shift with every new piece of economic data</a>.
Last week, Fed Chair Jerome Powell acknowledged that <a href="https://www.benzinga.com/economics/macro-economic-events/24/03/37857035/fed-chair-powell-opens-door-to-rate-cuts-this-year-downplays-recent-inflation-upt">rate cuts for this year are being decided on a meeting-by-meeting basis</a>. Therefore, it's not possible to predict how much the cost of borrowing will drop in 2024.
However, some investors <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37900527/federal-reserve-pushes-stocks-to-record-highs-as-rate-cuts-loom-nvidia-rallies-appl">continue to price in at least three rate cuts this year</a>. This took the S&amp;P 500 and other market gauges to record heights last week.
Investors priced in significant rate cuts for 2024 during the first two months, as inflation showed consistent signs of easing. 
But rising prices from February's CPI report came in <a href="https://www.benzinga.com/markets/equities/24/03/37615483/inflation-rises-more-than-expected-to-3-2-rebuffs-expectations-of-june-fed-rate-cut">above economist expectations</a>. And stronger than expected economic activity shows that inflation could be harder to tame than many had hoped.
Meanwhile, the fear of <a href="https://www.benzinga.com/markets/equities/24/01/36614222/stagflation-in-2024-red-sea-crisis-could-trigger-domino-effect-for-global-costs">stagflation</a> is weighing on optimism. 
Read Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37940764/commodities-poised-for-comeback-in-investor-portfolios-this-time-is-different-strat">Commodities Poised For Comeback In Investor Portfolios: &#8216;The Future Could Be Different,&#8217; Strategist Says</a>
How Treasury Notes Are Reacting: Treasury yields, which come down with interest rate cuts, continue to hang on attractive levels.
The yield on the 10-year U.S. The Treasury note was 4.25% on Tuesday, keeping the cost of borrowing money high for prospective homebuyers looking to get into a mortgage, as well as for corporate borrowers.
The 30-year fixed mortgage rate is still gravitating around 7%, which is <a href="https://www.benzinga.com/markets/equities/24/03/37855254/are-you-a-housing-market-lock-in-high-mortgage-rates-result-in-people-not-living-in-homes-they-w">negatively affecting the U.S. housing market</a>.
Yields on Treasury assets set the floor on mortgages and the general cost of borrowing, as mortgage lenders keep interest rates above bond yields in order to attract similar investors, who would otherwise just decide to invest in Treasury notes.
Yields on the 10-year note peaked at 5% in October of last year. They quickly dropped as it became apparent that the Fed's monetary policy was working. The 10-year Treasury yield went from 3.86% at the start of the year to today's 4.25%.
Investors today are <a href="https://www.wsj.com/finance/investing/treasury-yields-rising-fed-interest-rate-expectations-4a157a85?mod=hp_lead_pos11">more</a> moderate in their rate cut expectations. Current yields continue to reflect expectations that the Fed will cut rates in the future. They are now expecting that prediction to come true on a longer timescale.
Investors continue to expect yields to drop. The only thing that could take yields back to October's heights would be if the market receives very strong signals of economic acceleration, taking inflation back up again.
Retail investors can gain diversified exposure to the bond market by purchasing bond ETFs. The largest ones include Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>), iShares Core US Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>) and iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>).
Now Read:<a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/03/37891092/5-technologies-that-could-be-worth-220-trillion-by-2030-cathie-woods-ark-predicts-t"> 5 Technologies That Could Be Worth $220 Trillion By 2030, Cathie Wood&#8217;s ARK Predicts &#8211; &#8216;The Time Is Now&#8217;</a>
Image: Shutterstock

Bond Traders Think Interest Rate Cuts Are Ahead, But One Caveat Keeps Yields Above 4%

Vanguard has become a towering figure <a href="https://www.benzinga.com/etfs">in the world of exchange-traded funds (ETFs)</a>. 
As investors increasingly turn to ETFs for their diversification, lower costs, and liquidity, understanding the offerings and strategies of major players like Vanguard is essential. 
Yet, amidst this expansive array of financial instruments, one notable absence in Vanguard&#8217;s portfolio raises eyebrows: the lack of a <a href="https://www.benzinga.com/topic/bitcoin-etf">Bitcoin ETF. </a>
Here, we delve into the five critical factors about Vanguard ETFs, also explaining why a Bitcoin ETF is deliberately missing from their portfolio lineup.
<h3 class="wp-block-heading">Vanguard&#8217;s Status In The ETF Arena</h3>
Vanguard ranks as the second-largest ETF issuer globally, overseeing a diverse portfolio of over a hundred ETFs and boasting an impressive $2.5 trillion in assets under management (AUM), just shy of BlackRock Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BLK#NYSE">BLK</a>), which leads with $2.7 trillion AUM.
The Vanguard S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VOO#NYSE">VOO</a>), with $426 billion in AUM as of Mar. 14, 2024, is not only Vanguard&#8217;s flagship fund but also the world&#8217;s second-largest ETF, trailing slightly behind the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) at $503 billion. 
Top 7 Vanguard&#8217;s ETFs By AUM
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>ETF</th>
<th>AUM (bn)</th>
</tr>
</thead>
<tbody>
<tr>
<td>Vanguard S&amp;P 500 ETF </td>
<td>426.87 </td>
</tr>
<tr>
<td>Vanguard Total Stock Market ETF </td>
<td>385.48 </td>
</tr>
<tr>
<td>Vanguard FTSE Developed Markets ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VEA#NYSE">VEA</a>)</td>
<td>130.07 </td>
</tr>
<tr>
<td>Vanguard Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VUG#NYSE">VUG</a>)</td>
<td>119.81 </td>
</tr>
<tr>
<td>Vanguard Value ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTV#NYSE">VTV</a>)</td>
<td>115.14</td>
</tr>
<tr>
<td>Vanguard Total Bond Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>)</td>
<td>105.94</td>
</tr>
<tr>
<td>Vanguard Div Appreciation ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VIG#NYSE">VIG</a>) </td>
<td>77.92</td>
</tr>
</tbody>
</table>
</figure>
<h3 class="wp-block-heading">Champion of Low Fees</h3>
In the competitive ETF marketplace, cost efficiency is a significant battleground. Vanguard emerges as a victor here, offering the lowest average expense fees among its funds—an AUM-weighted average expense ratio of a mere 0.05%, according to data from VettaFi. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Issuers</td>
<td>Expense Rank</td>
<td>Avg. Expense Ratio (%)</td>
</tr>
<tr>
<td>Vanguard</td>
<td>1</td>
<td>0.05%</td>
</tr>
<tr>
<td>BNY Mellon</td>
<td>2</td>
<td>0.05%</td>
</tr>
<tr>
<td>Charles Schwab</td>
<td>3</td>
<td>0.08%</td>
</tr>
<tr>
<td>Bondbloxx Investment Management Corp.</td>
<td>4</td>
<td>0.10%</td>
</tr>
<tr>
<td>GAMCO Investors, Inc.</td>
<td>5</td>
<td>0.11%</td>
</tr>
<tr>
<td>Humankind USA LLC</td>
<td>6</td>
<td>0.11%</td>
</tr>
<tr>
<td>State Street</td>
<td>7</td>
<td>0.12%</td>
</tr>
<tr>
<td>Deutsche Bank AG</td>
<td>8</td>
<td>0.13%</td>
</tr>
<tr>
<td>Goldman Sachs</td>
<td>9</td>
<td>0.15%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Data: VettaFi</figcaption></figure>
The cheapest ETFs issued by Vanguard are the Vanguard S&amp;P 500 ETF, Vanguard Total Stock Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTI#NYSE">VTI</a>), and the Vanguard Total Bond Market ETF, all screening an expense ratio of just 0.03%.
<h3 class="wp-block-heading">Leading The 2024 Inflow Race</h3>
In 2024, Vanguard outshines its competitors in attracting investment flows. The issuer has seen a staggering $75 billion in inflows over the past three months, eclipsing BlackRock&#8217;s $55.7 billion, thereby securing its position as the top performer in fund flows thus far this year.
The Vanguard S&amp;P 500 ETF has attracted $21 billion over the past three months, topping the ranking among its peers. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Issuers</td>
<td>Fund Flow Rank</td>
<td>3-Month Fund Flow ($MM)</td>
</tr>
<tr>
<td>Vanguard</td>
<td>1</td>
<td>$70,097.57</td>
</tr>
<tr>
<td>BlackRock, Inc.</td>
<td>2</td>
<td>$55,791.59</td>
</tr>
<tr>
<td>Invesco</td>
<td>3</td>
<td>$20,380.07</td>
</tr>
<tr>
<td>State Street</td>
<td>4</td>
<td>$16,097.65</td>
</tr>
<tr>
<td>Dimensional</td>
<td>5</td>
<td>$9,362.99</td>
</tr>
<tr>
<td>JPMorgan Chase</td>
<td>6</td>
<td>$9,263.38</td>
</tr>
<tr>
<td>Fidelity</td>
<td>7</td>
<td>$9,240.89</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Data: VettaFi</figcaption></figure>
<h3 class="wp-block-heading">A Conservative Product Range</h3>
Unlike some of its peers, Vanguard has opted for a more conservative route in its ETF offerings. The company does not offer leveraged ETFs, sticking strictly to equity and fixed-income products. 
This strategic choice highlights Vanguard&#8217;s focus on traditional investment vehicles over speculative or alternative assets. Vanguard&#8217;s portfolio notably lacks any commodities, currency, or Bitcoin-related ETFs.
<h3 class="wp-block-heading">Absence of Bitcoin and Crypto ETFs</h3>
This absence isn&#8217;t due to oversight but a deliberate decision. Vanguard has explicitly stated it has no plans to introduce a Bitcoin ETF or any other crypto-related products, distinguishing itself from other major ETF issuers — such as BlackRock, VanEck, Franklin Templeton, WisdomTree, Invesco, Fidelity, Global X, 21 Shares and ProShares – who have embraced the crypto bandwagon.
Why No Bitcoin ETF? Vanguard&#8217;s Reasoning
Vanguard&#8217;s stance on Bitcoin and cryptocurrencies is grounded in a cautious approach to investment merit and client needs. Janel Jackson, global head of ETF Capital Markets and broker &amp; index relations at Vanguard, has expressed skepticism about the role of cryptocurrencies in long-term portfolios. 
Citing crypto&#8217;s speculative nature, lack of inherent economic value, and potential to disrupt portfolio stability, Vanguard sees crypto as an &#8220;immature asset class.&#8221; 
Instead, the company invests its interest in blockchain technology for its potential to enhance capital market efficiency, steering clear of cryptocurrencies as investment products.
Now Read: <a href="https://www.benzinga.com/markets/cryptocurrency/24/03/37712624/tightening-the-tap-regional-banks-tech-stocks-bitcoin-brace-for-liquidity-crunch-as-fed-li">Tightening The Tap: Regional Banks, Tech Stocks, Bitcoin Brace For Liquidity Crunch As Fed Lifeline Ends</a>

Coverage of Bitcoin, Etherum, Ripple and all the latest digital currencies.

Cryptocurrency

5 Things You Need To Know About Vanguard ETFs: Why There's No Bitcoin ETF In Their Lineup?

As 2023 concludes, the bond market has witnessed a remarkable rally, bolstered by the strength of the<a href="https://www.benzinga.com/news/23/12/36058438/federal-reserve-to-implement-six-rate-cuts-in-2024-amid-economic-slowdown-says-ing"> U.S. economy and a reduction in inflationary pressures.</a>
Despite this, some analysts caution that investor optimism might be overly optimistic for the upcoming year, The Wall Street Journal&nbsp;<a href="https://www.wsj.com/finance/investing/five-investors-on-how-to-navigate-the-bond-market-in-2024-d6e802d2?mod=hp_lead_pos3">reports</a>.
What Happened: This past year, the bond market&#39;s journey has been marked by significant volatility. The 10-year U.S. Treasury note yield, a key market indicator, has dramatically fluctuated.
Initially driven to highs not seen in over a decade by concerns over persistent high interest rates, these yields have since retreated due to various factors, including banking sector stresses and shifts in Federal Reserve policies, WSJ reports.&nbsp;
From its peak of over 5% in October, the highest in 16 years, the yield has retreated by a full percentage point, easing fears about its impact on broader economic factors such as mortgage and corporate loan rates.
There&#39;s a growing belief among economists and market participants in a &#39;soft landing&#39; scenario, where inflation recedes without triggering major economic downturns like increased unemployment or a recession.
However, the bond market is not without its challenges. Issues such as the expanding fiscal deficit, the impending need to refinance low-rated corporate debt, and the final phases of the Fed&#39;s anti-inflationary measures loom large.
Insights provided&nbsp;to the Journal&nbsp;by&nbsp;five seasoned investors reveal diverse perspectives on the future of inflation and the likelihood of a recession.
Also Read:&nbsp;<a href="https://www.benzinga.com/news/23/12/36058725/from-bearish-to-bullish-major-analysts-predict-us-stock-markets-performance-in-2024">From Bearish To Bullish: Major Analysts Predict US Stock Market&#39;s Performance In 2024</a>
George Bory, the chief investment strategist for fixed income at Allspring Global Investments, told WSJ that the risks to the macroeconomy hinge on the market&rsquo;s most significant assumption: inflation&nbsp;will fall smoothly and orderly toward the Fed&rsquo;s 2% target.
&ldquo;Our base case is inflation does come down, but not as orderly as the market thinks,&rdquo; Bory said. &ldquo;Ultimately getting to 2% will be challenging for the Fed without a notable slowdown in growth.&rdquo;&nbsp;
James St. Aubin, the chief investment officer at Sierra Mutual Funds, expresses concerns about the combined effects of higher interest rates and stricter lending standards potentially leading the economy into a recession.
He warns of the potential for a sudden economic downturn: &quot;Everyone always sees a soft landing just before a recession. Then something happens. Things slow down abruptly.&quot;
On a more optimistic note, Rick Rieder, BlackRock&nbsp;chief investment officer of global fixed income, is enthusiastic about the prospects for 2024. He sees significant bond opportunities, favoring investment-grade bonds and European corporate debt. &quot;This is an environment where you can clip 6.5% to 7% without taking that risk,&quot; Rieder told the Journal.
Frances Donald, global chief economist at Manulife Investment Management, suggests that the market might be underestimating the chances of a recession or inflation dropping below the Fed&#39;s target. She advocates for investing in bonds despite potential economic headwinds.
Torsten Slok, chief economist at Apollo Global Management, emphasizes the importance of considering the bond supply and government fiscal policies. He believes the market will pay more attention to Treasury auctions than ever before, telling WSJ, &quot;The market needs to take the bond supply more seriously.&quot;
For investors seeking opportunities in the bond market, here are three ETFs to consider:
<ol>
<li>
iShares Core U.S. Aggregate Bond ETF (ARCA:AGG): Offers diverse exposure to U.S. investment-grade bonds, including government and corporate bonds. Ideal for stable, core bond investments.
</li>
<li>
Vanguard Total Bond Market ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bnd#NASDAQ">BND</a>): Provides comprehensive access to the U.S. bond market, covering government, corporate, and municipal bonds. Suitable for broad market exposure.
</li>
<li>
SPDR Bloomberg Barclays High Yield Bond ETF (ARCA:JNK): Focuses on high-yield bonds with higher risk and return potential. Good for investors seeking greater income potential.
</li>
</ol>
Each ETF caters to different risk profiles and investment strategies, making them interesting options for diversifying an investment portfolio in the bond sector.
Now Read:&nbsp;<a href="https://www.benzinga.com/news/23/12/36061721/wall-street-braces-for-2024-recession-economic-growth-to-slow-markets-to-rise-say-bullish-firms">Wall Street Braces For 2024 Recession: Economic Growth To Slow, Markets To Rise, Say Bullish Firms</a>
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo: Shutterstock

Investor Optimism Tested: Navigating 2024 Bond Market's Uncertain Terrain

The traditional 60/40 investment portfolio has recorded a remarkable year of growth in 2023, sharply rebounding from a disappointing year in 2022. As of Dec. 27, the year-to-date performance of the 60/40 portfolio, benchmarked by the iShares Core Growth Allocation ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AOR#NYSE">AOR</a>), <a href="https://www.benzinga.com/money/what-is-the-60-40-investment-strategy">stands at approximately 13%. </a>
This performance figure ranks as the third-best year for the strategy since its inception in 2008, trailing only behind the strong years of 2009 and 2019.
As we enter the new year, investors are pondering whether the favorable conditions that supported both equities and bonds in the second half of the year will endure.
<h2 class="wp-block-heading">60/40 Portfolio In 2022-2023: From Downturn to Upswing</h2>
The 60/40 portfolio is a time-tested investment strategy known for its simplicity and effectiveness. It involves allocating 60% of the portfolio to stocks and 40% to bonds, with the aim to strike a balance between risk and reward.
Stocks offer the potential for higher returns but come with higher risk, while bonds generally provide lower but more stable returns. By combining both asset classes, the portfolio naturally diversifies, potentially reducing the risk of significant losses since stocks and bonds often react differently to market conditions.
In 2022, the traditional 60/40 portfolio faced one of its most challenging years due to the Fed&#8217;s aggressive interest rate hikes, which created strong headwinds for both equities and fixed-income assets.
The gauge fell as much as 17%, wiping out a sizable portion of the pandemic rally. 
An initial $1,000 investment in a 60/40 portfolio at the beginning of 2022 dipped to less than $800 by November of that year, only to rebound to its current value of $928.
<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="650" height="650" src="https://editorial-assets.benzinga.com/wp-content/uploads/2023/12/27172235/newplot-5-1.jpeg" alt="" class="wp-image-170022" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2023/12/27172235/newplot-5-1.jpeg 650w,https://editorial-assets.benzinga.com/wp-content/uploads/2023/12/27172235/newplot-5-1-300x300.jpeg 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2023/12/27172235/newplot-5-1-150x150.jpeg 150w" sizes="(max-width: 650px) 100vw, 650px" /></figure>
However, as inflation subsided in 2023, traders began to anticipate a normalization of elevated interest rates, betting on the Federal Reserve reducing borrowing costs in 2024. 
Money markets currently factor in six rate cuts by 25 basis points next year, a figure substantially higher than the indications given by Federal Reserve officials at the latest meeting, with the dot-plot showing a median preference for 75-basis-point cuts. 
Read also: <a href="https://www.benzinga.com/23/08/33967223/why-the-6040-portfolio-rule-is-not-for-everyone-the-statistics-might-surprise-you">Why The 60/40 Portfolio Rule Is NOT For Everyone – The Statistics Might Surprise You</a>
<h2 class="wp-block-heading">Will the 60/40 Portfolio Continue to Rally in 2024?</h2>
Looking ahead to 2024, it remains to be seen whether the numerous rate cuts currently priced in by the market will be delivered by the Federal Reserve. 
If these rate cuts materialize, bond yields are likely to continue heading lower, benefiting fixed-income assets and potentially rate-sensitive stocks such as those in the technology, real estate, and financial sectors.
On the other hand, if the decline in inflation stalls or fresh pressures emerge, the Federal Reserve may find it inappropriate to deliver as many rate cuts as currently expected by market participants. 
This could lead to disappointment in the markets and potentially weigh on both equities and bonds.
In summary, the 60/40 portfolio has made a strong comeback in 2023, but its performance in 2024 will depend on whether the anticipated rate cuts materialize and how economic factors evolve.
<h2 class="wp-block-heading">5 Strategies to Create a 60/40 Portfolio</h2>
Aside from the iShares Core Growth Allocation ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AOR#NYSE">AOR</a>), there are several other ways for investors to construct a 60/40 portfolio. 
Here are seven different approaches an investor can use to replicate a 60/40 portfolio, with each pairing a stock ETF with a bond ETF:
<ol>
<li>S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) and iShares 20+ Year Treasury Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NYSE">TLT</a>): Combining SPY, which tracks the S&amp;P 500 Index, with TLT, focusing on long-term U.S. Treasury bonds, offers a balanced portfolio with exposure to the U.S. stock market and the stability of government bonds.</li>
<li>Vanguard Total World Stock ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VT#NYSE">VT</a>) and iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>): VT provides global stock market exposure, while AGG tracks the U.S. Aggregate Bond Index, diversifying bond exposure.</li>
<li>iShares MSCI ACWI ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ACWI#NYSE">ACWI</a>) and Vanguard Total International Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BNDX#NYSE">BNDX</a>): ACWI offers global equity exposure, and BNDX focuses on non-U.S. bonds, providing international diversification.</li>
<li>iShares Core S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IVV#NYSE">IVV</a>) and Vanguard Total Bond Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>): Similar to SPY, IVV tracks the S&amp;P 500, and BND provides diversified exposure to the U.S. bond market.</li>
<li>Vanguard Total Stock Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTI#NYSE">VTI</a>) and Vanguard Total World Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BNDW#NYSE">BNDW</a>): VTI offers exposure to the entire U.S. stock market, and BNDW provides a globally diversified bond exposure.</li>
</ol>
Read now: <a href="https://www.benzinga.com/economics/macro-economic-events/23/12/36403950/treasury-etf-and-real-estate-sector-rise-together-as-30-year-yields-dip-below-4">Treasury ETF And Real Estate Sector Rise Together As 30-Year Yields Dip Below 4%</a>
Photo: Shutterstock

Tech

ACWI

BNDW

60/40 Portfolio Bounces Back From 2022 Slump: Is It The Right Investment Strategy For 2024?

New research from Goldman Sachs reveals that U.S. Exchange-Traded Funds (ETFs) have surpassed the threshold of $8 trillion in assets under management (AUM), setting an <a href="https://www.benzinga.com/etfs">all-time high this week</a>. 
This milestone is another clear indicator of the robust health of the investment landscape in the United States, as major stock market indices trade at or near their record levels. 
The S&amp;P 500, for instance, has rallied by 25% year to date, trading at a mere 1% distance from its all-time highs. Tech stocks in the Nasdaq 100 have soared 53% year to date, hitting a <a href="https://www.benzinga.com/news/large-cap/23/12/36305091/nasdaq-100-hits-record-high-set-for-best-annual-performance-since-1999-tech-boom">record high on Tuesday.</a>
But the increase in the ETF market size isn't just about a bullish stock market. Rising assets among U.S. ETFs have also been driven by the influx of fresh capital from investors, as a testament of a broader optimistic sentiment.
Statistics from ETFdb.com shows that the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), the largest ETF globally, saw an impressive $30.8 billion of inflows in December, raising its AUM to $478 billion. Similarly, another ETF tracking the S&amp;P 500, the Vanguard S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VOO#NYSE">VOO</a>), witnessed $5.5 billion of inflows this month. The Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>) also saw inflows, amounting to $4 billion.
Investors have shown a keen interest in bond-related ETFs as well. For instance, the iShares 20 Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>) has witnessed $3.6 billion of inflows so far this month, underlining the diversity of investor interest in both equity and bond markets, as the Federal Reserve&#8217;s stance shifts. 
Here are the top 10 U.S. ETFs with over $100 billion in assets:
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<th>ETF Name</th>
<th>Asset Class</th>
<th>Total Assets ($MM)</th>
<th>YTD Price Change</th>
<th>Avg. Daily Share Volume (3mo)</th>
<th>Previous Closing Price</th>
</tr>
<tr>
<td>SPDR S&amp;P 500 ETF Trust </td>
<td>Equity</td>
<td>$459,320</td>
<td>25.29%</td>
<td>83,028,508</td>
<td>$471.97</td>
</tr>
<tr>
<td>iShares Core S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IVV#NYSE">IVV</a>)</td>
<td>Equity</td>
<td>$396,818</td>
<td>25.41%</td>
<td>5,025,149</td>
<td>$476.15</td>
</tr>
<tr>
<td>Vanguard S&amp;P 500 ETF</td>
<td>Equity</td>
<td>$370,019</td>
<td>25.44%</td>
<td>4,786,040</td>
<td>$435.54</td>
</tr>
<tr>
<td>Vanguard Total Stock Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTT#NYSE">VTT</a>)</td>
<td>Equity</td>
<td>$344,291</td>
<td>25.04%</td>
<td>3,440,999</td>
<td>$236.33</td>
</tr>
<tr>
<td>Invesco QQQ Trust Series I (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>)</td>
<td>Equity</td>
<td>$226,720</td>
<td>53.54%</td>
<td>50,701,398</td>
<td>$407.08</td>
</tr>
<tr>
<td>Vanguard FTSE Developed Markets ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VEA#NYSE">VEA</a>)</td>
<td>Equity</td>
<td>$120,812</td>
<td>14.85%</td>
<td>11,897,938</td>
<td>$46.65</td>
</tr>
<tr>
<td>Vanguard Value ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTV#NYSE">VTV</a>)</td>
<td>Equity</td>
<td>$106,321</td>
<td>8.14%</td>
<td>2,694,169</td>
<td>$148.94</td>
</tr>
<tr>
<td>Vanguard Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VTG#NYSE">VTG</a>)</td>
<td>Equity</td>
<td>$105,540</td>
<td>46.26%</td>
<td>924,069</td>
<td>$310.27</td>
</tr>
<tr>
<td>iShares Core MSCI EAFE ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IEFA#NYSE">IEFA</a>)</td>
<td>Equity</td>
<td>$104,985</td>
<td>15.03%</td>
<td>8,991,273</td>
<td>$69.57</td>
</tr>
<tr>
<td>Vanguard Total Bond Market ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>)</td>
<td>Bond</td>
<td>$103,544</td>
<td>4.92%</td>
<td>7,811,976</td>
<td>$73.25</td>
</tr>
</tbody>
</table>
</figure>
Now read: <a href="https://www.benzinga.com/news/earnings/23/12/36300632/nasdaq-s-p-500-futures-bounce-higher-as-santa-claus-rally-awaits-analyst-says-december-typically-se">Nasdaq, S&amp;P 500 Futures Bounce Higher As Santa Claus Rally Awaits: Analyst Says December Typically &#8216;Second-Half Story&#8217;</a>
Photo: Shutterstock

IEFA

Rydex ETF Trust Rydex S&P Equal Weight ETF

US ETFs Surpass $8 Trillion In Assets: Top 10 Funds Holding Over $100B Each

In recent weeks, several bond exchange-traded funds (ETFs) have experienced a significant surge in inflows, indicating a <a href="https://www.benzinga.com/money/best-bond-etf">heightened interest among investors. </a>
This shift coincided with a market that significantly upped bets on Federal Reserve rate cuts for 2024, backed by a robust and ongoing <a href="https://www.benzinga.com/topic/inflation">disinflationary trend</a> in the U.S. economy. 
Speculators have gone as far as factoring in an initial rate cut as early as March 2024, with whispers of a total of five rate cuts by December 2024.
But which bond ETFs are currently piquing investors&#8217; interest?
<h2 class="wp-block-heading">From &#8216;Cash-Like&#8217; to &#8216;Equity-Like&#8217;</h2>
While the third quarter in 2023 witnessed a notable uptick in inflows into cash-linked bond ETFs, primarily those investing in short-dated Treasury bonds and bills, the latest trends are veering towards more aggressive fixed-income strategies.
Investors are strategically positioning themselves in anticipation of an imminent U-turn in Fed&#8217;s monetary policy stance, eyeing a select group of bond ETFs that have weathered the storm during the recent spate of interest rate hikes.
Their bullish stance on riskier bond ETFs underscores a burgeoning belief that the bond market landscape could undergo a substantial recalibration in the coming months, as they brace for a more accommodating monetary policy environment.
These ETFs encompass a diverse range, including long-term Treasury bonds, emerging-market bonds, and high-yield corporate bonds. 
<h2 class="wp-block-heading">Top 10 Bond ETFs by Fund Inflows in the Past Month</h2>
<figure class="wp-block-table"> 
<table>
<thead>
<tr>
<th>Name</th>
<th>Fund Flows (1-month)</th>
</tr>
</thead>
<tbody>
<tr>
<td>iShares Trust &#8211; iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYG#NYSE">HYG</a>)</td>
<td>$3.69 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>)</td>
<td>$2.62 bn</td>
</tr>
<tr>
<td>SPDR Series Trust &#8211; SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>)</td>
<td>$1.99 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NASDAQ">EMB</a>)</td>
<td>$1.89 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>)</td>
<td>$1.62 bn</td>
</tr>
<tr>
<td>Vanguard Bond Index Funds &#8211; Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>)</td>
<td>$1.56 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares Broad USD High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USHY#NYSE">USHY</a>)</td>
<td>$1.31 bn</td>
</tr>
<tr>
<td>Vanguard Scottsdale Funds &#8211; Vanguard Long-Term Treasury ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGLT#NASDAQ">VGLT</a>)</td>
<td>$665.99 bn</td>
</tr>
<tr>
<td>Vanguard Charlotte Funds &#8211; Vanguard Total International Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BNDX#NASDAQ">BNDX</a>)</td>
<td>$641.06 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares 5-10 Year Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IGIB#NYSE">IGIB</a>)</td>
<td>$216.67 bn</td>
</tr>
</tbody>
</table>
</figure>
Read Now: <a href="https://www.benzinga.com/etfs/specialty-etfs/23/12/36075348/golds-record-high-why-havent-gold-miners-followed-suit">Gold&#8217;s Record High: Why Haven&#8217;t Gold Miners Followed Suit?</a>
Photo: Shutterstock

Emerging Markets

New ETFs

Emerging Market ETFs

IGIB

USHY

VGLT

Investors Pour Billions To Aggressive Bond ETFs, Banking On Multiple Fed Rate Cuts in 2024

Investors have accumulated record amounts of cash and equivalent assets as a way to hedge against the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/10/35150923/why-this-cboe-global-markets-analyst-is-bullish-at-time-of-geopolitical-turmoil">volatility of recent times.</a>
Now, fund managers are urging investors to put that money to work, as decreasing inflation and the potential for an economic slowdown may lead to profitable opportunities in the bond markets.
<a href="https://www.ici.org/research/stats/mmf">According</a> to ICI Global, capital invested into money market fund assets reached a record of $5.73 trillion last week. Money market funds are characterized by having very low volatility and very high liquidity, holding large amounts of cash and other low-risk securities in their portfolios.
Investors tend to lean towards money market investing in times of uncertainty, when availability of cash is a prime concern and tolerance to risk is low. Money market funds give better returns than cash deposits on banks, which is why investors have been flocking towards these assets since the Fed began its tightening cycle last year, which has now taken the federal funds rate to between 5.25% and 5.50%.
But, with <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35783516/october-inflation-drop-triggers-markets-rally-economists-reassess-after-surprising-">inflation dropping to more comfortable levels</a>, bond managers are suggesting that now is an optimal time to allocate some of those assets into the bond market.
Minutes from the Federal Open Market Committee&#8217;s November meeting revealed that Fed participants view the current interest rate level of between 5.25% and 5.5% as restrictive, potentially signaling the end of their intensive rate hike campaign in light of recent positive inflation data and acknowledging the significant tightening of financial <a href="https://www.benzinga.com/economics/macro-economic-events/23/11/35903926/november-fomc-minutes-fed-leans-toward-rate-stability-as-inflation-eases">conditions in recent months.</a>
Also Read: <a href="https://www.benzinga.com/news/23/11/35905071/musk-and-the-magnificent-9-how-worlds-10-richest-people-bagged-400b-in-2023">Musk And The Magnificent 9: How World&#8217;s 10 Richest People Bagged $400B In 2023</a>
Greg Whiteley, head of Government Securities Investing at DoubleLine <a href="https://www.bloomberg.com/news/articles/2023-11-21/bond-managers-of-2-5-trillion-make-case-for-leaving-cash-behind?srnd=premium&amp;sref=TBDibEcD">told</a> Bloomberg that the range of 4.5% to 5% yield "is a safe place to be buying bonds."
The two-year treasury bond currently yields at 4.89% while the 5- and 10-year bonds have a yield of 4.44%.
Whiteley and other fund managers contend that the Federal Reserve&#8217;s actions are effectively slowing down the economy, a necessary step to reduce inflation back to the 2% target. Economist Gary Shilling <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35867664/legendary-economist-foresees-30-drop-in-stocks-predicts-recession-and-feds-credibil">this week predicted that a recession is imminent</a>, potentially including a 30% drop in stock values, which further supports the strategy of redirecting investments towards safer and comparatively higher-yielding assets such as bonds.
Piper Sandler strategist Michael Kantrowitz echoed the same prediction over the weekend, based on several data points coming<a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35866823/top-wall-street-strategist-expresses-worries-about-looming-recession-we-are-at-the-"> from housing, profits, and employment.</a> 
The housing market showed a slight uptick last week but<a href="https://www.benzinga.com/news/23/11/35836886/housing-market-shows-a-slight-uptick-but-remains-slow-ahead-of-beazer-homes-earnings-call"> continues at historically low levels</a>, with mortgage rates sustaining prices that are unaffordable for the majority of homebuyers.
Other economists, however, lean towards a soft-landing scenario, which would mean a return to pre-pandemic<a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/11/35820947/us-economy-gearing-towards-soft-landing-amid-inflation-concerns-says-economists"> inflation levels without a recession</a>.
Bond fund managers argue that sticking to cash "means you miss all the potential price appreciation if the economy starts to slow," as Ryan Murphy of Capital Group told Bloomberg.
The managers also pointed to <a href="https://www.benzinga.com/money/what-are-mortgage-backed-securities">mortgage bonds</a> as a sector that could lift off next year if interest rates come down. Mortgage-backed securities consist of pools of mortgages that lenders bundle together and sell as securities to third parties in order to free up more cash to continue lending.
While these securities gained a bad reputation for their role in the 2008 financial crash, increased regulation has made them appealing again. Although they still carry more risk than cash or government bonds, they're generally considered less risky than corporate bonds, because there&#8217;s real estate as collateral, and they carry less volatility than stocks.
These include Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) and iShares Core US Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>) for the broad ranging bond market, and iShares MBS ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MBB#NASDAQ">MBB</a>) as well as Vanguard Mortgage-Backed Securities ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VMBS#NASDAQ">VMBS</a>) for specific exposure to mortgage-backed securities.
Now Read: <a href="https://www.benzinga.com/fintech/23/11/35904576/sam-altman-in-discussions-about-openai-return-as-employees-revolt-and-msft-picks-up-the-pieces">Sam Altman In Discussions About OpenAI Return As Employees Revolt, Microsoft Picks Up The Pieces</a>
Image by Shutterstock.

VMBS

Ready For Recession? Fund Managers Advocate Shift To Treasury, Mortgage Bonds

Market participants are eagerly awaiting for the March personal consumption expenditure (PCE) price index report from the Bureau of Economic Analysis on Friday (April 28),&nbsp;<a href="https://www.benzinga.com/premarket-prep/" target="_blank">before the market opens</a>.&nbsp;
With the next FOMC meeting in less than a week, what is regarded as the Fed&#39;s preferred gauge of inflation will be considered a key signal for assessing&nbsp;<a href="https://www.benzinga.com/news/23/04/31957119/the-next-big-short-hedge-funds-place-record-bearish-bets-on-us-10-year-treasuries" target="_blank">market expectations about the Fed&#39;s impending policy moves.</a>
What To Know:&nbsp;The PCE price index grew 5% year on year in February 2023, down from 5.3% in January, and 0.3% month on month, down from 0.6% in January.&nbsp;
<ul>
<li>The Core PCE price index, which measures inflation over a wide range of consumer expenditures excluding energy and food and is of particular relevance to the Fed, increased 4.6% annually and 0.3% monthly in February. The annual figure was marginally above expectations (4.5%), while the monthly one matched estimates.&nbsp;</li>
<li>The market consensus&nbsp;is for the March core PCE price index to rise 0.3% month on month and 4.5% year on year.&nbsp;</li>
<li><a href="https://www.benzinga.com/economics/macro-economic-events/23/04/32045033/us-gdp-growth-falls-short-of-expectations-in-q1-markets-react-to-potential-fed-po" target="_blank">The Bureau of Economic Analysis&#39; initial GDP estimate&nbsp;in the first quarter&nbsp;of 2023&nbsp;</a>delivered surprises in terms of both real growth and the price deflator. While real GDP growth was lower than projected (1.1% vs. 2.2%), the price index for gross domestic purchases&nbsp;accelerated&nbsp;in the&nbsp;quarter (3.8% compared to 3.6% prior&nbsp;and a consensus of 3.7%).&nbsp;</li>
<li>The BEA also announced PCE prices grew at a 4.2% quarter-on-quarter annualized rate in the first quarter of&nbsp;2023 after gaining 3.7% in the fourth quarter of&nbsp;2022. The core PCE price index climbed 4.9% in the first quarter of&nbsp;2023 after rising 4.4%. Both figures were higher than market expectations of 0.5% and 3.7%, respectively.</li>
<li>In March, the U.S. consumer price index (CPI) inflation was 5% year-on-year, down from the 6% posted in February and below expectations of 5.2%. Core CPI inflation, instead, ticked up from 5.5% to 5.6% year-on-year.&nbsp;</li>
</ul>
The following are predicted to be some of the most volatile ETFs in response to the March PCE figures:
<ul>
<li>SPDR S&amp;P 500 ETF Trust (ARCA: SPY)</li>
<li>Invesco QQQ Trust Series 1 (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>)</li>
<li>SPDR Dow Jones Industrial Average ETF Trust&nbsp;(ARCA: DIA)</li>
<li>iShares 20 Plus&nbsp;Year Treasury Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>)</li>
<li><a href="https://www.benzinga.com/money/vanguard-review/">Vanguard</a> Total Bond Market Index Fund ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bnd#NASDAQ">BND</a>)</li>
<li>SPDR Gold Trust (ARCA: GLD)</li>
<li>Invesco DB USD Index Bullish Fund ETF (ARCA: UUP)</li>
</ul>
Why It Is Important For Markets: March Core PCE inflation will almost certainly remain substantially over the Fed&#39;s 2% inflation target.
Markets will be paying close attention to how far the March Core PCE figure deviates from consensus predictions.&nbsp;
A core PCE print&nbsp;of less than 0.3% monthly or 4.5% annually will likely reinforce current market assumptions that the Fed&#39;s rate hike cycle will come to an end in May. This will be a relief for the markets, even though a lot of the Fed&#39;s expected shift in policy may have already been priced in.
A core PCE reading greater than 0.3% monthly or 4.5% yearly will generate considerably more uncertainty on the rate front, possibly sparking some speculation on another Fed hike&nbsp;in June, and so creating additional headwinds for interest-rate sensitive assets such as tech and growth equities as well as bonds, while likely favoring the U.S. dollar.&nbsp;
Markets have nearly fully priced in a 25-basis-point rate hike in May to 5%-5.25%, however, estimates for the June meeting are more open with a 66% chance that rates would remain unchanged in the aforesaid range and a 24% chance of another hike, according to CME Group Fedwatch tool.&nbsp;
Read Also:&nbsp;<a href="https://www.benzinga.com/trading-ideas/long-ideas/23/04/32044850/top-5-industrials-stocks-that-could-lead-to-your-biggest-gains-in-april" target="_blank">Top 5 Industrials Stocks That Could Lead To Your Biggest Gains In April</a>
Photo: Shutterstock
<ul>
</ul>
<ul>
</ul>
&nbsp;

March PCE Price Index Preview: Here's Why Fed's Favorite Inflation Gauge Is A Key Market-Moving Event Before FOMC

A good ETF strategy will depend on your investment goals, risk tolerance, and time horizon. However, here are a few general principles to keep in mind when developing an ETF strategy:
Index-based strategy: This strategy involves investing in ETFs that track a specific index, such as the S&amp;P 500 or the Nasdaq 100. The advantage of this strategy is that it provides broad market exposure with low expense ratios. By investing in index-based ETFs, you can gain exposure to the overall performance of the stock market, without having to select individual stocks. Index-based ETFs are typically designed to provide a diversified portfolio of stocks that represent a particular market or industry sector.
<ul>
<li>SPDR S&amp;P 500 ETF Trust (ARCA: SPY): This ETF tracks the S&amp;P 500 index, which is a benchmark of 500 large-cap US stocks. Year-to-date, the ETF has had a return of around 9% (as of April 2023).</li>
<li>iShares Russell 2000 ETF (ARCA: IWM): This ETF tracks the Russell 2000 index, which is a benchmark of 2,000 small-cap US stocks. Year-to-date, the ETF has had a return of around 11% (as of April 2023).</li>
</ul>
Sector-based strategy: This strategy involves investing in ETFs that track a specific sector, such as technology, healthcare, or energy. This can be a good way to gain targeted exposure to specific industries. Sector-based ETFs allow investors to invest in specific areas of the market that they believe will perform well in the future. This can be a good way to diversify your portfolio and potentially increase your returns. However, sector-based ETFs can be riskier than index-based ETFs because they are concentrated in a specific sector.
<ul>
<li>Technology Select Sector SPDR Fund (ARCA: XLK): This ETF tracks the technology sector of the S&amp;P 500 index, which includes companies such as Apple, Microsoft, and Facebook. Year-to-date, the ETF has had a return of around 8% (as of April 2023).</li>
<li>Health Care Select Sector SPDR Fund (ARCA: XLV)): This ETF tracks the healthcare sector of the S&amp;P 500 index, which includes companies such as Johnson &amp; Johnson and Pfizer. Year-to-date, the ETF has had a return of around 10% (as of April 2023).</li>
</ul>
Dividend-based strategy: This strategy involves investing in ETFs that focus on high dividend-paying stocks. This can be a good way to generate regular income from your investments. Dividend-based ETFs provide exposure to stocks that have a history of paying high dividends to their shareholders. These stocks are typically well-established, financially stable companies with a long history of consistent dividends. Dividend-based ETFs can provide investors with a source of steady income, which can be particularly useful in retirement.
<ul>
<li>iShares Select Dividend ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/dvy#NASDAQ">DVY</a>): This ETF tracks the performance of US stocks that have a history of consistently paying high dividends. Year-to-date, the ETF has had a return of around 12% (as of April 2023).</li>
<li>SPDR S&amp;P Dividend ETF (ARCA: SDY): This ETF tracks the performance of US stocks that have a history of consistently paying dividends. Year-to-date, the ETF has had a return of around 11% (as of April 2023).</li>
</ul>
International strategy: This strategy involves investing in ETFs that provide exposure to international markets, such as emerging markets or developed markets outside of the US. This can be a good way to diversify your portfolio globally. International ETFs allow investors to invest in markets outside of the US. This can provide diversification benefits and potentially higher returns, as foreign markets can sometimes outperform US markets. However, investing in international markets can also expose investors to currency risk and political risk.
<ul>
<li>iShares MSCI EAFE ETF (ARCA: EFA): This ETF tracks the performance of developed market stocks outside of North America, including companies in Europe, Asia, and Australia. Year-to-date, the ETF has had a return of around 8% (as of April 2023).</li>
<li>iShares MSCI Emerging Markets ETF (ARCA: EEM): This ETF tracks the performance of emerging market stocks, including companies in China, India, and Brazil. Year-to-date, the ETF has had a return of around 3% (as of April 2023).</li>
</ul>
Bond-based strategy: This strategy involves investing in ETFs that track a specific bond market, such as US Treasury bonds or corporate bonds. This can be a good way to generate fixed income with low risk. Bond-based ETFs invest in a portfolio of bonds, which provide a fixed rate of return to investors. This can be particularly useful for investors who are looking for a low-risk investment that provides a regular stream of income. Bond-based ETFs can also help to diversify a portfolio, as they are typically less volatile than stocks.
<ul>
<li>iShares Core US Aggregate Bond ETF (ARCA: AGG): This ETF tracks the performance of the US investment-grade bond market. Year-to-date, the ETF has had a return of around 2% (as of April 2023).</li>
<li>Vanguard Total Bond Market ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/bnd#NASDAQ">BND</a>): This ETF tracks the performance of the US investment-grade bond market. Year-to-date, the ETF has had a return of around 1% (as of April 2023).</li>
</ul>

iShares Dow Jones Select Dividend Index Fund

Investment Strategies For Exchange Traded Funds (ETFs) & Funds You Should Consider

Net short bets <a href="https://www.benzinga.com/news/23/03/31519408/long-term-treasuries-suffer-worst-day-in-2023-as-markets-rethink-fed-policy-path">against U.S. treasuries have</a> reportedly risen to the highest level in last one year in the week ending last Tuesday.
What Happened: According to the latest report from the Commodity Futures Trading Commission, net-short leveraged fund positions in 10-year futures rose by almost 150,000 contracts in the week to last Tuesday, marking the biggest bearish shift since March 2022, <a href="https://www.bloomberg.com/news/articles/2023-04-10/hedge-funds-rushed-to-short-treasuries-in-time-for-payrolls-beat">reported</a> Bloomberg.
Also Read: <a href="https://www.benzinga.com/money/how-to-invest-in-startups">How To Invest In Startups</a>
Fast-money funds appear to be temporarily entering into bets against longer-dated bonds after taking hits during the recent banking crisis volatility when they took positions expecting a sell-off in shorter maturities, the report said.
On Friday, treasury yields rose after U.S. labor data increased expectations <a href="https://www.benzinga.com/economics/macro-economic-events/23/04/31672653/federal-reserves-loretta-mester-expects-likelihood-of-more-rate-hikes-heres-why">that the Federal Reserve</a> will hike rates in May by 25 basis points. The Labor Department reported the U.S. economy added 236,000 jobs in March, just shy of economist <a href="https://www.benzinga.com/news/23/04/31714148/s-p-500-volatility-continues-as-investors-digest-latest-labor-market-data">estimates of 240,000 new jobs</a>.
Rate Path: Traders are currently betting the central bank will hike rates again in May as the U.S. economy is indicating resilience despite the crisis in the banking sector, the report said. The CME FedWatch Tool shows 66% probability of a 25 bps rate hike in the next policy.
The 10-year note yielded 3.37% during Monday morning Asian trade, up from Friday's low of 3.25%. The ProShares Ultra 20+ Year Treasury (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UBT#NYSE">UBT</a>) gained over 6.5% in last five days while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) rose over 1% during the period.
Expert Take: Goldman Sachs Group analysts, including Praveen Korapaty, wrote in a note that although U.S. yields bounced following the jobs report, they remain below levels from the prior week, leaving room for more upward repricing, according to the Bloomberg report.
"The mix of March data thus far should solidify the case for a hike at the upcoming May FOMC meeting," they wrote.
ANZ Research said in a note that the Fed's update to its inflation forecast in March looks underdone. "The Fed has consistently underestimated inflation in recent times. There is no reason to think it hasn't done so again, especially if financial conditions settle down quickly following the collapse of a few U.S. banks," it said.
Read Next: <a href="https://www.benzinga.com/economics/macro-economic-events/23/04/31721115/currency-carry-trades-regain-popularity-as-global-rates-seemingly-hit-their-peaks">Currency Carry Trades Regain Popularity As Global Rates Seemingly Hit Their Peaks: Here&#8217;s What It Means</a>

Net Bearish Bets Against US Treasuries Rose To 1-Year Highs: Fed Rate Hike On Cards?

Pimco Multi-Asset Strategies Portfolio Manager Erin Browne reportedly said that rates and equities are singing from different hymn books currently. 
What Happened: Browne said that while the former is pricing-in accelerated rate cuts during second half of this year and into 2024, <a href="https://www.benzinga.com/news/23/04/31672113/tesla-c3-ai-johnson-amp-johnson-cardlytics-bullfrog-ai-holdings-why-these-5-stocks-are-drawing-inves">equities are priced for rich valuations.</a> Browne <a href="https://twitter.com/BloombergTV/status/1643253247459598339?cxt=HHwWhoCxremHgc4tAAAA">told</a> Bloomberg TV this indicates the rates market is starting to price-in the economy and is heading towards a recession.
Also Read<a href="https://www.benzinga.com/best-penny-stocks">: Best Penny Stocks</a>
"Equities, however, still are priced for very rich valuations, continued growth and expansion this year and even more so in 2024, and are really not focused on the fact that we are heading into a recession. So, I don&#8217;t think both markets can be right at the same time. Either we are not heading into a recession and rates need to reprice higher or we are and equities are really primed for too much growth and are going to have to re-rate lower," Browne explained.
Why It Matters: U.S. equity markets have registered gains since the beginning of the year while treasury yields have cooled down. 
For example, the S&amp;P 500 has gained over 7% since the beginning of the year. Meanwhile, yield on two-year Treasury notes have cooled about 50 basis points in the same period.
If yields are coming off, it indicates the market's expects <a href="https://www.benzinga.com/economics/macro-economic-events/23/04/31672653/federal-reserves-loretta-mester-expects-likelihood-of-more-rate-hikes-heres-why">the Federal Reserve may</a> cut interest rates at some point in time during the year — a scenario that factors-in the possibility of a recession. In contrast, the equity markets reflect higher valuations, indicating recession possibilities are not being factored-in.
The SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) gained 7.31% in 2023 while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) gained 2.82%.
Banking Woes: Browne said she doesn't think the banking woes may be over yet. 
"I don&#8217;t think it&#8217;s in a rear view mirror. Certainly the immediacy of the sort of heightened period of fear is behind us. But I do think we&#8217;re going to have more drips of this as we move through the rest of this year," she said.
Read Next:<a href="https://www.benzinga.com/economics/macro-economic-events/23/04/31672837/gold-eyes-record-high-on-safe-haven-status-weak-dollar-hopes-of-softening-fed-pet"> Gold Eyes Record High On Safe-Haven Status, Weak Dollar, Hopes Of Softening Fed: Peter Schiff Sees &#8216;Spectacular&#8217; Rally</a>

Pimco's Erin Browne Says Rates, Equities 'Singing From Different Hymn Books' — Thinks Both Can't Be Right

My 7% Yield Income Portfolio Still Carries Little Market Risk

Asset Class Scoreboard: October 2024

Tradeweb Exchange-Traded Funds Update - October 2024

Weekly Treasury Forecast, Nov. 15, 2024: Long-Run 1-Month Forward Rates Jump 0.20%

Piper Sandler sees the benchmark US10Y drifting below 4% by year-end

Desperately Seeking Yield: 19 November 2024

Easing Into Autumn: Rate Cuts, Volatility And Valuations

FBND: An Outperforming Bond Fund

U.S. Stocks Continue To Lead Markets By Wide Margin In 2024

Weekly Treasury Forecast, November 22, 2024: 4 Basis Points From Inversion Again

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폭발적인 <a href="https://www.benzinga.com/etfs" target="_blank" rel="noopener" data-google-interstitial="false">ETF들의 성장</a>이 금융 환경을 재편하고 있으며, 운용 자산이 현재 15조 달러의 이정표에 가까워지고 있다.
최근 분석에서 JP모건의 전략가 니콜라오스 파니기르초글로(Nikolaos Panigirtzoglou)는 이러한 엄청난 변화의 의미를 자세히 조사하면서 ETF가 투자자 행동, 유동성 패턴 및 심지어 시장 위험까지도 어떻게 재정의하고 있는지를 조명했다.
1. 소매 투자자 심리가 변동성을 주도 
파니기르초글로는 ETF의 지배력이 커짐에 따라 소매 투자자들이 시장 심리를 주도하는 데 더 큰 영향을 미치게 되었다고 지적한다. 기관 투자자들과 달리 소매 거래자들은 대개 짧은 시간적 시야를 가지고 있어, 심리가 변동할 때 시장 트렌드에 갑작스럽고 확대된 변화를 초래할 수 있다.
2. 더 긴 상승세와 더 급격한 조정 
이 분석가는 ETF가 모멘텀 중심의 시장을 조장하여 상승장이 지속되는 동안 장기간의 랠리를 촉진한다고 강조한다. 그러나 시장이 반전될 때, 능동적 관리 보호 장치가 결여되어 급격한 조정과 변동성이 증가할 수 있다.
3. 대형주로 자금이 집중 
대부분의 ETF가 시가총액 가중 방식으로 운영되기 때문에 대형주에 불균형적으로 자본이 집중된다. 파니기르초글로는 이 경향이 메가캡의 가치 평가를 부풀리고, 소형주의 자리를 축소시켜 자본 할당에 위험을 초래할 수 있다고 경고한다.
엔비디아, 애플 및 마이크로소프트와 같은 기업들은 현재 미국 주식 시장에서 각각 3조 달러 이상의 시가총액을 차지하고 있다.
4. 유동성이 장 마감에 집중 
ETF가 거래 세션 종료 무렵에 리밸런싱을 하면서 유동성이 이러한 시점에 집중되고 있다. 파니기르초글로는 S&amp;P 500 거래의 약 1/3이 이제 하루의 마지막 10분 동안 이루어져, 집중된 활동의 피드백 루프를 만든다고 지적한다.
5. 몇몇 ETF에 위험이 집중 
SPDR S&amp;P 500 ETF(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>)와 Invesco QQQ Trust, Series 1 ETF(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>)와 같은 대형 ETF의 등장은 시스템적 위험을 초래했다. 파니기르초글로는 이들의 규모와 중요성이 주식 선물과 경쟁하고 있어, 시장이 대규모 단일 상품 흐름에 취약해진다고 주장한다.
6. 알고리즘 트레이더가 성장 
특히 채권 ETF는 전자 및 알고리즘 거래를 강화했다고 파니기르초글로가 언급했다. 비은행 시장 조성자들이 이제 고수익, 저마진 거래를 활용하여 채권 시장의 유동성 제공을 지배하고 있다.
iShares Core U.S. Aggregate Bond ETF(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>)와 Vanguard Total Bond Market ETF(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>)와 같은 인기 있는 채권 ETF는 미국에서 거래되는 가장 크고 유동적인 채권 시장 ETF 중 일부이다.
7. 지수 변경이 큰 영향을 미친다 
파니기르초글로는 ETF 주도의 자금 흐름이 지수 리밸런싱의 영향을 확대했다고 강조한다. 주요 지수에 편입되는 주식은 비정상적으로 큰 상승을 경험하는 반면, 제외되는 주식은 기본적 가치가 정당화할 수 있는 것보다 급격한 하락을 겪는다.
8. 기업 거버넌스가 약화 
패시브 펀드가 지배적이 되면서 파니기르초글로는 기업 활동이 감소하고 있다고 본다. 능동적 매니저들은 거버넌스 변경을 추진할 유인이 있는 반면, 패시브 펀드는 그렇지 않아 감독이 약화될 수 있다.
9. 시장 효율성이 하락 
패시브 투자로의 전환은 차익 거래 기회를 줄여 파니기르초글로는 더 지속적인 가격 왜곡을 초래한다고 주장한다. 이는 능동적 매니저들을 다시 유인할 수 있지만, 그들의 알파 추출 능력은 약화되었다.
10. 패시브 투자 한계가 가까워질 수 있다 
파니기르초글로는 패시브 투자에 대한 자연스러운 한계가 있을 수 있다고 제안한다. 만약 시장 비효율성이 너무 커지면 능동적 관리자가 복귀하여 ETF에서 능동적으로 관리되는 펀드로 자본이 다시 유입될 수 있다.
ETF 혁명은 분명히 투자의 민주화를 가져왔지만, 파니기르초글로는 그 급속한 성장이 의도치 않은 결과를 초래한다고 경고한다.
집중된 유동성에서 시스템적 위험 증가에 이르기까지, 이 환경은 경계를 요구하는 방식으로 진화하고 있다.
ETF 자산이 15조 달러에 가까워짐에 따라, 패시브의 지배력이 정체될 것인지, 아니면 그 영향력이 이제 막 시작된 것인지에 대한 질문이 제기된다.

다음 읽기: 
<ul>
<li><a href="https://www.benzinga.com/24/11/42107863/us-futures-head-lower-as-nvidia-reports-slowdown-in-quarterly-revenue-growth-expert-says-market-weakness-is-perfectly-normal-but-late-november-is-still-possible">엔비디아 실적이 투자자들을 실망시키면서 미국 선물이 하락: 전문가가 시장 약세는 &#8216;완전히 정상적&#8217;이라고 말했지만 11월 하순 반등은 여전히 가능하다고 주장</a></li>
</ul>
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안정성을 위해 채권 및 채권 ETF를 찾는 투자자들은 도널드 트럼프 대통령 당선인의 관세 접근 방식으로 인해 <a href="https://www.benzinga.com/topic/treasury-yields">수익률 상승 압박</a>을 가할 수 있으므로 변동성이 높아질 수 있다.
무슨 일이 (What Happened): 채권 수익률은 목요일 연방준비제도(연준)의 25베이시스포인트 금리 인하 이후 계속 상승하고 있다. 10년 만기 국채 수익률은 트럼프의 재정 정책에 대한 시장의 추측에 따라 4.34%로 상승했다.
이러한 변화는 연준이 차입 비용을 낮추려는 노력을 복잡하게 만들며, 개별 채권 보유자들과 채권 ETF 투자자들에게 우려를 불러일으킨다. 세금 인하와 예상되는 관세의 배경은 연방준비제의 <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/11/41814589/why-trumps-boost-to-treasury-yields-inflation-expectations-may-weaken-feds-efforts-">금리 인하 능력을 제한</a>할 수 있다.
또한 읽어보세요: <a href="https://www.benzinga.com/24/11/41886697/two-ideas-famed-stock-market-forecasters-agree-on-for-2025">트럼프의 승리가 두 명의 시장 전문가를 소형주 및 금융주에 베팅하게 만든 이유</a>
9월 중순 이후로 국채 수익률은 70베이시스포인트 이상 급등하여 채권 가격에 추가 압박을 가하고 주요 채권 ETF에 영향을 미쳤다. BofA 글로벌 리서치는 국채 수익률 전망을 4.25%-4.75% 범위로 조정했다고 로이터가 보도했다. 이러한 상승하는 수익률 환경은 채권에 도전 과제를 제기한다. 높은 수익률은 채권 가격의 하락과 연결되며, 이는 채권 ETF 투자자들의 수익을 잠식할 수 있다.
왜 중요한가 (Why It Matters): 로이터에 따르면, 책임 있는 연방 예산 위원회는 트럼프의 제안된 재정 정책이 향후 10년간 국가 부채에 약 7.75조 달러를 추가할 것이라고 추정한다. 경제학자들, 은행들 및 분석가들은 이 <a href="https://www.benzinga.com/personal-finance/24/09/40961812/economists-warn-trumps-plans-for-tax-cuts-tariffs-and-deportation-could-trigger-skyrocketing-inf">계획이 인플레이션을 악화시키고 부채를 지속 불가능하게 만들 것</a>이라고 경고했다.
다양한 채권 시장 세그먼트에 대한 노출을 제공하는 채권 ETF는 채권 수익률이 상승함에 따라 이러한 재정적 압박의 영향을 받을 가능성이 높다.
수익률 상승은 채권 ETF 투자자에게 더 매력적인 소득을 제공할 수 있지만, 수익률이 계속 상승함에 따라 가격 하락과 관련된 위험이 커질 수도 있다.
월요일에는 10개의 주요 채권 ETF가 주로 하락 마감했다:
<ul>
<li>Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>): $72.95, 0.19% 하락.</li>
<li>iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>): $98.28, 0.22% 하락.</li>
<li>SPDR Portfolio Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPAB#NYSE">SPAB</a>): $25.37, 0.2% 하락.</li>
<li>iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>): $109.64, 0.19% 하락.</li>
<li>Vanguard Short-Term Corporate Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VCSH#NASDAQ">VCSH</a>): $78.31, 0.077% 하락.</li>
<li>iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>): $92.04, 0.49% 하락.</li>
<li>Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VCIT#NASDAQ">VCIT</a>): $81.49, 0.20% 하락.</li>
<li>iShares U.S. Treasury Bond ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/GOVT#BATS">GOVT</a>): $22.73, 0.20% 하락.</li>
<li>SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>): $97.01, 0.06% 하락.</li>
<li>Vanguard Total International Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BNDX#NASDAQ">BNDX</a>): $49.93, 0.08% 상승.</li>
</ul>
트럼프 하의 채권 수익률 상승과 재정적 확장으로 인해 채권 ETF는 변동성을 계속해서 경험할 수 있다.
채권 투자자들은 높은 수익률의 매력을 채권 가격 하락의 잠재적 위험과 비교해야 할 필요가 있다. 특히 고수익과 장기 국채 세그먼트에서는 시장 변화가 가장 뚜렷할 것으로 예상된다.
다음 읽어볼 내용:
<ul>
<li><a href="https://kr.benzinga.com/news/usa/economy/%ED%8A%B8%EB%9F%BC%ED%94%84%EC%9D%98-%EC%84%B8%EA%B8%88-%EC%9D%B8%ED%95%98-%EA%B4%80%EC%84%B8-%EB%8F%99%EB%AC%BC%EC%A0%81-%EC%B6%A9%EB%8F%99%EC%9D%B4-sp-500-%EC%88%98%EC%9D%B5%EC%97%90/" target="_blank" rel="noopener">트럼프의 세금 인하, 관세, &#8216;동물적 충동&#8217;이 S&amp;P 500 실적에 미칠 영향</a></li>
</ul>
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