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What Advisors Told VettaFi in First Half

VettaFi hosted and moderated 79 webcasts and livecasts in the first half of 2024. Approximately 18,000 advisors joined us to learn from ETF and mutual fund industry experts on a range of equity, fixed income, commodities, and alternatives topics.  

However, thanks to an engaged community, we also learned market sentiment and how advisors were likely to position client portfolios. In many cases, the data proved to be a great indicator of the market. 

Advisors Appropriately Less Aggressive on Rate Cuts 

In January, during a webcast with BondBloxx, 61% of respondents told VettaFi they expected just one or two Fed rate cuts in 2024. While the market consensus is now in late June, at the time, general expectations were for a whopping six rate cuts. Most advisors told us they were even more conservative than the Fed’s then estimate of three cuts. 

We published an article in January highlighting this data and some potential ETFs to consider. Advisors believing rates are more likely to hold steady in 2024 might prefer lower-risk alternatives. The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the Vanguard Short Term Corporate Bond ETF (VCSH) have average duration of 2.6 years and yields of 5.3%.  

Active ETF Demand Accelerating 

In late March, during a Fidelity webcast, we confirmed that demand for active ETFs was not slowing down. When asked how might your allocation to active ETFs change over the next 12 months, 62% of advisors said increase, while only 1% planned to decrease. 

As my colleague Kirsten Chang wrote last week, “It’s also shaping up to be a banner year for active fixed income ETFs, which have collectively reined in over $22 billion in net inflows during the second quarter.” The Fidelity Total Bond ETF (FBND) and the JPMorgan Ultra-Short Income ETF (JPST) accrued net inflows exceeding $1 billion. In the first half, active ETFs gathered approximately 30% of the more $400 billion of new money. They represent less than 10% of overall assets.

Would Covered Call Fans Still Answer in 2024? 

In 2023, covered call ETFs helped drive demand for active ETFs. Indeed, the JPMorgan Equity Premium Income ETF (JEPI) gathered $13 billion in 2023, despite rising just 10% in value. This led some to question whether advisor interest would wane in 2024.    

During a mid-February webcast with Kurv Investment Management, we gained some valuable insight. What was most encouraging was that 42% had not implemented covered calls but were considering it. Many advisors are still in the education stage with newer options-based ETF investments and regularly come to VettaFi to hear from industry experts.   

The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) pulled in more than $5 billion to start 2024. Meanwhile, the NEOS S&P 500 High Income ETF (SPYI) added approximately $1 billion. We think there is still room for further industry growth. 

Bringing Quality and Growth Together 

In addition to targeted webcasts and livecasts that are 60 and 30 minutes long, respectively, VettaFi hosts other virtual events. In the first half, we hosted two- to three-hour symposia on broad asset categories like alternatives, equities, and fixed income. At these events, we incorporated experts across the industry. 

At the March Equity Symposium, we asked advisors, “Which factor looks appealing to you?” The top choice of growth (37%) was closely followed by quality (26%).  

Year to date through June 27, the SPDR Portfolio S&P 500 Growth ETF (SPYG) rose 24%, outperforming the 16% gain for the SPDR S&P 500 ETF (SPY). Meanwhile, the Invesco S&P 500 High Quality ETF (SPHQ) climbed 19%.  

In the related article we published in March, we noted the American Century US Quality Growth ETF (QGRO) combines quality and growth factors. 

Second Half of ETF Education Kicks Off 

After a week off, VettaFi Voices will be hosting webcasts beginning next week. We have upcoming events with Goldman Sachs, Innovator, NEOS, State Street Global Advisors, Teucrium, and other asset management firms. I hope you will join us and share your views to help drive the discussion.  

For more news, information, and strategy, visit the Core Strategies Channel.

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