The independent researcher, which has announced it has extended its research coverage to listed fixed income ETFs, said it is following the same forward-looking approach it applies to its other ETF research.
“When looking at ETFs, their assessment as a product is most relevant when performed at the constituent or underlying holdings level,” said Michael Turner, head of sales and corporate development at Alta Vista.
“Like any investment, it’s about knowing all of the investment parameters of the asset that you own. That’s certainly one of the most important fundamental differences and advantages with ETFs.”
In terms of managing a portfolio, Mr Turner told InvestorDaily ETFs offer more flexibility when rebalancing and reallocating between sectors, when driven by research and investment viewpoints.
This ‘tactical’ or ‘dynamic’ asset allocation approach is in contrast with a strategic asset allocation approach that adopts more of a set and hold approach to match with largely fixed sector allocations, he said.
“Given investing is about the future, forward-looking research provides a more meaningful starting point for both ETF selection amongst ‘peer’ funds and also for the effective creation of ETF model portfolios,” he said.
The fixed income ETF research is significant because it addresses the “wall of cash” issue, according to Mr Turner. Rather than having a term deposits versus equities discussion, it becomes a term deposits versus fixed income discussion and how that then relates to equities.
Much of advisers’ client portfolios are still heavily invested in cash but greater fixed income research can help them consider the investment case to start moving their clients out of cash, Mr Turner said.
