Marc Zeitoun, COO of North America Distribution & Head of Strategic Beta, Columbia Threadneedle Investments discusses the current market uncertainty, and how advisors can de-risk their clients’ portfolios without sacrificing opportunities for income.
For many, de-risking means reallocating away from volatile stocks into fixed income. In the first half of 2020, passively managed, index bond ETFs have seen big inflows, even with the historically low rates. Zeitoun warns that the traditional de-risking strategy, which typically hinges on low-yielding broad bond exposure may be leaving income opportunities on the table.
Zeitoun says that benchmarks like the Agg only capture about 40% of the global yield opportunity, missing out on higher yielding fixed income sectors like credit and emerging market debt. In the current low-rate environment, Zeitoun implores advisors to leverage a more comprehensive, multi-sector approach to fixed income. The Columbia Threadneedle suite of strategic beta ETFs are designed to incorporate active insights into a cost-efficient ETF wrapper, and ultimately to deliver longterm outperformance against the benchmark.
Columbia Diversified Fixed Income Allocation ETF (DIAL) is the #1 performer across 296 open-end mutual funds and exchange traded funds in the Morningstar category of U.S. Multisector Bonds.* DIAL is a multi-sector bond strategy that aims to deliver enhanced return and yield opportunities in a single fund. Balancing yield, quality and liquidity, the ETF does not use any derivatives. Zeitoun says that advisors are using DIAL as both a core holding and as a core complement to reduce expenses. Columbia Threadneedle also offers MUST, a multi-sector municipal bond ETF. Built by fixed income experts with active hands-on experience, DIAL and MUST are designed to thrive in uncertain markets.
Marc Zeitoun manages Columbia Threadneedle’s strategic beta platform and RIA and private bank distribution channels. Zeitoun was the chief product and marketing officer for Emerging Global Advisors from 2013 to 2016 before they were acquired by Columbia Threadneedle. He has been a valued member of the investment community since 1994 and holds the CFA distinction. Columbia Threadneedle Investments manages roughly $426 billion in assets and prides itself on its ability to provide clients with a global perspective and research-based, forward-thinking strategies.
To learn more, head here.
*Morningstar data from 06/30/18 through 6/30/2020. Columbia Diversified Fixed Income Allocation ETF was benchmarked against its peer group of U.S. Multisector Bond open-ended and exchange traded funds. The number of investments ranked in this category, during this time-period was 296, of which DIAL was the top performer based on total return performance. Morningstar data from 06/30/2019–06/30/2020. Columbia Diversified Fixed Income Allocation ETF (DIAL) was benchmarked against its peer group of U.S. Multisector Bond open-ended mutual funds and exchange-traded funds. The number of investments ranked during this time period in this category was 339, of which DIAL was in the top 10% for total return performance.