iShares Core U.S. Aggregate Bond ETF

AFRICAN GOLD GROUP INC by African Gold Group Inc.

African Gold Gr

Antilia Group

AGRIOS GLOBAL HLDGS LTD by Agrios Global Holdings Ltd.

Agrios Global Holdings

Investors are eagerly anticipating the U.S. Federal Reserve&rsquo;s updated economic projections expected out&nbsp;Wednesday.
Inflation is at the forefront of many investors minds at the moment, but the latest global hedge fund manager survey from Bank of America suggests fund managers aren&rsquo;t particularly concerned about inflation.
Inflation Concerns: The Consumer Price Index climbed 5% in May, its highest growth since 2008. However, the Fed has said it expects high inflation levels in 2021 to be &ldquo;transitory&rdquo; as the economy opens up to full capacity.
Some investors are skeptical that recent inflation levels are transitory, but 72% of fund managers surveyed agreed that the current inflationary situation is only temporary. In fact, 68% of managers surveyed said it should be smooth sailing for the economy in the next couple of years and don&rsquo;t expect another recession until 2024 at the earliest.
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/21/06/21516023/2-reasons-to-stay-overweight-on-the-financial-sector">2 Reasons To Stay Overweight On The Financial Sector</a>
But just because inflation is not a concern doesn&rsquo;t mean fund managers aren&rsquo;t expecting action from the Fed in the near term. About 63% of managers surveyed said they expect the Fed to signal a tapering of its $120 billion in monthly bond purchases in August or September.
Current Allocations: Cash levels among fund managers have dropped from 4.1% to 3.9% in the past month, and 57% of managers surveyed said any near-term correction in the stock market will ultimately be less than a 10% pullback.
Allocation to bonds is currently at a three-year low, while stock allocations are at year-to-date highs.
Bank of America found long commodities has also overtaken long Bitcoin (CRYPTO: $BTC) as the trade fund managers consider to be the &ldquo;most crowded&rdquo; at the moment.
Despite a belief that the commodity trade is crowded, it is also the most aggressive overweight allocation among fund managers relative to historical levels.
Fund managers are also overweight materials and banks and underweight bonds and utilities.
Benzinga&rsquo;s Take: To mimic fund managers&rsquo; current allocations, consider buying the Invesco Optimum Yld Dvsfd Cmd Str No K-1 ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pdbc#NASDAQ">PDBC</a>), the Materials Select Sector SPDR Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlb#NYSE">XLB</a>) and the SPDR S&amp;P Bank ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/kbe#NYSE">KBE</a>) and selling the iShares Core US Aggregate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>).
Investors who want to take the contrarian approach and bet against hedge funds should take the opposite side of that trade.
(Photo: <a href="https://pixabay.com/users/kalhh-86169/">Kalhh</a> via <a href="https://pixabay.com/illustrations/money-dollar-stack-funds-finance-1090815/">PIxabay</a>)

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Futures

Hedge Funds

Economics

Federal Reserve

Markets

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ETFs

General

PDBC

Survey: Hedge Fund Managers Aren't Worried About Inflation

A flood of new traders joined the market in 2020 thanks to the coronavirus&nbsp;pandemic.
Most of those traders are sitting on big gains at this point thanks to a historic market rally, but much of the easy rebound money may have already been made at this point.
Looking ahead to 2021, now is the time for new investors to start thinking about positioning their portfolio for the long-term. One of the best ways to protect your 2020 gains is by taking advantage of the power of diversification.
Here&rsquo;s an introduction to diversified investing and four tips for making sure your <a href="https://www.benzinga.com/money/best-portfolio-tracker/">portfolio</a> is diversified.
Don&rsquo;t Put All Your Eggs In One Basket:&nbsp;Even if you love a particular stock or two, putting all your money in one or two companies is an unnecessarily large risk.
Lehman Brothers investors in 2007 had no idea the types of risky mortgage derivative bets banks were making behind the scenes. Enron investors had no idea the type of fraudulent accounting that was going on under their noses.
Diversify your portfolio by investing in a number of different stocks in different market sectors. Mix&nbsp;growth stocks and value stocks, technology stocks and utilities, real estate investment trusts and SPACs, U.S. dividend stocks and emerging market stocks.
Make sure you don&rsquo;t miss the next hot market sector, and don&rsquo;t get crushed by the next cold one.
Take Advantage Of Mutual Funds, ETFs:&nbsp;In 2021, it&rsquo;s never been easier to diversify your portfolio by taking advantage of mutual funds and ETFs. If you want to have individual stocks like Tesla Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tsla#NASDAQ">TSLA</a>), Apple, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>) and Walt Disney Co (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dis#NYSE">DIS</a>) as core holdings, there&rsquo;s nothing wrong with that.
At the same time, try to&nbsp;allocate a large percentage of your portfolio to diversified ETFs, such as the SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>), the iShares Core S&amp;P 500 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ivv#NYSE">IVV</a>) and the Vanguard Total Stock Market Index Fund ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vti#NYSE">VTI</a>).
With just one click, your portfolio can go from three holdings to hundreds or even thousands of holdings thanks to the diversification power of ETFs.
Think Outside The Stock Market:&nbsp;Not only should your portfolio contain a diversified mix of stocks, it should also contain a diversified mix of asset classes. A truly diversified portfolio will have at least some <a href="https://www.benzinga.com/money/what-is-asset-allocation/">allocation to assets</a> such as bonds, commodities, real estate, cash, gold or even <a href="https://www.benzinga.com/money/best-crypto-app/">cryptocurrency</a>.
Here are some of the most popular funds to consider to diversify outside of the stock market:
<ul>
<li>iShares Core US Aggregate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>)</li>
<li>SPDR Gold Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gld#NYSE">GLD</a>)</li>
<li>Vanguard Real Estate Index Fund ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vnq#NYSE">VNQ</a>)</li>
<li>Invesco Optimum Yld Dvsfd Cmd Str No K-1 ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pdbc#NASDAQ">PDBC</a>)</li>
<li>Grayscale Bitcoin Trust (Btc) (OTC: <a class="ticker" href="https://www.benzinga.com/stock/gbtc#OTC">GBTC</a>)</li>
</ul>
Consider Your Investing Time Horizon: If you&rsquo;re relatively young, you can safely take a much more aggressive approach to investing than if you are approaching retirement.
From <a href="https://www.fool.com/investing/how-to-invest/portfolio-diversification/">1926 to 2018</a>, a portfolio of 100% stocks averaged roughly a 10.1% average annual return. However, that portfolio also generated an annual net loss in 26 out of 93 years, or about 28% of the time.
During the same stretch, a portfolio of 80% bonds and just 20% stocks generated an average annual return of only 5.3%, but it produced an annual net loss in just 13 out of the 93 years, or about 14% of the time.
Typically, the older you are, the more conservative you want to be with your investments. Stocks are considered among the highest-risk investments, whereas certificates of deposit and U.S. Treasury bonds are among the <a href="https://www.benzinga.com/money/best-low-risk-investments/">lowest-risk investments</a>.

Long Ideas

Education

Short Ideas

AAPL

GBTC

TSLA

Beginning Investor? Here's How To Protect Your Portfolio In 2021

After a huge second half of 2020, the S&amp;P 500 is off to another hot start to 2021. With stock market valuations getting more bloated by the week, there are plenty of skeptics that believe certain stocks and sectors have come too far too fast.
There is currently $244 billion in aggregate domestic ETF short interest, according to S3 Partners analyst Ihor Dusaniwsky. Over the past month, Dusaniwsky said short sellers have increased their exposure by about $14 billion.
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/21/02/19677086/heres-where-to-look-for-a-short-squeeze-in-the-reopening-restaurant-space">Here&#39;s Where To Look For A Short Squeeze In The Reopening Restaurant Space</a>
As of Wednesday, here are the six most heavily shorted domestic ETFs:
<ul>
<li>SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>), $60.5 billion in short interest.</li>
<li>iShares Russell 2000 Index (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwm#NYSE">IWM</a>), $20.9 billion in short interest.</li>
<li>PowerShares QQQ Trust, Series 1 (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>), $19.7 billion in short interest.</li>
<li>iShares iBoxx $ High Yid Corp Bond (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>), $11 billion in short interest.</li>
<li>iShares MSCI Emerging Markets Indx (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/eem#NYSE">EEM</a>) 2.12%, $9.5 billion in short interest.</li>
<li>SPDR S&amp;P Biotech (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xbi#NYSE">XBI</a>), $7.9 billion in short interest.</li>
</ul>
Short Percent Of Float: By far the most heavily shorted ETF is the SPY ETF, which tracks the S&amp;P 500 and represents a simple bet against the U.S. stock market and/or a hedge against long positions in U.S. stocks. In the past 30 days, SPY short interest has increased by $4.8 billion. When it comes to short percent of float, however, the XBI Biotech ETF has the highest of the six ETFs mentioned above at 94%.
While it didn&rsquo;t crack the top six, Dusaniwsky said the SPDR S&amp;P Oil &amp; Gas Exploration &amp; Production ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xop#NYSE">XOP</a>) has seen the largest percent increase in short interest so far in 2021. XOP short increase is up 27% to $2.6 billion year-to-date.
At the same time, short sellers have been jumping ship on the iShares Core US Aggregate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>). AGG fund short interest is down 42% year-to-date to $1.9 billion.
Here are the six ETFs with at least $25 million in short interest that have the highest short percent of float, according to S3:
<ul>
<li>SPDR S&amp;P Retail (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xrt#NYSE">XRT</a>), 195% of float.</li>
<li>SPDR S&amp;P Biotech (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xbi#NYSE">XBI</a>), 94% of float.</li>
<li>SPDR S&amp;P Oil &amp; Gas Exploration &amp; Production ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xop#NYSE">XOP</a>), 89.7% of float.</li>
<li>iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>), 49.4% of float.</li>
<li>SPDR S&amp;P Regional Banking ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/kre#NYSE">KRE</a>), 44.1% of float.</li>
<li>iShares Expanded Tech-Software Sector ETF (BATS: <a class="ticker" href="https://www.benzinga.com/stock/igv#BATS">IGV</a>), 39.4% of float.</li>
</ul>
Benzinga&rsquo;s Take: The highest short percent of floats data is an indication of where short sellers see the most potential weakness in the market. Short sellers are betting most aggressively against retail stocks, volatility and biotech stocks.

Analyst Color

Biotech

Specialty ETFs

Analyst Ratings

Short Sellers Still Targeting Retail, Biotech ETFs

In the world of exchange traded funds, it&#39;s often said that $100 million in assets is what an issuer needs to turn a profit on a particular fund. Of course, making it to $1 billion is impressive and $10 billion is rarefied air.
<h3>What Happened</h3>
Speaking of exclusivity, $100 billion is truly elite company in the ETF space, but that club got a new member last week with the addition of the PowerShares QQQ (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>). Bolstered by the leadership of technology and communication services equities, the Nasdaq-100 index &mdash; QQQ&#39;s underlying benchmark &mdash; recently <a href="https://www.benzinga.com/trading-ideas/long-ideas/20/05/16007402/with-this-nasdaq-100-soaring-dont-forget-this-etf">returned to positive territory</a> while the S&amp;P 500 still labors in the red following the coronavirus March meltdown.
Year to date, investors added $9.37 billion to QQQ &mdash; a total surpassed by just five other ETFs &mdash; vaulting the fund to nearly $104 billion in assets under management.
<h3>Why It&#39;s Important</h3>
The only U.S.-listed ETFs larger than QQQ are the SPDR S&amp;P 500 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>), iShares Core S&amp;P 500 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ivv#NYSE">IVV</a>), Vanguard S&amp;P 500 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/voo#NYSE">VOO</a>) and the Vanguard Total Stock Market ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vti#NYSE">VTI</a>).
&ldquo;CFRA rates QQQ as a five-star diversified U.S. equity fund, believing it has a high probability of outperforming in the next nine months due to its low costs and high reward potential, despite slightly elevated risks,&rdquo; said <a href="https://www.cfraresearch.com/">CFRA Research </a>Director of ETF &amp; Mutual Fund Research Todd Rosenbluth in a Tuesday note.
At $71.24 billion in assets under management, the iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>) is the next closest ETF to QQQ on the assets totem pole, but it could be awhile before the bond fund joins the $100 billion club.
&ldquo;CFRA thinks it could be three or more years before another fund joins the $100 billion club given competitive pressure and modest returns for bond funds. But actions by the Federal Reserve could boost one fund into the upper echelon,&rdquo; said Rosenbluth.
<h3>What&#39;s Next</h3>
Past performance is never a guarantee of future returns, but with the sectors QQQ is heavy performing well this year, it&#39;s hard to imagine investors won&#39;t remain fond of the fund. Plus, QQQ has history on its side when it comes to outperforming the aforementioned S&amp;P 500 ETFs.
&ldquo;The Nasdaq-100 is heavily allocated towards top performing industries such as Technology, Consumer Services, and Health Care, which have helped the Nasdaq-100 outperform the S&amp;P 500 by a wide margin between Dec. 31, 2007 and March. 31, 2020,&rdquo; <a href="https://www.nasdaq.com/articles/when-performance-matters:-nasdaq-100-vs.-sp-500-2020-04-24">according to Nasdaq Global Indexes</a>.
The Nasdaq-100 beat the S&amp;P 500 in 10 of those 12 years.
Photo credit: <a href="https://www.flickr.com/photos/61368956@N00/3100369536">bfishadow, Flickr</a>

News

Broad U.S. Equity ETFs

Tech

The QQQ ETF Joins Exclusive $100B Club

ETF short interest can shed light for traders on areas of the market where investors see potential weakness.
S3 Partners analyst Ihor Dusaniwsky&nbsp;released his latest list of ETFs with the most short interest on Wednesday.&nbsp;Total short interest in the 2,200 domestic ETFs that S3 tracks was up $4.77 billion to $159 billion last week, Dusaniwsky said.&nbsp;
&ldquo;ETF short sellers continue to make fixed income ETF&rsquo;s a popular short for both hedging and outright trading purposes, as five out of the top 20 ETF shorts are fixed-income ETFs,&rdquo; he said.
<h3>Most Shorted ETFs</h3>
The following are the 16 ETFs with the highest short interest, according to S3:
<ul>
<li>SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>), $42.12 billion.</li>
<li>iShares Russell 2000 Index (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwm#NYSE">IWM</a>), $11.37 billion.</li>
<li>PowerShares QQQ Trust, Series 1 (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>), $9.51 billion.</li>
<li>iShares MSCI Emerging Markets Indx (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/eem#NYSE">EEM</a>), $5.54 billion.</li>
<li>iShares iBoxx $ High Yid Corp Bond (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>), $5.16 billion.</li>
<li>iShares IBoxx $ Invest Grade Corp Bd Fd (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lqd#NYSE">LQD</a>), $3.6&nbsp;billion.</li>
<li>Utilities SPDR (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlu#NYSE">XLU</a>), $3.28 billion.</li>
<li>SPDR S&amp;P Biotech (NYSEARCA: XBI), $3.27 billion.</li>
<li>iShares Barclays Aggregate Bond Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>), $3.08 billion.</li>
<li>iShares Barclays 20+ Yr Treas.Bond (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>), $3.03 billion.</li>
<li>iShares MSCI EAFE Index Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/efa#NYSE">EFA</a>), $2.91 billion.</li>
<li>Financial Select Sector SPDR Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlf#NYSE">XLF</a>), $2.51 billion.</li>
<li>Industrial Select Sector SPDR Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xli#NYSE">XLI</a>), $2.48 billion.</li>
<li>ISHARES TR/JPMORGAN USD EMERGI (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/emb#NASDAQ">EMB</a>), $2.46 billion.</li>
<li>SPDR Gold Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gld#NYSE">GLD</a>), $2.17 billion.</li>
<li>SPDR Dow Jones Industrial Average ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dia#NYSE">DIA</a>), $2.07 billion.</li>
</ul>
<h3>Benzinga&rsquo;s Take</h3>
It shouldn&rsquo;t be worrying that the SPY ETF is the largest short position by far. It doesn&rsquo;t necessarily mean investors are bearish about the market given that shorting the SPY ETF is one of the most popular ways for investors to hedge against their long stock positions.
Do you agree with this take? Email&nbsp;<a href="mailto:feedback@benzinga.com">feedback@benzinga.com</a>&nbsp;with your thoughts.
Related Links:
<a href="https://www.benzinga.com/top-stories/19/09/14481041/14-lowest-peg-ratios-in-the-s-p-500">14 Lowest PEG Ratios In The S&amp;P 500</a> 
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/19/09/14473044/10-stocks-where-short-sellers-are-throwing-in-the-towel">10 Stocks Where Short Sellers Are Throwing In The Towel</a>

SPDR Dow Jones Industrial Average ETF Trust

iShares JPMorgan USD Emerging Markets Bond Fund

iShares Trust Barclays 20+ Year Treasury Bond Fund

Report: The 16 Most Shorted ETFs

LibertyShares, Franklin Templeton&#39;s brand of exchange traded funds, added to its lineup of fixed-income funds this&nbsp;week with the debut of the Franklin Liberty U.S. Core Bond ETF (NYSE: FLCB).
<h3>What Happened</h3>
The new Franklin Liberty U.S. Core Bond ETF can be <a href="https://www.nasdaq.com/articles/reconsidering-complete-fixed-income-exposure-with-etfs-2019-09-19">used as an alternative</a> to traditional, passively managed aggregate bond strategies, as the new LibertyShares fund is actively managed and seeks low tracking error relative to the widely followed Bloomberg Barclays Aggregate Bond Index.
&ldquo;Franklin Templeton&rsquo;s fixed income and quantitative research teams review issuers and assess risks from multiple perspectives, which results in a truly holistic viewpoint on each potential investment,&rdquo; <a href="http://www.globenewswire.com/news-release/2019/09/19/1918051/0/en/Franklin-Templeton-Expands-Active-Fixed-Income-ETF-Lineup-with-Launch-of-Franklin-Liberty-U-S-Core-Bond-ETF.html">according to a statement from the issuer</a>.
&ldquo;FLCB will be managed by David Yuen, SVP, head of quantitative and multi-sector strategies, Amy Cooper, VP, portfolio manager, Patrick Klein, SVP, portfolio manager, multi-sector strategies, and Tina Chou, VP, portfolio manager, with Franklin Templeton Fixed Income Group.&rdquo;
<h3>Why It&#39;s Important</h3>
FLCB came to market with just over $100 million in assets under management, putting it in the upper echelon of new ETFs this year, active or passive.
Nearly 58% of the new ETF&#39;s roster is allocated to Treasuries and agency debt,&nbsp;<a href="https://www.franklintempleton.com/investor/investments-and-solutions/investment-options/etfs/portfolio/28565/franklin-liberty-u-s-core-bond-etf/FLCB">with about 28%</a> coming from a category deemed as &ldquo;other.&rdquo;
Examining FLCB&#39;s roster of 88 holdings, which is highly focused relative to passive total bond funds, it&#39;s reasonable to assume the bulk of that &ldquo;other&rdquo; category is investment-grade corporate debt.
FLCB&#39;s Treasury holdings give the fund a duration contribution of just over two years, while the other category has a duration contribution of 2.29 years, according to issuer data. FLCB has an average duration of 5.59 years.
Over 72% of FLCB&#39;s holdings are rated AAA, AA or A. Another 18.56% are rated BBB.
<h3>What&#39;s Next</h3>
FLCB is the eighth ETF in the LibertyShares fixed-income lineup, a roster that covers investment-grade corporates, municipal bonds, international debt, senior loans and junk bonds. FLCB charges 0.15% per year, or $15 on a $10,000 investment, making it cost-effective among actively managed funds.
At the end of August, LibertyShares had $4.4 billion in assets under management.
Related Links:&nbsp;
<a href="https://www.benzinga.com/markets/cannabis/19/09/14462339/potx-a-potent-pot-etf-debuts">Another New Cannabis ETF</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/19/09/14462412/how-to-find-small-caps-that-actually-make-money">This ETF&#39;s Small Caps Are Actually Profitable</a>

Bonds

New ETFs

Franklin Templeton's LibertyShares Launches Active Core Bond ETF

Goldman Sachs Assets Management (GSAM), the exchange traded funds arm of Goldman Sachs (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gs#NYSE">GS</a>), is looking to boost its profile in the fast-growing fixed income ETF space.
<h3>What Happened</h3>
With bond ETFs having hit $1 trillion in combined assets under management for the first time just a couple of months ago and with the asset class poised to double in <a href="https://www.benzinga.com/trading-ideas/long-ideas/19/06/13998876/bond-etfs-to-hit-2-trillion-in-five-years-blackrock-says">size in five years</a>,&nbsp;GSAM is looking to grab a bigger slice of that pie.
In a recent filing with the Securities and Exchange Commission, GSAM outlined plans for the Goldman Sachs Access U.S. Aggregate Bond ETF, which would likely be a competitor to the iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>) and the Vanguard Total Bond Market ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bnd#NYSE">BND</a>). Assuming that Goldman ETF comes to market, it will track an offshoot of the e FTSE US Broad Investment-Grade (USBIG&reg;) Bond Index.
<h3>Why It&#39;s Important</h3>
The filing also highlighted plans for the Goldman Sachs Access China Bonds ETF, which looks like it will be comprised primarily of Chinese sovereign debt and bonds issued by policy banks. That ETF will hold yuan-denominated debt and also track a FTSE index.
GSAM&#39;s <a href="https://www.sec.gov/Archives/edgar/data/1479026/000119312519223580/d755444d485apos.htm#toc755444_1">SEC filing also features</a> plans for two corporate bond ETFs: one with that caps maturities at five years and another that only holds bonds with maturities of more than 10 years. Those proposed funds are the Goldman Sachs Access Investment Grade Corporate 1-5 Year Bond ETF and the Goldman Sachs Access Investment Grade Corporate 10+ Year Bond ETF. GSAM already offers two corporate bond ETFs, one of which is an investment-grade product.
The issuers also filed plans for the Goldman Sachs Access Total Bond Market ETF, a broad-based fund that would feature exposure to U.S. government debt, domestic investment-grade corporates, junk bonds and emerging markets sovereign and corporate bonds.
The Goldman Sachs Access U.S. Treasury Total Market Bond ETF is the other ETF GSAM revealed in the filing.
<h3>What&#39;s Next</h3>
The filing did not include tickers or expense ratios for any of the funds, indicating launches aren&#39;t imminent. Goldman currently offers <a href="https://etfdb.com/etfs/issuers/goldman-sachs/">five bond ETFs</a>, the largest of which is the $3.07 billion Goldman Sachs Treasury Access 0-1 Year ETF (NYSEARCA: GBIL). GBIL is Goldman&#39;s second-largest ETF overall.
Related Links:
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GBIL

Goldman Sachs Files Plans For 6 Bond ETFs

On the back of first half of inflows of $72 billion, global fixed income exchange traded funds topped $1 trillion in combined assets under management earlier this month and BlackRock Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/blk#NYSE">BLK</a>) sees that number surging to $2 trillion in just five years. BlackRock is the parent company of iShares, the world&#39;s largest ETF sponsor.
<h3>What Happened</h3>
Over the past several years, bond ETFs have been ascending the ranks of the ETF world as more professional investors adopt the products for a variety of reasons. Some institutional investors have turned to corporate bond ETFs over individual issues as their preferred avenues for exposure to corporate bonds, <a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/09/12380305/demand-has-swelled-why-bond-etfs-will-continue-growing">both investment-grade and high-yield</a>.
The largest bond ETF in the U.S. is the $63.74 billion iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>), the eighth-largest ETF overall. Of the 100 largest U.S.-listed ETFs, nearly a quarter are bond funds. Of those 24 ETFs, 14 are iShares funds.
<h3>Why It&#39;s Important</h3>
&ldquo;Global bond ETFs are currently growing 20% annually, and they still only represent less than 1% of the $105 trillion global fixed income marketplace,&rdquo; said Carolyn Weinberg, iShares Global Head of Product. &ldquo;Future growth will be driven by an increasing number of investors using bond ETFs in more ways.&rdquo;
Other behemoth bond ETFs include the $36.89 billion iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lqd#NYSE">LQD</a>) and the $17.37 billion iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>).
&ldquo;Bond ETFs are not only a product, but a technology,&rdquo; said Weinberg. &ldquo;Bond ETFs have transformed how all investors - from individuals to wealth managers to institutions - can access fixed income efficiently and transparently.&rdquo;
<h3>What&#39;s Next</h3>
This year, four of the top 10 ETFs in terms new assets added are bond funds, a quartet including the $14.39 billion iShares 20+ Year Treasury Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>). With the Federal Reserve poised to keep rates lower or lower borrowing costs and the European Central Bank keeping an easy monetary policy, global bond ETFs could see even <a href="https://www.benzinga.com/trading-ideas/long-ideas/19/06/13990674/vanguard-enters-the-1-trillion-etf-club">larger flows this year</a>.
It&#39;s likely the move to bond ETFs will be accompanied by fee compression or the introduction of &ldquo;me too&rdquo; products with lower fees to compliment funds like HYG and LQD. Most iShares bond ETF fees <a href="https://www.ishares.com/us/strategies/invest-with-bond-etfs">are just 25%</a> of the fees on competing active mutual funds.
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Bond ETFs To Hit $2 Trillion In Five Years, BlackRock Says

The universe of fixed income exchange traded funds following socially responsible investing principles gained another member Thursday when BlackRock Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/blk#NYSE">BLK</a>) launched an ETF dedicated to green bonds.
The iShares Global Green Bond ETF (NASDAQ: BGRN) is the latest bond ETF to tap into environmental, social and governance (ESG) principles.
<h3>What Happened</h3>
Fixed income ETFs tilting toward sustainable investment themes are not new territory for BlackRock&#39;s iShares, the world&#39;s largest ETF issuer. Prior to the debut of BGRN, iShares had three fixed income ETF focusing on various sustainable investing themes.
Last month, iShares launched the iShares ESG U.S. Aggregate Bond ETF (NYSE:EAGG), the ESG answer to the popular iShares Core Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>). In less than a month on the market, EAGG already has over $55 million in assets under management.
<h3>Why It&#39;s Important</h3>
The new BGRN tracks the Bloomberg Barclays MSCI Green Bond Select (USD Hedged) Index and holds nearly 180 green bonds. Green bonds can be issued by corporations, governments and super-national issues. Bonds in this category are deemed to have positive environmental impacts and are used to fund environmentally friendly projects.
&ldquo;This fund simplifies access to green bonds, enabling investors to more precisely match their values to their investment portfolios,&rdquo; Carolyn Weinberg, iShares Global Head of Product at BlackRock, <a href="https://www.ishares.com/us/products/305296/">said in a statement</a>. &ldquo;Issuers of green bonds disclose how their projects are achieving the promised environmental outcome, which will allow us to provide our clients with fund level impact reporting. BGRN can be positioned in the core of a global bond allocation or as a satellite in a diversified fixed income portfolio to achieve greater environmental impact.&rdquo;
BGRN has an effective duration of 6.96 years and an average yield to maturity of 3.65 percent. The new green bond fund is heavily investment-grade as about 78 percent of its holdings are rated AAA, AA or A.
<h3>What&#39;s Next</h3>
BGRN isn&#39;t the first green bond ETF on the market. Rather, the new iShares fund will compete directly with the VanEck Vectors Green Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/grnb#NYSE">GRNB</a>), which debuted in March 2017.
BGRN charges 0.20 percent per year, or $20 on a $10,000 investment compared with GRNB&#39;s annual fee of 0.30 percent.
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GRNB

Another Green Bond ETF Is Here

Few stocks have been immune from the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/10/12488010/dow-falls-1-300-points-in-48-hours-as-market-rout-conti">broad market&#39;s two-day tumble</a>. Among the punished are companies with direct exposure to the exchange traded funds industry.
This week, shares of BlackRock Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/blk#NYSE">BLK</a>), the world&#39;s largest assets manager and ETF issuer&nbsp;and WisdomTree Investments, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/wetf#NASDAQ">WETF</a>), the only publicly traded pure play ETF sponsor, are among the ETF-related stocks getting drubbed.
<h3>What Happened</h3>
Shares of BlackRock are lower by 11.91 percent this week. Invesco Ltd. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ivz#NYSE">IVZ</a>), the fourth-largest U.S. ETF issuer, has seen its shares tumble 13.57 percent over the same span.
&ldquo;Increased volatility has led to an increase in U.S.-domiciled ETF outflows at BLK and IVZ, although it appears that WETF has had break-even flows in the U.S. This exhibit excludes non-U.S. Domiciled ETF flows,&rdquo; said Keefe, Bruyette &amp; Woods analysts Robert Lee and Pell Bermingham in a note out Thursday.
Shares of BlackRock, the owner of the iShares ETF brand, slid 7 percent Wednesday. The KBW analysts offer some insight into the impact of ETF outflows on the stock.
&ldquo;Simplistically, if we assume the average fee rate on equity ETFs is about 26bp with a 70% incremental margin, then (all else equal) -$100bn of outflows would impact EPS about -$0.85 (our current 2019 EPS forecast is $29.56),&rdquo; the analysts said. &ldquo;However, this would also be highly dependent upon the mix. For example, if the outflows were predominately in lower fee core products where average fee rates are below 10bps the impact would be significantly less.&rdquo;
<h3>Why It&#39;s Important</h3>
For the week ended Oct. 10, five of the 10 worst ETFs in terms of lost assets are iShares funds, more than any other issuer. The iShares Russell 1000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwb#NYSE">IWB</a>), the iShares iBoxx USD High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>) and the iShares Core U.S. Aggregate Bond Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>) are among the offending funds.
To be fair, BlackRock&#39;s iShares is the largest ETF issuer in terms of number of funds and three of its funds were also among the top asset gatherers for the week ended Oct. 10.
&ldquo;In this context, the -7% decline in BLK yesterday to the extent it was exacerbated by concerns over ETF outflows, may be overdone,&rdquo; said the KBW analysts.
KBW has an Outperform rating on BlackRock and Market Perform ratings on Invesco and WisdomTree.
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WETF

How Market Volatility Is Affecting Some ETF Issuers

The&nbsp;iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>), the largest U.S.-listed fixed income exchange traded fund, reached its 15th birthday Sept. 22, making it an appropriate time to examine the bond ETF boom.
When AGG debuted, a scant number of bond ETFs were on the market. Today, more than 1,200 such funds with $840 billion in assets under management are listed around the world, <a href="https://www.blackrockblog.com/2018/09/19/bond-investing-revolution/">according to BlackRock</a>.
<h3>What Happened</h3>
Various data points indicate the growth of bond ETFs will continue.
&ldquo;Though fixed income offerings represent 17 percent&nbsp;of the exchange traded product market, the category&rsquo;s $63 billion of net inflows year-to-date through Sept. 7 were a 36-percent&nbsp;share,&rdquo; <a href="https://newpublic.cfraresearch.com/">CFRA Research</a> Director of ETF &amp; Mutual Fund Research Todd Rosenbluth said in a recent note.
&ldquo;Despite recent interest rate hikes (as well expectations for additional hikes in the future), demand has swelled for low-cost, liquid vehicles for core and tactical bond allocations.&rdquo;
As of Aug. 31, investors have added $51.5&nbsp;billion to U.S.-listed bond ETFs this year. Bond ETFs still represent a small percentage of the overall fixed income space, but institutional investors are increasingly turning to these products as avenues for superior liquidity.
A recent survey by <a href="https://www.plansponsor.com/fixed-income-etfs-used-address-bond-market-issues/">Greenwich Associates</a> said institutional investors find it&nbsp;harder to execute large trades in some individual bonds, a scenario that is stoking demand for bond ETFs.
<h3>Why It&#39;s Important</h3>
Broadly speaking, bond ETFs do offer valid alternatives for liquidity-seeking investors. CFRA&#39;s coverage universe includes 63 bond ETFs with average daily volume of 250,000 shares or more and 138 bond ETFs with bid/ask spreads of 3 cents or less, Rosenbluth said.&nbsp;
AGG is one of the ETFs meeting both parameters,&nbsp;as is the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lqd#NYSE">LQD</a>) and the iShares MBS ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/mbb#NASDAQ">MBB</a>).
Insurance companies are expected to increase usage of bond ETFs in the years ahead.
<h3>What&#39;s Next</h3>
Last year, the National Association of Insurance Commissioners revised its accounting methodology for bond ETFs, opening the door for insurance companies to increase use of these products in investment portfolios.
&ldquo;A new systematic valuation method allowed insurers to treat ETFs more like ordinary bonds, which has the potential to reduce the volatility in the company&#39;s balance sheet and income statement,&rdquo; Rosenbluth said. &ldquo;In 2017, insurance companies increased their assets in fixed income ETFs by a whopping 69 percent,&nbsp;according to S&amp;P Global.&rdquo;
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'Demand Has Swelled': Why Bond ETFs Will Continue Growing

The bulk of assets allocated to exchange traded funds&nbsp;reside in equity-based products, but fixed income funds are making significant contributions to the ETF industry&#39;s growth. Last year, investors allocated a record $84.34 billion to U.S.-listed bond ETFs.
As of Aug. 31, year-to-date inflows to bond ETFs trading in the U.S. are a still-<a href="https://etfgi.com/news/press-releases/2018/09/etfgi-reports-assets-invested-etfs-and-etps-listed-us-reached-new-high">impressive $51.5&nbsp;billion</a>.
Credit the iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>) with starting a bond revolution in the ETF universe.
<h3>What Happened</h3>
Home to $55.91 billion in assets under management as of Sept. 18, AGG is by far the largest U.S.-listed fixed income ETF. The fund, which celebrates its 15th anniversary this month, is about $20 billion larger than its closest rival.
AGG targets the Bloomberg Barclays US Aggregate Bond Index, one of the most widely followed fixed income benchmarks in the world. That gives iShares&nbsp;investors exposure to a massive number of bonds &mdash; 6,885 to be precise. Before the fund debuted, bond investors mostly depended on individual issues or actively managed funds.
&ldquo;Instead, most people bought individual bonds or looked to actively managed funds for the bond portion of their portfolios,&rdquo;&nbsp;<a href="https://www.blackrockblog.com/2018/09/19/bond-investing-revolution/">BlackRock said in a recent note</a>.
&ldquo;While each approach has its uses, there can be downsides: bond buying can be cumbersome and costly, especially for smaller investors; active funds typically try to outperform the index by over-weighting higher-yielding sectors or adjusting duration (interest rate risk).&rdquo;
<h3>Why It&#39;s Important</h3>
Various data points suggest the growth of fixed income ETFs will continue. A recent study by Greenwich Associates indicates a majority of institutional investors around the world <a href="https://www.plansponsor.com/fixed-income-etfs-used-address-bond-market-issues/">would consider turning to bond ETFs</a> for fixed income exposure. Liquidity challenges are among the reasons more institutional investors are embracing bond ETFs.
In the U.S., about 20 of the 100 largest ETFs by assets are bond funds. Year-to-date, two bond ETFs, including the iShares fund, are among the top 10 asset-gathering U.S. ETFs.
&ldquo;The launch of the iShares Core U.S. Aggregate Bond ETF revolutionized and democratized bond investing,&rdquo; said BlackRock. &ldquo;It was the first ETF to provide all investors with a low-cost, transparent way to &#39;own&#39; the world&rsquo;s predominant fixed income benchmark.&rdquo;
The iShares fund charges just 0.05 percent per year, or $5 on a $10,000 investment, making it one of the least expensive U.S. ETFs, fixed income or otherwise. That expense ratio is well below the stock&#39;s original expense ratio of 0.22 percent.
<h3>What&#39;s Next</h3>
AGG spurred the creation of rival funds and international equivalents, such as the $872.25-million iShares Core International Aggregate Bond ETF (CBOE: IAGG).
&ldquo;Fifteen years ago, there were only a handful of bond ETFs. Today, there are more 1,200 of them, trading in a market worth $840 billion globally.&nbsp;AGG opened the door toward a more modern and transparent bond market,&rdquo; according to BlackRock.
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IAGG

The ETF That Changed The Bond Game

Unless you follow investing closely you may never have heard of the &ldquo;yield curve&rdquo; and may not realize how much impact it has on your life. The yield curve predicts to some extent your income over the next few years, whether or not you&#39;ll be able to borrow money and how your portfolio is likely to perform.
<h3>What Is The Yield Curve?</h3>
The yield curve is the difference between long-term interest rates and the short-term interest rate. On surface that sounds like a pretty confusing concept, but let&rsquo;s dig into it.
In our economy there is a short-term interest rate that is set by the Federal Reserve. That interest rate dictates how much banks can borrow for in the short-term. The long-term interest rate is what investors think is a satisfactory rate to loan&nbsp;money for across 10 or 30 years. Investors forecast the long-term rate based upon what they think economic growth and inflation is going to be. The difference between the long term and short term interest rate is called the yield curve slope. If long term interest rates are lower than short term interest rates, it is called an &ldquo;inverted yield curve&rdquo;. Right now, long term interest rates are barely higher than short term interest rates and market commentators fear that it is close to becoming inverted.
<a href="https://www.hibenjamin.com/blog/wp-content/uploads/2018/07/YieldCurveHistory.png"><img alt="" src="https://www.hibenjamin.com/blog/wp-content/uploads/2018/07/YieldCurveHistory.png" style="height:519px; width:913px" /></a>
<h3>How An Inverted Yield Curve Could Affect You</h3>
An inverted yield curve, where long-term rates are higher than short term rates predicts a number of big things that affects your life, including:
1.&nbsp;Getting A Mortgage
All banks are in the business of borrowing money for short periods of time (e.g. through offering you a 1-year certificate of deposit that pays interest) while loaning people money for long periods of time (e.g by providing 30 year mortgages). The profit of the bank is the extent to which it can keep borrowing at these shorter-term interest rates and use that money to then loan you and I money at longer-term interest rates.
Put another way, a bank&#39;s profitability is determined to what extent long-term interest rates are higher than short-term interest rates. If long-term interest rates are a lot higher than short-term interest rates banks should be very profitable as they are able to borrow money at favorable short term rates while lending money out at much higher long term rates. If the yield curve is inverted and long term rates are lower than short term rates, it isn&#39;t profitable for the bank to loan money. This has a big impact on whether they want to offer you a loan, such as a mortgage.
If you need to buy a home or take out a mortgage, it may make sense to do it before the yield curve is inverted and banks are unwilling to lend. We are getting close to that territory.
2.&nbsp;Your Job And Income&nbsp;Prospects
Because the shape of the yield curve has an impact on whether banks lend money, it also predicts whether customers can receive credit to spend and businesses can receive financing to grow. If they can&rsquo;t, people may consume less and companies may choose to hire fewer workers. When we look at the history of the yield curve from 1975 onwards and isolate every situation where the yield curve is inverted, we find that the subsequent month had a higher unemployment than the month before it.
This means that it&#39;s more likely that you are you may be laid off or that your income may shrink as businesses contract and lay off workers.
If you don&#39;t have enough money saved to be able to cover your expenses for the next few years now is a good time to think about saving more or reducing your expenses.
3.&nbsp;Your Portfolio&rsquo;s Returns
If you&rsquo;ve been invested in the market over the past 10 years you&#39;ve experienced a remarkable bull market and have realized a return of 270 percent. We looked through the history of the yield curve from 1975 and isolated every month where the yield curve was inverted. We found that on average the S&amp;P 500 returned 0.5 percent&nbsp;after a month where the yield curve was inverted and 0.8 percent&nbsp;after a month the yield curve was not inverted.
When we dig in deeper, we notice that even those the stock market is up 0.5% on average after a yield curve inversion, the return carries significant risk, with 10 percent&nbsp;of months experiencing price drops of greater than 5 percent.
It makes sense to always be invested in the market and not try to buy or sell based on predictions of when the market is going to go up or down. There is a sea of research that shows that trying to time the market is a fool&rsquo;s errand. However, that is likely little comfort to an investor or saver who doesn&rsquo;t want to lose any of their hard-earned money, but still wants to capture some of the upside the market can offer.&nbsp;
It actually possible to construct a portfolio where you receive some market upside while being protected from losing any money. It is a lot like a CD or a bond, but where the interest payments are linked to the stock market. You can implement this strategy on your own in a brokerage account.
4: Long-Term Certificates Of Deposit
Typically when you buy a certificate of deposit or a fixed <a href="https://www.policypedia.com/annuity-directory">annuity</a> (the insurance industries version of a CD), the longer you lock up your money for, the higher the interest rate you receive. If the yield curve is inverted this might not be the case. You could very well receive the same yearly interest rate for committing your money for 10 years compared to committing your money for 2 years. Therefore, yield curve inversion can make locking your money up for longer periods a bad deal.
If long-term interest rates are the same or lower than short term interest rates on CDs or annuities, it makes sense to invest in the shorter term annuity and wait, since you are not being compensated for locking your money up.
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Personal Finance

Real Estate

How A Negative Yield Curve Could Impact Your Finances

Various studies and <a href="https://www.investopedia.com/news/blackrock-these-trends-will-drive-etf-growth/">surveys are confirming</a> the growth trajectory of the exchange traded funds industry and the importance of institutional investors in driving that growth.
<a href="https://www.benzinga.com/insurance/">Insurance companies</a> are among the institutional investors that are embracing ETFs in a significant fashion and, thanks to an accounting change enacted last year, insurance providers are driving growth of fixed-income ETFs.
<h3>
	What Happened</h3>
&quot;In April 2017, the National Association of Insurance Commissioners revised its methodology for accounting of fixed-income ETFs,&rdquo; <a href="https://newpublic.cfraresearch.com/">CFRA Research</a> Director of ETF &amp; Mutual Fund Research Todd Rosenbluth said in a Thursday note. &ldquo;A new systematic valuation method allowed insurers to treat ETFs more like ordinary bonds, which has the potential to reduce the volatility in the company&#39;s balance sheet and income statement.&rdquo;
Earlier this year, bond ETFs ascended to record highs in terms of combined assets under management. Year-to-date, three of the top 10 ETFs in terms of new assets added are bond funds, including the iShares Core U.S. Aggregate Bond ETF&nbsp;(NYSE: <a class="ticker" href="/stock/agg#NYSE">AGG</a>).
<h3>
	Why It&#39;s Important</h3>
&quot;CFRA thinks that as insurance companies become more comfortable with the new accounting treatment, usage of bond ETFs will climb considerably higher,&rdquo; Rosenbluth said. &ldquo;Companies chose the SV designation for 37 percent of the bond ETFs held by insurance companies. Interestingly, even though the amount of bond ETF investments by life and property and casualty companies was similar, nearly three-quarters of life companies chose SV, while only 5 percent of P&amp;C companies did so.&rdquo;
At the geographic level, insurance companies in just four states do not invest in bond ETFs, while insurance providers in Massachusetts, Indiana, Illinois, California and Texas account for two-thirds of the industry&#39;s bond ETF investments, <a href="http://www.indexologyblog.com/2018/05/24/on-the-use-of-bond-etfs-by-insurance-companies/">according to S&amp;P Dow Jones Indices</a>.
<h3>
	What&#39;s Next</h3>
Critics of bond ETFs often base their criticisms on liquidity concerns, but increased adoption of bond ETFs could serve to enhance liquidity.
&quot;One of the common concerns the ETF industry faces is related to ETF liquidity. However, CFRA thinks that as insurance company demand increases, already strong ETF volume will further increase,&rdquo; Rosenbluth said.&nbsp;
AGG and other large bond ETFs often trade with tight bid-ask spreads. CFRA has an Overweight rating on AGG, the largest domestic bond ETF.
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Insurance Companies Boost Usage Of Bond ETFs

Year-to-date, three fixed income exchange-traded funds are among the top 10 ETFs in terms of new assets added. The iShares Short Treasury Bond ETF (NYSE: <a class="ticker" href="/stock/shv#NYSE">SHV</a>) and the iShares Core Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/agg#NYSE">AGG</a>) probably don&#39;t come as surprises regarding bond fund asset-gathering proficiency.
The Vanguard Total International Bond ETF (NASDAQ: <a class="ticker" href="/stock/bndx#NASDAQ">BNDX</a>) is making a name for itself as well and doing so with scant exposure to U.S. debt. At the end of the first quarter, BNDX allocated just 3 percent of its weight to U.S. bonds. The fund&#39;s total North American exposure was just 8.40 percent, <a href="https://personal.vanguard.com/us/funds/snapshot?FundId=3711&amp;FundIntExt=INT&amp;funds_disable_redirect=true#tab=2">according to issuer data</a>.
<h3>
	What Happened</h3>
Year-to-date, investors have added $2.31 billion to BNDX, good for the third-best total among U.S.-listed fixed income ETFs and the 10th-best among all US-listed ETFs. At the end of the first quarter, BNDX had $11.1 billion in assets under management. The fund has seen second-quarter inflows of just over $379 million.
BNDX tracks the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged). As its name implies, that index hedges currency risk, meaning that if the recent uptick in the dollar is sustainable, more investors could be drawn to BNDX.
<h3>
	Why It&#39;s Important </h3>
Investors&#39; increased interest in BNDX likely isn&#39;t yield-driven. The ETF&#39;s yield is just 2.22 percent, typically not enough to get investors interested in international debt when 10-year Treasuries are well above that range.
Investors could be leaning to BNDX based on the notion that few if any of its marquee geographic exposures are likely to raise interest rates this year. That or market participants are favoring BNDX as a way to bet on a resurgent dollar while generating some income.
<h3>
	What&#39;s Next </h3>
Credit risk isn&#39;t an issue with BNDX as 83 percent of its 4,815 holdings are rated AAA, AA or A. The ETF&#39;s duration is 7.9 years with an average effective maturity of 9.4 years. In the absence of surprise interest rate cuts by member countries, BNDX&#39;s near-term capital appreciation potential could be driven in large part by the U.S. dollar.
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BNDX

One Of This Top Asset-Gathering Bond ETFs Has Little US Debt

Globally, exchange traded funds have about $5 trillion in combined assets under management, but the ETF industry is expected to continue growing at a rapid rate over the next several years.
BlackRock, Inc. (NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>), the parent company of iShares, the world&#39;s largest ETF issuer, views ETFs as a disruptive technology in the investment landscape and one that will be increasingly embraced by investors.
&ldquo;Another transformative technology is catalyzing change,&rdquo; BlackRock Managing Director Martin Small said&nbsp;<a href="https://www.ishares.com/us/lp/ishares-investors">in an open letter</a> to investors. &ldquo;More and more people are choosing ETFs to actively pursue the goals that matter most to them by tapping into markets and strategies that were once available to only the most deep-pocketed professionals. Along the way, they are reshaping what&rsquo;s possible by demanding fresh ideas to reflect fresh realities.&rdquo;
<h3>Compelling Data</h3>
Data indicate that one in three investors currently own ETFs, up from 25 percent last year, according to BlackRock. That is impressive growth in just one year and that upside trajectory is forecast to continue.
&ldquo;Today, one in three U.S. investors owns an ETF, according to BlackRock&rsquo;s latest <a href="https://www.ishares.com/us/resources/insights/etf-pulse">ETF Pulse Survey</a>,&rdquo; said Small. &ldquo;That&rsquo;s up from one in four last year, but we are just getting started. By 2020, we expect half of such investors to be following your lead and making ETFs an integral part of how they build portfolios.&rdquo;
The Pulse Survey indicates 44 percent of investors use ETFs for increased diversification, while 37 percent turn to ETFs for sector exposure. Another 33 percent of polled investors use ETFs to generate income.
<h3>
	Fees Matter</h3>
Fees, particularly paltry ones, matter for ETF investors. That has been a consistent theme over the ETF industry&#39;s evolution and one that remains true today.
Year-to-date, the iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/agg#NYSE">AGG</a>), iShares Core S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/ivv#NYSE">IVV</a>), iShares Core MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/iemg#NYSE">IEMG</a>) and the iShares Core MSCI EAFE ETF (CBOE: IEFA) have accounted for 44 percent of all inflows to U.S.-listed ETFs, <a href="https://www.bloomberg.com/news/articles/2018-03-13/blackrock-s-lowest-cost-etfs-devour-almost-half-of-u-s-flows">according to Bloomberg.</a>
The average annual fee on those four ETFs is 0.77 percent per year, or just $7.70 on a $10,000 investment.
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Emerging Markets

Emerging Market ETFs

IEFA

IEMG

Exponential ETF Growth To Continue, Says BlackRock

Most fixed income assets have struggled in the new year. For example, the iShares Core US Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/agg#NYSE">AGG</a>), the largest bond exchange traded fund in the U.S., is lower by 2.7 percent.
Corporate bonds, both investment-grade and junk, are not offering much shelter from the storm. Perhaps surprisingly to some investors, emerging markets debt has been a source of bond market strength this year. The WisdomTree Emerging Markets Local Debt Fund (NYSE: <a class="ticker" href="/stock/eld#NYSE">ELD</a>), an actively managed fund, is higher by nearly 2.2 percent year-to-date.
ELD holds bonds denominated in local currencies. Its geographic selection universe includes Brazil, Chile, Colombia, Mexico, Peru, Poland, Romania, Russia, South Africa, Turkey, China, Indonesia, Malaysia, Philippines, South Korea and Thailand.
<h3>
	Widespread Outperformance</h3>
Through late February, the J.P. Morgan GBI-EM Global Diversified Composite Yield to Maturity Index, a widely followed gauge of developing world debt, was outpacing two- and 10-year Treasuries, 10-year German bunds and a major junk bond index, among other fixed income assets. Diverging rate patterns could explain this scenario as well as ELD&#39;s impressive year-to-date showing.
&ldquo;This divergence in rate patterns has helped to play an integral role behind the different performance stories,&rdquo; WisdomTree said&nbsp;<a href="https://www.wisdomtree.com/blog/2018-03-07/emerging-market-local-debt-an-exception-to-the-rule">in a recent note</a>.
&ldquo;As the reader can clearly see in the accompanying chart, emerging market local debt is the only asset class that has thus far come in on the plus side of the ledger, year-to-date, posting a return of 4.2 percent (<a href="https://www.wisdomtree.com/blog/glossary#JP%20Morgan%20Government%20Bond%20Index%20–%20Emerging%20Markets%20(GBI-EM)%20Global%20Diversified">J.P. Morgan Government Bond Index &ndash; Emerging Markets Global Diversified Index</a>). This is in stark contrast to the negative performances seen throughout the developed sovereign debt markets.&rdquo;
ELD holds over 130 bonds and has an effective duration of 4.65 years. Nearly 76 percent of the fund&#39;s holdings are rated BBB or A.
<h3>
	A Different Approach</h3>
Most bond ETFs, regardless of geographic emphasis, are cap-weighted. ELD takes a different approach &mdash; one that can help reduce risk and potentially boost income.
&ldquo;By focusing on factors such as short-term external debt over international reserves, current account over <a href="https://www.wisdomtree.com/blog/glossary#Gross%20domestic%20product%20(GDP)">gross domestic product</a>&nbsp;and gross government debt over GDP, we are able to boost allocations to countries that are pursuing monetary and fiscal discipline, while reducing weightings to those that are overextended,&rdquo; WisdomTree said.&nbsp;
ELD allocates about 31 percent of its combined weight to Russia, Brazil and Indonesia.
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Where To Find Bond ETFs That Are Going Up

Invesco Ltd. (NYSE: <a class="ticker" href="/stock/ivz#NYSE">IVZ</a>)'s PowerShares unit, the fourth-largest U.S. exchange-traded funds issuer, recently ventured into the low-cost, plain vanilla ETF space in a big way, launching five inexpensive, pure beta ETFs in a single day last month.
PowerShares followed that up with the recent launch of the PowerShares PureBeta US Aggregate Bond Portfolio (BATS: PBND). PBND follows the BofA Merrill Lynch US Broad Market Index.
That cap-weighted index &ldquo;measures the performance of US dollar-denominated, investment grade debt securities, including US Treasury notes and bonds, quasi-government securities, corporate securities, residential and commercial mortgage-backed securities and asset-backed securities,&rdquo; <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=PBND">according to PowerShares</a>.&nbsp;
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/09/10105269/going-overseas-for-fixed-income-exposure">International Bond ETFs</a>
<h3>Plenty Of Competition</h3>
The aggregate bond space is teaming with competition in the ETF space. For example, the iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/agg#NYSE">AGG</a>) is the largest bond ETF in the world with $50.3 billion in assets under management.
The Vanguard Total Bond Market ETF (NYSE: <a class="ticker" href="/stock/bnd#NYSE">BND</a>) is the second-largest U.S. fixed income ETF with $35.6 billion in assets under management as of the end of August. AGG and BND both charge 0.05 percent per year, or $5 on a $10,000 investment.
PBND, the new PowerShares ETF, matches that expense ratio. However, PBND has some notable differences compared to its established rivals. The new PowerShares ETF holds 146 bonds compared to nearly 6,400 found in AGG and over 8,300 in BND.
<h3>More Important PBDN Details</h3>
Just over 56 percent of PBND holdings have maturities of one to five or five to 10 years. About 92 percent of the ETF&#39;s holdings are rated A- up to AAA.
PBND, which debuted with $25 million in assets under management, trades on the Bats ETF Marketplace, bringing the number of PowerShares ETFs listed on the Bats ETF Marketplace to 16. 
Year to date, Bats has welcomed 102 ETFs to its U.S. market. In the second quarter of 2017, Bats welcomed a total of 26 ETFs to the Bats ETF Marketplace, and year to date has won 36 percent of all new U.S. ETF listings. There are now 234 ETFs listed on Bats ETF Marketplace, from 41 different issuers,&rdquo; according to the exchange operator.
Related Link: <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/09/10093368/powershares-becomes-latest-competitor-in-plain-vanilla-fee-w">PowerShares Launches Low-Cost ETFs</a>

PowerShares Adds To Low-Cost Lineup With New Bond ETF

One of the primary selling points with exchange-traded funds has been and continues to be low fees. In many cases, index funds and ETFs offer expense ratios that are well below those offered by competing actively managed mutual funds, a trait that matters, particularly to long-term investors.
Investors&#39; preference low-fee ETFs is on display again this year as many of 2017&#39;s top asset-gathering ETFs are low fee products with many of those funds having annual expense ratios of 0.1 percent or less. However, fees are only part of the ETF equation. Investors should also assess trading costs, such as bid/ask spreads before committing capital to a particular ETF.
&ldquo;While CFRA incorporates expense ratios in our equity and bond ETF rankings, with lower-cost offerings scoring higher than more expensive ones, this is just one factor in our analysis,&rdquo; said <a href="https://newpublic.cfraresearch.com/">CFRA Research</a> Director of ETF &amp; Mutual Fund Research Todd Rosenbluth in a note out Tuesday. &ldquo;In particular, we think investors need to pay attention to the bid/ask spread as trading costs can similarly eat into returns.&rdquo;
<h3>Low Fees, Tight Spreads</h3>
The iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/agg#NYSE">AGG</a>), the largest fixed income ETF trading in the U.S., is an example of a low-fee ETF with tight spreads, helping investors realize additional cost savings.
&ldquo;AGG also has one of the strongest cost factor ranking inputs, aided by its low 0.05 percent net expense ratios and $0.01 bid/ask spread,&rdquo; said Rosenbluth. &ldquo;However there are other ETFs tracking the prominent investment-grade Bloomberg Barclays Aggregate Index with both lower and higher expense ratios and trading-related costs.&rdquo;
AGG holds over 6,300 bonds and has an effective duration of 5.7 years. The ETF has a 30-day SEC yield of 2.2 percent and has seen year-to-date inflows of $6.8 billion, the second-best asset-gathering pace among all bond ETFs.
<h3>Even Cheaper</h3>
When every penny matters, there is the Schwab U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/schz#NYSE">SCHZ</a>), which is slightly cheaper than the rival AGG. The $4 billion SCHZ and AGG also compete with the $1.1 billion SPDR Bloomberg Barclays Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/bnds#NYSE">BNDS</a>).
SCHZ has a lower 0.04 percent expense ratio, while the $1.1 billion SPDR Bloomberg Barclays Aggregate Bond ETF has a higher 0.08 percent expense ratio,&rdquo; said Rosenbluth. &ldquo;Yet, CFRA thinks the higher $0.02 and $0.05 trading costs for SCHZ and BNDS, respectively, is notable particularly if an investor plans to use the ETF to periodically tactically tilt asset allocations.&rdquo;
CFRA rates SCHZ Overweight and AGG Market Weight.
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BNDS

SCHZ

Looking Beyond Fees With ETFs

Analyst ratings are not always perfect, but there are some indications that some research is getting it right <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/02/9038723/ratings-matter-for-some-etfs">when it comes to exchange traded funds</a>.
That applies to fixed-income ETFs, too, one of the fastest-growing segments of the ETF space. On a global basis in January, bond ETFs saw inflows of $16.6 billion with $13.6 billion of that being allocated to US-listed bond ETFs. That was the best month of bond ETF inflows since February 2015.
<h3>Fixed-Income ETFs</h3>
Investors affinity for fixed-income ETFs in January came after they poured $92 billion into the asset class last year, a record for a single year. In a note out Tuesday, <a href="https://www.cfraresearch.com/">CFRA Research</a> highlighted the 2016 performance of the bond ETFs the research firm rates Overweight. Following those ETFs proved rewarding.
&ldquo;In 2016, the Overweight ranked fixed income ETFs had a 3.23 percent total return, ahead of the 2.65 percent of the aggregate index. While the Underweight ranked ETFs gained 3.78 percent, those ETFs have lagged over the longer-term. Our least favored ETFs lost 0.40 percent on a three-year annualized basis, underperforming the 2.96 percent total return for the index. In contrast, Overweight ETFs gained 3.45 percent,&rdquo; said CFRA.
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/02/9038723/ratings-matter-for-some-etfs">Ratings Matter For Some ETFs</a>
The performance of CFRA&#39;s Overweight bond ETFs topped the average return of 2.45 percent generated by the iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/agg#NYSE">AGG</a>) and the Vanguard Total Bond Market ETF (NYSE: <a class="ticker" href="/stock/bnd#NYSE">BND</a>) last year.
The iShares Core U.S. Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/istb#NYSE">ISTB</a>) has an effective duration of less than three years, putting investors at the shorter end of the curve for a low fee of just 0.08 percent per year. ISTB has a 30-day SEC yield of 1.9 percent.
<h3>Other Options</h3>
Investors looking for more yield without the duration risk of traditional junk bond ETFs can tap the PIMCO 0-5 Year High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/hys#NYSE">HYS</a>) and the SPDR Bloomberg Barclays Short Term High Yield Bond ETF (NYSE: <a class="ticker" href="/stock/sjnk#NYSE">SJNK</a>).
SJNK has a modified adjusted duration of just 2.2 years with a tempting 30-day SEC yield of 5.2 percent.
&ldquo;Investors who want to earn a higher yield, while taking on limited interest rate risk, have some strong, yet more expensive, ETFs to consider. Both SPDR Bloomberg Barclays Short Term High Yield (SJNK) and PIMCO 0-5 Year High Yield Corporate Bond Index ETF (HYS) earn top rankings from CFRA due to their high 30-day SEC yields and moderate duration, which offset a negative input for credit risk. HYS has a higher expense ratio (0.55 percent vs. 0.40 percent) than SJNK, but has slightly less exposure to bonds rated CCC or lower. The 72-basis point performance difference in 2016 between these ETFs is a reminder that products that sound the same are often not the same,&rdquo; noted CFRA.
HYS, ISTB and SJNK are rated Overweight by CFRA.

ISTB

SJNK

Ratings Matter For Bond ETFs, Too

Every year, the top asset-gathering exchange traded funds are pure beta, broad market funds. Think the Vanguard Total Stock Market ETF (NYSE:<a class="ticker" href="/stock/VTI#NYSE">VTI</a>), Invesco QQQ (NASDAQ:<a class="ticker" href="/stock/QQQ#NASDAQ">QQQ</a>) or, in the fixed income department, the iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="/stock/AGG#NYSE">AGG</a>).

While that asset allocators&#39; affinity for boring ETFs isn&#39;t likely to change, 2020 may go down as the year that it was hip to <a href="https://www.benzinga.com/analyst-ratings/analyst-color/20/12/18887438/pandemic-made-this-fintech-etf-fabulous-the-phenomenon-will-continue">embrace thematic funds</a>.

Combine the reputation for outperformance by these ETFs and younger investors&#39; willingness to go thematic, and it&#39;s safe to say these funds are just getting going when it comes to adding new assets.

As of late in the third quarter, there was nearly $72 billion allocated to U.S.-listed thematic ETFs, more than quadruple the level seen six years earlier.

&ldquo;In the last five years, thematic ETF assets under management (AUM) have grown 25% annually, well above the 17% rate for total equity assets,&rdquo; <a href="https://www.wisdomtree.com/blog/2020-10-22/going-beyond-robinhood-traders-thematic-etfs-in-strategic-portfolios">notes WisdomTree.</a>

Plenty of thematic ETFs will enter 2021 with the potential to shine. Here&#39;s a trio to consider.

WisdomTree Growth Leaders Fund (PLAT)

The premise behind the WisdomTree Growth Leaders Fund (NYSE:<a class="ticker" href="/stock/PLAT#NYSE">PLAT</a>) is simple. PLAT, which is higher by 59% year-to-date, is comprised of high octane companies with platform-based business models, such as Alphabet (NASDAQ:<a class="ticker" href="/stock/GOOG#NASDAQ">GOOG</a>), Amazon (NASDAQ:<a class="ticker" href="/stock/AMZN#NASDAQ">AMZN</a>), Microsoft (NASDAQ:<a class="ticker" href="/stock/MSFT#NASDAQ">MSFT</a>) and PayPal (NASDAQ:<a class="ticker" href="/stock/PYPL#NASDAQ">PYPL</a>).

Many PLAT companies can be seen as &ldquo;modern monopolies&rdquo; and nearly all of the ETF&#39;s components fit the bill as a disruptive purveyors of seismic change in their respective industries. Both traits are positives for long-term investors.

&ldquo;Our expectation is for platforms to disrupt competitive landscapes, and to gain market share at the expense of traditional, linear businesses &mdash; while doing so with better economies of scale and potential for long-term profitability,&rdquo; according to WisdomTree. &ldquo;PLAT can replace or complement both active and passive growth-oriented investment strategies.&rdquo;

Roundhill Sports Betting &amp; iGaming ETF (BETZ)

One of the true success stories among this year&#39;s crop of new ETFs, the Roundhill Sports Betting &amp; iGaming ETF (NYSE:<a class="ticker" href="/stock/BETZ#NYSE">BETZ</a>) is a prime example of a thematic ETF entering 2021 with an array of tailwinds.

BETZ debuted in early June and has already returned 62.39% while accumulating $200 million in assets under management.

Buoyed by Wall Street&#39;s <a href="https://www.casino.org/news/penn-stock-could-surge-to-115-says-rosenblatt-analyst-mcternan/">seemingly undaunted enthusiasm</a> for sports wagering equities, BETZ enters 2021 with multiple catalysts, namely increased legalization of iGaming and sports betting by cash-strapped states. Near-term sparks could arrive via New York signing off on mobile betting and Massachusetts signaling sports betting will be addressed and passed in the&nbsp;2021 legislative session.

Adding to the case for BETZ in 2021 is that the new year will be the first full year of sports wagering in new &ldquo;live and legal&rdquo; states, such as Colorado, Illinois, Michigan and Tennessee.&nbsp;

The sports calendar should normalize in the back half of the year.

ARK Fintech Innovation ETF (ARKF)

The ARK Fintech Innovation ETF (NYSE:<a class="ticker" href="/stock/ARKF#NYSE">ARKF</a>) already more than doubled this year, meaning asking for a sequel in 2021 borders on the greedy, but that doesn&#39;t mean investors should gloss over ARKF.

It&#39;s a time when bitcoin is surging, cashless payments are taking more market share and digital wallets are deeply undervalued.

As companies such as Square (NYSE:<a class="ticker" href="/stock/SQ#NYSE">SQ</a>), ARKF&#39;s top holding, further monetize digital wallets, the future is bright for this actively managed ETF.

&ldquo;We believe that Square&rsquo;s (SQ) Cash App could become a leading global consumer financial services provider,&rdquo; <a href="https://ark-invest.com/articles/">according to ARK research</a>. &ldquo;If Cash App can monetize 20% of its US user base at the level of traditional banks today, then with modest growth in its seller business, SQ could return 19% at an annual rate during the next five years, rising from $150 today to $375 per share in 2025.&rdquo;

Fintech

3 Thematic ETFs Demanding Investor Attention In 2021

After a huge second half of 2020, the S&amp;P 500 is off to another hot start to 2021. With stock market valuations getting more bloated by the week, there are plenty of skeptics that believe certain stocks and sectors have come too far too fast.

There is currently $244 billion in aggregate domestic ETF short interest, according to S3 Partners analyst Ihor Dusaniwsky. Over the past month, Dusaniwsky said short sellers have increased their exposure by about $14 billion.

Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/21/02/19677086/heres-where-to-look-for-a-short-squeeze-in-the-reopening-restaurant-space">Here&#39;s Where To Look For A Short Squeeze In The Reopening Restaurant Space</a>

As of Wednesday, here are the six most heavily shorted domestic ETFs:

<ul>
	<li>SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="/stock/SPY#NYSE">SPY</a>), $60.5 billion in short interest.</li>
	<li>iShares Russell 2000 Index (NYSE:<a class="ticker" href="/stock/IWM#NYSE">IWM</a>), $20.9 billion in short interest.</li>
	<li>PowerShares QQQ Trust, Series 1 (NASDAQ:<a class="ticker" href="/stock/QQQ#NASDAQ">QQQ</a>), $19.7 billion in short interest.</li>
	<li>iShares iBoxx $ High Yid Corp Bond (NYSE:<a class="ticker" href="/stock/HYG#NYSE">HYG</a>), $11 billion in short interest.</li>
	<li>iShares MSCI Emerging Markets Indx (NYSE:<a class="ticker" href="/stock/EEM#NYSE">EEM</a>) 2.12%, $9.5 billion in short interest.</li>
	<li>SPDR S&amp;P Biotech (NYSE:<a class="ticker" href="/stock/XBI#NYSE">XBI</a>), $7.9 billion in short interest.</li>
</ul>

Short Percent Of Float: By far the most heavily shorted ETF is the SPY ETF, which tracks the S&amp;P 500 and represents a simple bet against the U.S. stock market and/or a hedge against long positions in U.S. stocks. In the past 30 days, SPY short interest has increased by $4.8 billion. When it comes to short percent of float, however, the XBI Biotech ETF has the highest of the six ETFs mentioned above at 94%.

While it didn&rsquo;t crack the top six, Dusaniwsky said the SPDR S&amp;P Oil &amp; Gas Exploration &amp; Production ETF (NYSE:<a class="ticker" href="/stock/XOP#NYSE">XOP</a>) has seen the largest percent increase in short interest so far in 2021. XOP short increase is up 27% to $2.6 billion year-to-date.

At the same time, short sellers have been jumping ship on the iShares Core US Aggregate Bond ETF (NYSE:<a class="ticker" href="/stock/AGG#NYSE">AGG</a>). AGG fund short interest is down 42% year-to-date to $1.9 billion.

Here are the six ETFs with at least $25 million in short interest that have the highest short percent of float, according to S3:

<ul>
	<li>SPDR S&amp;P Retail (NYSE:<a class="ticker" href="/stock/XRT#NYSE">XRT</a>), 195% of float.</li>
	<li>SPDR S&amp;P Biotech (NYSE:<a class="ticker" href="/stock/XBI#NYSE">XBI</a>), 94% of float.</li>
	<li>SPDR S&amp;P Oil &amp; Gas Exploration &amp; Production ETF (NYSE:<a class="ticker" href="/stock/XOP#NYSE">XOP</a>), 89.7% of float.</li>
	<li>iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="/stock/HYG#NYSE">HYG</a>), 49.4% of float.</li>
	<li>SPDR S&amp;P Regional Banking ETF (NYSE:<a class="ticker" href="/stock/KRE#NYSE">KRE</a>), 44.1% of float.</li>
	<li>iShares Expanded Tech-Software Sector ETF (BATS:<a class="ticker" href="/stock/IGV#BATS">IGV</a>), 39.4% of float.</li>
</ul>

Benzinga&rsquo;s Take: The highest short percent of floats data is an indication of where short sellers see the most potential weakness in the market. Short sellers are betting most aggressively against retail stocks, volatility and biotech stocks.

A flood of new traders joined the market in 2020 thanks to the coronavirus&nbsp;pandemic.

Most of those traders are sitting on big gains at this point thanks to a historic market rally, but much of the easy rebound money may have already been made at this point.

Looking ahead to 2021, now is the time for new investors to start thinking about positioning their portfolio for the long-term. One of the best ways to protect your 2020 gains is by taking advantage of the power of diversification.

Here&rsquo;s an introduction to diversified investing and four tips for making sure your <a href="https://www.benzinga.com/money/best-portfolio-tracker/">portfolio</a> is diversified.

Don&rsquo;t Put All Your Eggs In One Basket:&nbsp;Even if you love a particular stock or two, putting all your money in one or two companies is an unnecessarily large risk.

Lehman Brothers investors in 2007 had no idea the types of risky mortgage derivative bets banks were making behind the scenes. Enron investors had no idea the type of fraudulent accounting that was going on under their noses.

Diversify your portfolio by investing in a number of different stocks in different market sectors. Mix&nbsp;growth stocks and value stocks, technology stocks and utilities, real estate investment trusts and SPACs, U.S. dividend stocks and emerging market stocks.

Make sure you don&rsquo;t miss the next hot market sector, and don&rsquo;t get crushed by the next cold one.

Take Advantage Of Mutual Funds, ETFs:&nbsp;In 2021, it&rsquo;s never been easier to diversify your portfolio by taking advantage of mutual funds and ETFs. If you want to have individual stocks like Tesla Inc (NASDAQ:<a class="ticker" href="/stock/TSLA#NASDAQ">TSLA</a>), Apple, Inc. (NASDAQ:<a class="ticker" href="/stock/AAPL#NASDAQ">AAPL</a>) and Walt Disney Co (NYSE:<a class="ticker" href="/stock/DIS#NYSE">DIS</a>) as core holdings, there&rsquo;s nothing wrong with that.

At the same time, try to&nbsp;allocate a large percentage of your portfolio to diversified ETFs, such as the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="/stock/SPY#NYSE">SPY</a>), the iShares Core S&amp;P 500 ETF (NYSE:<a class="ticker" href="/stock/IVV#NYSE">IVV</a>) and the Vanguard Total Stock Market Index Fund ETF (NYSE:<a class="ticker" href="/stock/VTI#NYSE">VTI</a>).

With just one click, your portfolio can go from three holdings to hundreds or even thousands of holdings thanks to the diversification power of ETFs.

Think Outside The Stock Market:&nbsp;Not only should your portfolio contain a diversified mix of stocks, it should also contain a diversified mix of asset classes. A truly diversified portfolio will have at least some <a href="https://www.benzinga.com/money/what-is-asset-allocation/">allocation to assets</a> such as bonds, commodities, real estate, cash, gold or even <a href="https://www.benzinga.com/money/best-crypto-app/">cryptocurrency</a>.

Here are some of the most popular funds to consider to diversify outside of the stock market:

<ul>
	<li>iShares Core US Aggregate Bond ETF (NYSE:<a class="ticker" href="/stock/AGG#NYSE">AGG</a>)</li>
	<li>SPDR Gold Trust (NYSE:<a class="ticker" href="/stock/GLD#NYSE">GLD</a>)</li>
	<li>Vanguard Real Estate Index Fund ETF (NYSE:<a class="ticker" href="/stock/VNQ#NYSE">VNQ</a>)</li>
	<li>Invesco Optimum Yld Dvsfd Cmd Str No K-1 ETF (NASDAQ:<a class="ticker" href="/stock/PDBC#NASDAQ">PDBC</a>)</li>
	<li>Grayscale Bitcoin Trust (Btc) (OTC:<a class="ticker" href="/stock/GBTC#OTC">GBTC</a>)</li>
</ul>

Consider Your Investing Time Horizon: If you&rsquo;re relatively young, you can safely take a much more aggressive approach to investing than if you are approaching retirement.

From <a href="https://www.fool.com/investing/how-to-invest/portfolio-diversification/">1926 to 2018</a>, a portfolio of 100% stocks averaged roughly a 10.1% average annual return. However, that portfolio also generated an annual net loss in 26 out of 93 years, or about 28% of the time.

During the same stretch, a portfolio of 80% bonds and just 20% stocks generated an average annual return of only 5.3%, but it produced an annual net loss in just 13 out of the 93 years, or about 14% of the time.

Typically, the older you are, the more conservative you want to be with your investments. Stocks are considered among the highest-risk investments, whereas certificates of deposit and U.S. Treasury bonds are among the <a href="https://www.benzinga.com/money/best-low-risk-investments/">lowest-risk investments</a>.

Investors are eagerly anticipating the U.S. Federal Reserve&rsquo;s updated economic projections expected out&nbsp;Wednesday.

Inflation is at the forefront of many investors minds at the moment, but the latest global hedge fund manager survey from Bank of America suggests fund managers aren&rsquo;t particularly concerned about inflation.

Inflation Concerns: The Consumer Price Index climbed 5% in May, its highest growth since 2008. However, the Fed has said it expects high inflation levels in 2021 to be &ldquo;transitory&rdquo; as the economy opens up to full capacity.

Some investors are skeptical that recent inflation levels are transitory, but 72% of fund managers surveyed agreed that the current inflationary situation is only temporary. In fact, 68% of managers surveyed said it should be smooth sailing for the economy in the next couple of years and don&rsquo;t expect another recession until 2024 at the earliest.

Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/21/06/21516023/2-reasons-to-stay-overweight-on-the-financial-sector">2 Reasons To Stay Overweight On The Financial Sector</a>

But just because inflation is not a concern doesn&rsquo;t mean fund managers aren&rsquo;t expecting action from the Fed in the near term. About 63% of managers surveyed said they expect the Fed to signal a tapering of its $120 billion in monthly bond purchases in August or September.

Current Allocations: Cash levels among fund managers have dropped from 4.1% to 3.9% in the past month, and 57% of managers surveyed said any near-term correction in the stock market will ultimately be less than a 10% pullback.

Allocation to bonds is currently at a three-year low, while stock allocations are at year-to-date highs.

Bank of America found long commodities has also overtaken long Bitcoin (CRYPTO: $BTC) as the trade fund managers consider to be the &ldquo;most crowded&rdquo; at the moment.

Despite a belief that the commodity trade is crowded, it is also the most aggressive overweight allocation among fund managers relative to historical levels.

Fund managers are also overweight materials and banks and underweight bonds and utilities.

Benzinga&rsquo;s Take: To mimic fund managers&rsquo; current allocations, consider buying the Invesco Optimum Yld Dvsfd Cmd Str No K-1 ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PDBC#NASDAQ">PDBC</a>), the Materials Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLB#NYSE">XLB</a>) and the SPDR S&amp;P Bank ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KBE#NYSE">KBE</a>) and selling the iShares Core US Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>).

Investors who want to take the contrarian approach and bet against hedge funds should take the opposite side of that trade.

(Photo: <a href="https://pixabay.com/users/kalhh-86169/">Kalhh</a> via <a href="https://pixabay.com/illustrations/money-dollar-stack-funds-finance-1090815/">PIxabay</a>)

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