Todd Sohn
ETF Strategist
ETFs and Markets with Todd Sohn: Bond ETFs & Cash on the Sidelines
09/05/2024
Strategas Asset Management ETF Strategist Todd Sohn checks in on the record flows to Fixed Income ETFs and discusses where cash that's currently sitting on the sidelines may end up after potential rate cuts.
An exchange-traded fund (ETF) is a pooled investment security that can be bought and sold like an individual stock.
Fund flows represent the cash that goes into or out of companies, financial assets, sectors, or other market categories.
The term “federal funds rate” refers to the target interest rate range set by the Federal Open Market Committee (FOMC). This target is the rate at which commercial banks borrow and lend their excess reserves to each other overnight.
Money market funds are a type of mutual fund that invests in highly liquid, near-term instruments. These instruments include cash, cash equivalent securities, and high-credit-rating, debt-based securities with a short-term maturity (such as U.S. Treasuries).
Equity ETFs invest in a basket of company stocks (also known as equities or shares). They are the most common type of ETFs.
Assets under management (AUM) is the market value of the investments managed by a person or entity on behalf of clients. AUM is used in conjunction with management performance and management experience when evaluating a company.
Fixed Income Exchange-Traded Funds (ETFs) are investment products that give you exposure to the performance of a diversified basket of bonds.
The Vanguard Federal Money Market Fund (“VMFXX”) primarily holds cash, U.S. government securities and/or repurchase agreements collateralized by U.S. government securities.
A “Fed rate cut” refers to when the Federal Reserve is lowering the Fed funds target rate.
The iShares Core US Aggregate Bond ETF (“AGG”) seeks to track the investment results of the Bloomberg U.S. Aggregate Bond Index. The index measures the performance of the total U.S. investment-grade bond market.
This communication was prepared by Strategas (“we,” “us,” or “our”), a brand that offers investment advisory services through Strategas Asset Management, LLC, an SEC Registered Investment Adviser, and provides research to institutional investors through Strategas Securities, LLC, a broker-dealer and FINRA member firm and an SEC Registered Investment Adviser. This communication represents our views as of 09/03/2024, which are subject to change, and presented for illustrative purposes only. The information contained herein has been obtained from sources we believe to be reliable, but no guarantee of accuracy can be made. This communication is provided for informational purposes only and should not be construed as an offer, recommendation, nor solicitation to buy or sell any specific security, strategy, or investment product. This communication does not constitute, nor should it be regarded as, investment research or a research report or securities recommendation and it does not provide information reasonably sufficient upon which to base an investment decision. This is not a complete analysis of every material fact regarding any company, industry, or security. Additional analysis would be required to make an investment decision. This communication is not based on the investment objectives, strategies, goals, financial circumstances, needs or risk tolerance of any particular client and is not presented as suitable to any other particular client. Past performance does not guarantee future results. All investments carry some level of risk, including loss of principal.
Strategas Asset Management, LLC and Strategas Securities, LLC are affiliated with Robert W. Baird & Co. Incorporated ("Baird"), a broker-dealer and FINRA member firm, and an SEC Registered Investment Adviser, although the firms conduct separate and distinct businesses.
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