Investors seeking exposure to fixed income should consider several new FundX exchange-traded funds (ETFs).
A veteran asset management company based in San Francisco. Last year, it became a subsidiary of One Capital Management.converted two of its investment trusts into ETF products and listed them on the New York Stock Exchange Arca on Monday, October 9th.
The former FundX Flexible Income Fund is now FundX Flexible ETF (“XFLX”)using the FundX Conservative Upgrader Fund. FundX Conservative ETF (“XRLX”).
The first fund, XLFX, has a mix of bond funds and total return funds. XLFX aims to dynamically allocate the fund’s allocation to adapt to changing fixed income market conditions and interest rates. FundX claims it is suitable for investors who seek the stability of bonds as a haven against stock price fluctuations.
The latter, XRLX, offers more equity exposure with modified bonds. About half of the portfolio is in core equity funds. It also provides total return and opportunistic exposure to a basket of bond funds. According to FundX, XRLX is designed for investors seeking the growth potential of stocks with less volatility than bonds.
Fix Me Up
Tightening monetary policy has set the stage for a resurgence in fixed income products.
“Bond ETFs are in high demand in 2023,” said Todd Rosenbluth, head of research at VettaFi.
Rosenbluth noted that as of Sept. 30, the category had “attracted more than 40% of the industry’s new capital” year-to-date, “despite accounting for just 20% of the market.” did.
Rising interest rates have proven attractive to investors this year. Even as stocks have rebounded from last year’s lows, investors continue to stash more cash in money market funds (MMFs). Total seated by July U.S.-based money market funds exceeded $5 trillion.
However, BlackRock views MMF as simply a transit point. The world’s largest asset managers predict that a large portion of that cash pile will go into fixed income products once the Fed finishes raising interest rates.
Rob Capito, head of BlackRock, told the Financial Times: “We’re finally starting to see some income in the bond market and we’re hoping for a resurgence in demand.” “There’s trillions. . . . It’s ready to go when people feel like interest rates have peaked.”
become active
These two new funds reflect a different trend. More fund managers are repackaging mutual funds into ETF wrappers.
according to Morningstar Direct dataFrom early 2021 to early 2023, 37 actively managed mutual funds were converted to ETFs. August of this yearJPMorgan also converted four mutual funds into ETFs, accumulating a total of $1.5 billion in capital.
Asset management companies simply follow investors’ preferences. Mutual funds, once the mainstay of investors’ portfolios, have been in steady decline for years, with their share of total assets shrinking.as According to Baudridge’s research, It has become less popular among various investor groups, including young people, wealthy individuals, and active households.
When sizing these ETFs, investors will evaluate what level of fixed income exposure makes sense for their investment strategy and whether these newly converted funds are worth the relatively high management fees. I will do it.
XFLX and XRLX have net expense ratios of approximately 1.57% and 2.02%, respectively.
