From a fixed income perspective, inflation is becoming a hot topic. While aggressive monetary stimulus has undoubtedly been instrumental in supporting financial markets throughout the pandemic, investors are now considering assessing the possibility that they may have caused the economy to overheat, leading to an inflation calculation.
“Investors are keeping an eye on Treasury yields as they rose steadily in the first few months of the year before falling,” Kanagasingam said. “Within the fixed income ETF space, investors favor shorter-dated, less interest-rate sensitive bonds as $ 1.6 billion has been invested in short-term bond funds. until May. “
The uncertain environment has also dampened investor demand for passive bond funds. Regarding non-money market bond funds, Nirujan said about 60% of net flows went to active YTD bond funds, reflecting investors’ desire for active management that can navigate short-term bumps. and air pockets.
The increased volatility and ultra-low yields have also caused investors to look beyond traditional asset classes. With a correlation between traditional stocks and fixed income, as well as across geographies approaching all-time highs, investors are reaping the benefits of diversification, potentially improved returns, and reduced risk through alternative assets as well as strategies such as short selling, the use of derivatives and leverage.
“Although this is a relatively new asset class, alternative ETFs have grown significantly, bringing together $ 2.2 billion in assets under management as well as a wave of new product launches over the years. past three years, ”Kanagasingam said. “In May, liquid alternative ETFs generated $ 841 million in year-to-date net sales. As an innovator in the field of liquid alternatives in Canada, CI GAM is today the largest provider of liquid alternatives in Canada, with a total of $ 3 billion in liquid assets under management and alternative ETFs representing 23% of assets in the entire Canadian space.