As of late May, actively managed fixed income ETFs had already gathered $35 billion. This was equal to a 38% share of the category’s net inflows for the year. Active represents only 13% of fixed income ETFs. VettaFi thinks as more firms broaden their lineups and educate advisors, the active flows will persist in the second half of 2024.
For example, in March, Nuveen expanded its ETF lineup to include three actively managed fixed income ETFs come ETF market. It’s exciting to see the firm bring its proficiency to meet advisors where they are. The firm’s ETF team celebrated last week at the Nasdaq to close the market highlighting their latest funds. VettaFi was honored to join them.
Part of TIAA, Nuveen is one largest fixed income managers in the U.S with deep sector expertise. Anders Persson, Nuveen’s chief investment officer and head of global fixed income, rang the Nasdaq closing bell last Thursday.
Advisors Favoring Active ETFs
VettaFi hosted a Fixed Income Symposium in April. We asked attendees to describe their view of active management. More than two-thirds (67.5%) believed that active management could add value to fixed income investing. In contrast, just 2.4% commented that an index –based fixed income approach was best. The remainder favored pairing active and index to add value.
“We are seeing a shift in the ETF space as investors seek the guidance of active managers to help navigate market uncertainty,” explained William Huffman, Head of Nuveen Equity & Fixed Income and president of Nuveen Asset Management in March. “By broadening our ETF line-up to further expand access to Nuveen’s investment capabilities, we can provide actively managed solutions designed to fit at the core of an investor’s portfolio.”
Meet the Nuveen Fixed Income ETFs
The three new active fixed income ETFs include the Nuveen Core Plus Bond ETF (NCPB), the Nuveen Ultra Short Income (NUSB), and the Nuveen Preferred and Income ETF (NPFI).
- NCPB seeks total return, primarily through current income, with allocations to investment grade bonds, non-investment grade bonds and other out-of-benchmark fixed-income sectors.
- NUSB allocates primarily to high quality, short-term investment grade corporate bonds and other short-term debt instruments.
- NPFI invests in high quality, institutional preferred securities and contingent capital securities.
Expanding the ETF Lineup
While these funds are still gaining scale, Nuveen has had success with active equity and ESG ETFs. For example, the Nuveen Growth Opportunities ETF (NUGO) manages $3.1 billion in assets. NUGO recently had 47% of assets in information technology stocks. Microsoft and NVIDIA each represented more than 10% of the ETF.
Meanwhile, three ESG focused equity ETFs managed more than $1 billion each led by the Nuveen ESG Large Cap Value ETF (NULV). Given Nuveen’s strong fixed income heritage, we believe as awareness of these new funds grow, assets are likely to follow.
For more news, information, and analysis, visit VettaFi | ETF Trends.