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Bond ETF Investing: What You Need to Know

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  • (1:05) - Why Are theBond ETFs So PopularThis Year?
  • (7:25) - Why Is Active Management So Important For Bond ETFs?
  • (9:10) - What Does The Fed’s Purchase of Treasury Debt Mean For The Market?
  • (12:00) - International and Emerging Bond Markets
  • (15:45) - What Are Some Of The Risks With The Current Bond Market?
  • (21:30) - Myths about Bond ETF Investing
  • (25:50) - Women In ETFs
  •             Podcast@Zacks.com

In this episode of ETF Spotlight, I speak with Jillian DelSignore, Head of ETF Distribution, and Alex Dryden, Global Market Strategist at J.P. Morgan Asset Management. We talk about fixed income ETFs.

J.P. Morgan has an excellent suite of bond ETFs, including one of the most popular actively managed bond ETFs--the JPMorgan Ultra-Short Income ETF (JPST - Free Report) .

Bond ETFs have seen huge inflows this year as rates have plunged. About $17 trillion in bonds in Europe and Japan have negative yields and compared to those, US bonds look quite attractive. Volatility in stock markets also sent investors to bonds as they provide safety and income.

Should we expect more rate cuts by the Fed this year? Can the bond rally continue? Which areas of the bond market should investors look at now? Alex likes core US government debt, mortgage backed securities and municipal debt in the late stage of the economic cycle. Find out more on the podcast.

Most of the inflows this year have gone into passive ETFs, but active bond ETFs have been gaining share in recent years and some active managers have outperformed the popular bond indexes. We discuss why active management makes more sense for bond ETFs.

The Fed began buying short-term Treasury debt last week as it tries to keep the money markets functioning smoothly. What happened in money markets last month and will the Fed's purchase fix the problem? 

The JPMorgan USD Emerging Markets Sovereign Bond ETF (JPMB - Free Report) has gained more than 15% this year while the JPMorgan Global Bond Opportunities ETF is up 11%. Should investors look at international bond ETFs now?

Most investors do not understand that bond markets work differently from stock markets and market cap weighting results in higher exposure to the most indebted companies. The Bloomberg Barclays U.S. Aggregate Bond Index now has been more than 14% BBB rated bonds as the amount of debt rated in the lowest tier of investment grade has soared.

The JPMorgan U.S. Aggregate Bond ETF which applies a multi-factor credit screening process that seeks exposure to corporate debt issuers with attractive value, quality and momentum characteristics, offers a way to avoid some of these issues.

Jillian also talks about Women in ETFs—an organization that has grown immensely since its founding about five years back.

Please visit JPMorgan if you want to learn more about these ETFs. Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com .

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