CVSB ETF

With memories of Monday's sell-off fresh on investors' minds, all eyes remain fixated on the Federal Reserve's next moves. At a recent event in Hawaii, San Francisco Fed President and CEO Mary Daly reiterated that within the Federal Reserve, minds remain “quite open to adjusting the policy rate in coming meetings.

Uncertainty currently reigns supreme with investors and traders alike trying to anticipate where the economy is headed. Fortune reported that a recent survey from Deutsche Bank found that 45% of investors see the U.S. economy reaching a “no landing” scenario.

The first actively managed exchange traded funds came to market in 2008. But 2023 may be remembered as the year when the asset class matured, paving the way for broader long-term adoption.

With stocks racing to record highs, diminishing expectations of a recession, and hopes that the Federal Reserve could potentially reduce interest rates multiple times next year, risk appetite is being reborn.

In recent weeks, chatter has increased regarding the likelihood of the Federal Reserve lowering interest rates at some point in 2024. Obviously, that would be good news for high yield and long-duration fixed income strategies.

November was kind to fixed income investors as bonds posted their best month of 2023. High yield corporate debt participated in that rally as highlighted by the fact that the largest junk bond exchange traded fund is higher by nearly 4.3% over the past month.

Once a sparsely populated afterthought within the broader ETF industry, active ETFs are flourishing. That's true both in terms of population and, more importantly, assets under management.

Amid soaring interest rates in the U.S., third-quarter issuance of ESG, sustainability, and related debt declined. But annual issuance of such debt is poised to be elevated — a theme that could carry over into 2024.

Some fixed income investors may feel as though the bond market is currently treacherous territory. Those feelings are not unwarranted; however, there are some bright spots.