Bond investing with ETFs - 1q19 update

1. Bond indices have evolved from being simple broad benchmarks to span more targeted dimensions of the bond market
2. Increased granularity enables investors to use bond ETFs not only for broad access to the bond market, but also specific portfolio applications, such as yield pick-up, inflation protection and duration targeting
3. The efficiencies of the ETF structure means that investors can access these exposures in a way that is targeted, transparent and liquid

 
In this report, we analyse the data around a selected opportunity set of bond indices as represented by London-listed ETFs.  The report covers global, USD, EUR, GBP and Emerging Market bond markets, for aggregate, government, corporate, high yield and emerging market exposures.
 
Whilst the bond market dwarfs the equity market, the majority of ETFs are focused on equity exposures.  That is gradually changing with growing acceptance of bond ETFs as a convenient and liquid way of accessing targeted bond exposures by geography, issuer type, credit quality, or maturity profile.
 
In this report, we:

1. define the opportunity set of bond exposures under analysis
2. consider key applications from a portfolio construction perspective
3. outline key characteristics of this opportunity set
4. analyse performance of this opportunity set
5. summarise cost of accessing this opportunity set

For more information and important notices, view the full report.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: This article references research by Elston Consulting that is sponsored by State Street Global Advisors Limited.  I wrote this article myself, and it expresses my own opinions.
Additional disclosure: This article has been written for a UK audience. Tickers are shown for corresponding and/or similar ETFs and may be prefixed by the relevant exchange code, e.g. “LON:” (London Stock Exchange) for UK readers. For research purposes/market commentary only, does not constitute an investment recommendation or advice, and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product. This blog reflects the views of the author and does not necessarily reflect the views of Elston Consulting, its clients or affiliates. For information and disclaimers, please see www.ElstonETF.com All product names, logos, and brands are property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, logos, and brands does not imply endorsement.  Image credit: Elston; Chart credit: n.a.; Table credit: n.a.