In response to the Federal Reserve’s recent pause in its 15-month rate hike cycle, FolioBeyond is slapping a fresh coat of paint on an exchange-traded fund that it launched 21 months ago to help investors ride the rising-rate wave.
Starting next Monday, the FolioBeyond Rising Rates ETF (RISR) will be renamed FolioBeyond Alternative Income and Interest Rate Hedge, using the same ticker symbol.
There's no indication that the fund’s investment strategy will change from investing primarily in government agency interest-only mortgage-backed securities.
At just $55.6 million, the ETF may be too small to hit most financial advisors' radar screens, but its performance during the Fed’s efforts to fight inflation by pushing rates to around 5.25% has been solid.
The fund gained 32% last year and is up 4.2% so far this year. The performance has been in stark contrast to the S&P 500 Index, which declined by 18.2% last year and is up 15.8% so far this year.
The thinking at FolioBeyond is that renaming the fund will separate the strategy from a Fed monetary policy that appears to be moving away from rising rates.
“Our decision to rename the fund reflects our belief that RISR has broad utility to investors seeking to manage risk in fixed income, equity and blended portfolios,” said Chief Executive Yung Lim.
“Many investors have successfully used RISR to take a position on the recent Federal Reserve tightening of financial conditions, but RISR is not a simple directional bet,” he added. “We believe the new name better aligns with our overall strategy for generating current income while managing risk in diverse investment strategies."
Todd Rosenbluth, director of research at VettaFi, described the name change as an effort to “tap into advisor sentiment.”
“With the Fed pausing rate hikes, advisors are likely to see income strategies as more attractive than a focus on limited interest-rate sensitivity,” he said. “However, advisors need to make sure any fund makes sense for their client objectives and go beyond the fund name.”
[More: Are Fed interest rates going up?]
Hendershott Wealth Management's Hilary Hendershott on turning a niche for women into an operating strategy, not a marketing pitch.
Iowa's Greenwood Wealth Partners exits D.M. Kelly as UBS and Ameriprise win Merrill Lynch recruits in California and Florida
Less than 1% of pool funds went to actual trading, CFTC says
Plus, SEIA builds a governed data foundation for its in-house AI and Snappy Kraken debuts a read-only marketing coworker for advisors.
He owes $364 million but pays $100 a month
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
