BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply | Masters in Business
From Masters in Business
Stephen Laipply•Global Co-Head of iShares Fixed Income ETFs, BlackRock
Executive Summary
The fixed income ETF market has seen massive growth, with BlackRock's assets surpassing $1 trillion and a projection for the global market to more than double from $2.8 trillion to $6 trillion by 2030.
Adoption of bond ETFs accelerates during periods of market stress, as seen during the COVID-19 pandemic, because they provide crucial liquidity, price discovery, and ease of access when individual bonds are hard to trade.
With yields at their highest levels in nearly two decades, the current environment presents a generational opportunity in fixed income, but investors should avoid trying to time the market and instead focus on building a durable, long-term portfolio.
A resilient portfolio construction strategy involves using low-cost, diversified bond ETFs as a core holding, supplemented by active strategies or individual bonds as satellite positions to balance efficiency with targeted opportunities.
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Concerns Raised
Ambiguity around the U.S. fiscal trajectory and large deficits creating uncertainty for long-term yields.
The risk of investors staying in cash for too long and missing the opportunity to lock in high yields before rates fall.
The futility and risk associated with trying to time interest rate movements, as the market consensus has been consistently wrong.
Opportunities Identified
Yields are at their highest levels in nearly two decades, offering a generational opportunity to lock in income.
The intermediate part of the yield curve (e.g., 5-to-7 year range) is viewed as an attractive area for investment.
The continued growth and adoption of bond ETFs provide increasingly efficient, low-cost tools for accessing the fixed income market.