NASDAQ Index Blog - Posts with tag of "Fixed Income"

One Way to Circumvent the China Rate Cut By: Efram Slen
on 11/23/2015

After markets closed on October 23, 2015, China cut its benchmark interest rate for the sixth time since last November. One way to combat decreasing interest rates in a portfolio is to look to dividend themed strategies. Under the Dividend Achievers brand, Nasdaq offers indexes with exposure to dividends in multiple parts of the world. For this region, Nasdaq offers the Nasdaq Asia Ex Japan Dividend Achievers Index.

Why utilize this index as your dividend benchmark for the region?

The index is built, as all Nasdaq Dividend Achievers Indexes are, around a track record of increasing dividends. After extensive research, it was determined that three years of increasing dividends was the optimal time horizon for securities in this region. In addition to the dividend achievers requirement, there is a dividend sustainability aspect to this methodology, ensuring that securities that have the dividend track record are also positioned to maintain that through positive historical cash flows. Lastly, as with all Nasdaq tradable indexes, there are minimum eligibility requirements that each security must pass including minimum liquidity and size thresholds.

Sufficient Exposure to China and the rest of Asia

As expected, the index has very high historical and current exposure to China. As you can see below, the index had a 28% weight in China as of the most recent quarter end. Other than China, the index offers broad diversification to nine other countries in Asia.

Yield

The index has had a very consistent yield and it is currently at 3.5%. Comparing the index to its benchmark (NQASPAXJP), the index has higher historical yield year-to-date over almost every period.

Conclusion

Whenever reaching for yield, one has the option to go the fixed income or equity route. If one has concerns about the fixed income route due to the rate environment or are looking to go the equity route, one solution may be a basket of stocks that have a strong dividend track record and dividend sustainability. The Nasdaq Asia Ex Japan Dividend Achievers Index offers both of those aspects in addition to a high historical allocation to China (between 25% and 40% historically) and a consistent yield around 3.5%.

Nasdaq® is a registered trademark of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED. © 2015. Nasdaq, Inc. All Rights Reserved.

Web Seminar: Finding Yield in a Rising Interest Rate Environment - 1 CE Credit Updated: 10/15/2014

Against a backdrop of low interest rates, investors may be finding it difficult to maintain the level of income they need from their investment portfolios. Join Nasdaq Global Indexes as we host Recon Capital and Highland Capital Management to present ways that investors can position themselves in a rising interest rate environment. The firms will present alternatives for income-oriented investors that include short-duration strategies.

Host: David Krein, Nasdaq Global Indexes Head of Research
Speakers: Kevin Kelly, Chief Investment Officer of Recon Capital Partners and Ethan K. Powell, CPA, CFA - Chief Product Strategist at Highland Capital Management

Listeners will walk away with a better understanding of:

  • Alternatives to traditional fixed income that can produce high income potential in all markets
  • Strategies and products that have low correlation to other asset classes
  • How to manage duration in a rising interest rate environment ETFs that provide access to alternative income strategies

As a participant in the CFA Institute Approved-Provider Program, Nasdaq has determined that this program qualifies for 1 credit hour. If you are a CFA Institute member, CE credit for your participation in this program will be automatically recorded in your CE tracking tool.

This web seminar aired on Tuesday, October 28th
10:00 – 11:00 a.m., ET
Watch the Replay Now
 

Web Seminar Replay: Building Better Bond Ladders Updated: 10/6/2014

Join David Krein, Head of Research, Nasdaq Global Indexes; Matt Patterson, Managing Director, LadderRite Portfolios LLC; and Joe Becker, Senior Fixed Income Product Strategist, Invesco PowerShares, for a complimentary 60-minute web seminar to discuss bond ladders. Bond laddering is increasing in popularity because of the benefits it offers investors. Learn how to simplify the challenges associated with them, receive an overview of the Nasdaq LadderRite Corporate Bond Indexes, and ask questions.

Watch the Replay

Video: John Jacobs on The Future of Our Index Business By: John Jacobs
on 8/1/2014

John Jacobs, Executive Vice President, NASDAQ OMX Global Information Services, addresses the the future of our indexing business in the fifth installment of his video series.


Transcript: Let’s take a look at where we think NASDAQ OMX Global Indexes will be in a year or two down the road. As a global indexer with multi-asset classes, our near term strategy is to continue to roll out our superior technology on two fronts: The ability to calculate more indexes across more asset classes, so you’ll see us adding in more asset classes like fixed income and commodities. And the ability to have a superior data offering. We’re going to be able to offer data in a far more convenient fashion to the end user in a better way than it’s ever been offered before. So those are two near-term strategies. In addition, there’s been a tremendous movement and demand from the buy side and the sell side, those firms on the street, and those ultimate investors, for more custom capabilities and calculation, and we’re going to be offering a lot more custom indexes to partner with different firms, so they can find exactly what they want for their investment thesis. Whether they want geography or style or some other asset class, we’ll be able to provide that for them. So you’ll see a lot of growth in the custom [indexing]. You’ll continue to see us roll out more exchange traded products. You’ll see more structured products, and you’ll see a richer data set come out from us, both price data and weights and components. We also have recently announced that we’re acquiring eSpeed, which is a fixed income business, so you’ll be seeing a rich data set from fixed income, on-the-run treasuries, and an index family as well. So the next one to two years is going to be a very exciting time for NASDAQ OMX Global Indexes as we continue to fill out our mandate of multi-asset class, a scalable technology solution, create a better value proposition, and the richest, most robust data set in the index business.


PowerShares launches new Canadian ETF with NASDAQ OMX Global Indexes By: Rob Hughes
on 7/21/2014

The appetite for fixed-income investments remains strong among Canadian investors despite a prolonged period of record-low yields. When interest rates eventually rise, many Canadian fixed-income investors may be surprised by the negative effect on their portfolios.

Historically, a laddered bond strategy has helped reduce the risks associated with rising interest rates, but managing a fixed-income portfolio requires expertise.

PowerShares Canada today announced the listing of two new smart beta exchange-traded funds (ETFs) on the Toronto Stock Exchange (TSX) that aim to help investors interested in fixed income strategies.

One of them, the PowerShares LadderRite U.S. 0-5 Year Corporate Bond Index ETF, is based on the new NASDAQ LadderRite 0-5 Year USD Corporate Bond Index . The index is designed to give investors exposure to a laddered basket of U.S.-dollar-denominated, investment-grade corporate bonds. USB has a low management fee of 0.25%. The ticker symbol "USB" represents Canadian-dollar-denominated units, while "USB.U" represents U.S.-dollar-denominated units.

For more information, please contact:

Rob Hughes
Vice President, Sales and Business Development
NASDAQ OMX Global Indexes
Direct: +1 212 401 8987
Robert.Hughes@nasdaqomx.com

NASDAQ Bulletshares Developer to Speak at Inside Fixed Income Updated: 10/14/2013

NASDAQ OMX will be presenting and exhibiting at this year’s Inside Fixed Income Conference, October 18, 2013, at the Grand Hyatt in San Francisco. Hosted by Index Universe, this one-day event aims to deliver insightful content, lively discussions and provide investors with tactical and strategic approaches to benefit their fixed-income allocation.

Join Accretive Asset Management Head of Product Development, Darrin DeCosta, CFA, CPA, at “The High-Yield Trade: Crowded & Dangerous?” panel from 1:35-2:25 p.m. In June, NASDAQ OMX and Accretive Asset Management partnered to create the NASDAQ BulletShares® Indexes, a series that represents the performance of an investment in a diversified, held-to-maturity portfolio of fixed income securities with a common year of maturity.

Visit the NASDAQ OMX booth for the latest information about NASDAQ Bulletshares and learn about our new NASDAQ Bulletshares Ladder Indexes. Plus, enter to win an Amazon Kindle Fire HD!

Can’t make it? Find out more by downloading the white paper “The Minimum Maturity Rules: The Cost of Selling Bonds Before Their Time.”

NASDAQ BulletShares Debuts New Ladder Indexes Updated: 10/14/2013

Today, NASDAQ OMX Global Indexes introduced the NASDAQ BulletShares® Ladder Indexes, which are indexes designed to track traditional bond ladders implemented through target maturity bond exchange-traded funds (ETFs).

The indexes are equal-weighted and use Guggenheim BulletShares ETFs to track defined bond ladders of 0-3 years and 0-5 years of the investment grade and high yield corporate bond markets. Each BulletShares Ladder Index rebalances annually in December to reset the bond ladder and equally weight the components.

"The Bulletshares Ladder Indexes are an important addition to the NASDAQ Bulletshares Index family as they provide investors the same liquidity and diversification benefits as the underlying Bulletshares Indexes themselves, but in a format that systematically captures how many investors choose to assemble their bond portfolios," said David Krein, Head of Index Research, NASDAQ OMX.

Click here to see the full list of NASDAQ Ladder Indexes

Controlling your Duration with Innovative ETFs Updated: 9/5/2013

By: Michael Fabian, NASDAQ OMX Global Indexes Contributor

The volatility in interest rates this year has been particularly troublesome for fixed-income investors. Much of the jump in long-term Treasury bond yields has been due to the quicker than expected improvement in the labor market, thereby putting pressure on the Federal Reserve to begin tapering its asset purchase programs in 2013. The unrelenting rise in stock prices combined with investors pouring assets into equity-oriented funds at a breakneck pace has also put downward pressure on the fixed-income sentiment. This has been a wakeup call for investors to begin paying closer attention to their fixed income holdings, and examine them for potential weaknesses. Investors that own traditional “core” fixed income funds now face a unique set of challenges: continue to hang on as rates creep higher and indexes ultimately rotate to higher yielding bonds, or sell and forego the cash-flow benefit of fixed income altogether?

Investors that have a portfolio made up of individual bond issues have a very different set of concerns than holders of traditional bond funds. This is primarily due to the fact that a fund will continue its duration into perpetuity, as there is no fixed maturity date. It will simply roll short maturity holdings forward based on the investment objectives of the fund. Naturally the advantage to owning a fund is the ease of use and diversification you get for holding just one security within your portfolio. Conversely, the obvious advantages to owning individual bonds is the ability to latter a basket of credits, and then allow them to mature at par. This enables the investor to participate in the income component, yet not get wrapped up in the pricing anomalies in relation to treasury bonds. Furthermore, after maturity, you have the option of either rolling proceeds over to higher yielding bonds if a rising rate environment persists, or just sit in cash to wait out better opportunities.

Several years ago an innovative index-based ETF product was brought to market to satisfy the needs of both individual issue and bond fund investors. The Bulletshares concept is based on a “target-date” fund philosophy, but it utilizes a unique index methodology whereby bonds are grouped together based on their maturity date. As an example, the Guggenheim Bulletshare 2016 Corporate Bond ETF (BSCG) has a constituency of investment grade bonds that will all mature in 2016; when the fund is set to be liquidated at year end. As the bonds mature within the fund, the proceeds will be placed in cash until it finally liquidates and makes a full distribution to its shareholders. The index is inherently designed to represent a “held to maturity” basket of bonds with all the benefits of diversification offered by a fund.

A list of the Bulletshare family of ETFs includes options for both investment grade and high yield:

  • Guggenheim BulletShares 2013 Corporate Bond ETF (BSCD)
  • Guggenheim BulletShares 2014 Corporate Bond ETF (BSCE)
  • Guggenheim BulletShares 2015 Corporate Bond ETF (BSCF)
  • Guggenheim BulletShares 2016 Corporate Bond ETF (BSCG)
  • Guggenheim BulletShares 2017 Corporate Bond ETF (BSCH)
  • Guggenheim BulletShares 2018 Corporate Bond ETF (BSCI)
  • Guggenheim BulletShares 2019 Corporate Bond ETF (BSCJ)
  • Guggenheim BulletShares 2020 Corporate Bond ETF (BSCK)
  • Guggenheim BulletShares 2021 Corporate Bond ETF (BSCL)
  • Guggenheim BulletShares 2022 Corporate Bond ETF (BSMC)
  • Guggenheim BulletShares 2013 High Yield Corporate Bond ETF (BSJD)
  • Guggenheim BulletShares 2014 High Yield Corporate Bond ETF (BSJE)
  • Guggenheim BulletShares 2015 High Yield Corporate Bond ETF (BSJF)
  • Guggenheim BulletShares 2016 High Yield Corporate Bond ETF (BSJG)
  • Guggenheim BulletShares 2017 High Yield Corporate Bond ETF (BSJH)
  • Guggenheim BulletShares 2018 High Yield Corporate Bond ETF (BSJI)

Practical uses within a portfolio can vary, and include the basic buy-and-hold to maturity approach, or even a more sophisticated yield curve positioning strategy. Other uses can even include opportunistically shortening or lengthening duration, while staying in the same fund family to take advantage of prevailing interest rate fluctuations.

When the need arises for even large institutional portfolio managers to target a specific duration and/or credit quality within their portfolios, Bulletshares ETFs offer the convenience of not having to curate an entire bond latter from scratch. This concept opens up the use of Bulletshares to small or medium sized pension funds or defined benefit plans to cut the cost of research and implementation.

With the future of interest rates largely being called into question, investors need to leverage every tool they can to protect capital while still generating income. Reaching outside the bounds of your typical core fixed income fund can have many benefits. However, understanding the risks associated with market price fluctuation, while still having the defined maturity to fall back on is something many investors should take heed to.

Note: As of this writing, the author did not own any securities listed in this article.

To get more investor insights from Fabian Capital, visit their blog here or click here to download their latest special report, The Opportunistic Approach to Growth Investing.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
NASDAQ® and NASDAQ OMX® are registered trademarks of The NASDAQ OMX Group, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither The NASDAQ OMX Group, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding NASDAQ-listed companies or NASDAQ proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED. © 2013. The NASDAQ OMX Group, Inc. All Rights Reserved.

 

NASDAQ Bulletshares-linked ETFs Cross $3B By: Rob Hughes
on 8/5/2013

Announced in June, NASDAQ OMX partnered with Accretive Asset Management (AAM) to co-brand and expand the NASDAQ BulletShares® Indexes, a pioneering and innovative family of target-maturity corporate and high yield bond indexes. Assets of the NASDAQ BulletShares-linked Guggenheim ETFs have grown nearly 60% in 2013 ? from $1.7B as of 12/19/2012 to over $3B as of 8/2/2013.

To put this in perspective, U.S. Fixed Income ETF assets were virtually unchanged YTD through 6/30/13 ($243.1B as of year-end 2012 and $243.6B as of the end of the second quarter in 2013*).By contrast, over this same six-month period, the BulletShares ETFs are up $1B.

"Bulletshares ETF investors recognize the significant advantages of building portfolios using target maturity bond funds that act like a bond. This has pushed Bulletshares ETF assets to its historical high,” said David Krein, Head of Index Research, NASDAQ OMX.

GUGGENHEIM BULLETSHARES® HIGH YIELD CORPORATE BOND ETFS:

  • Guggenheim BulletShares 2013 High Yield Corporate Bond ETF (BSJD)
  • Guggenheim BulletShares 2014 High Yield Corporate Bond ETF (BSJE)
  • Guggenheim BulletShares 2015 High Yield Corporate Bond ETF (BSJF)
  • Guggenheim BulletShares 2016 High Yield Corporate Bond ETF (BSJG)
  • Guggenheim BulletShares 2017 High Yield Corporate Bond ETF (BSJH)
  • Guggenheim BulletShares 2018 High Yield Corporate Bond ETF (BSJI)

GUGGENHEIM BULLETSHARES® CORPORATE BOND ETFS:

  • Guggenheim BulletShares 2013 Corporate Bond ETF (BSCD)
  • Guggenheim BulletShares 2014 Corporate Bond ETF (BSCE)
  • Guggenheim BulletShares 2015 Corporate Bond ETF (BSCF)
  • Guggenheim BulletShares 2016 Corporate Bond ETF (BSCG)
  • Guggenheim BulletShares 2017 Corporate Bond ETF (BSCH)
  • Guggenheim BulletShares 2018 Corporate Bond ETF (BSCI)
  • Guggenheim BulletShares 2019 Corporate Bond ETF (BSCJ)
  • Guggenheim BulletShares 2020 Corporate Bond ETF (BSCK)
  • Guggenheim BulletShares 2021 Corporate Bond ETF (BSCL)
  • Guggenheim BulletShares 2022 Corporate Bond ETF (BSCM)

*Source: BlackRock ETF Landscape reports

 

NASDAQ® and NASDAQ® are registered trademarks of The NASDAQ Group, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither The NASDAQ Group, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding NASDAQ-listed companies or NASDAQ proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

© 2015. The NASDAQ Group, Inc. All Rights Reserved.

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