Global business news twenty four hours a day. It's Bloomberg dot Com, the radio plus mobile lact and on your radio. This is a Bloomberg Business Flash from Bloomberg World Handquarters. I'm Charlie Pellett. Nez DAC now negative on the day, down four points to drop. There of point one percent. The SMP five hundred index has gotten within one percent of a record. Right now. The SMP is at twenty one twelve. The record on the SMP twenty one thirty.
It is up by two tenths of one percent. Tow Industrial is up thirty again there of two tenths of one percent. The tenure up seven thirty seconds, the old one point seven one percent, Gold lower little change, down just thirty cents, twelve forty seven. Announced crude oil fifty seven for a barrel of West Texas Intermedia crude. It is up one and a half percent today, building on yesterday's gains. Brent fifty one fifty one for a barrel
of Brent. I'm Charlie Palett, and that's a Bloomberg business flash. Thank you very much, Charlie Pett. It's time now for the e t F Report. It is brought to by Vanach vectors et f s. Expect more from your muni's target tax exempt income by maturity and credit quality, all with low cost ETFs. Visit vanac dot com slash muni vanack access the opportunities. That's go to Katherine Cowdery for the t F Report. There's a new class of e
t s. It's taking the industry by storm. What we're seeing now with low volatility products is what we saw two years ago with currency hedging. It is the flavor of the month. Bloomberg Intelligence analyst Eric Bltuna says, an example is U s m V or the I Shares Edge m SCI Minimum Volatility USA e t F. It's attracted five point four billion dollars so far this here, putting it in the top five in terms of inflows.
The reason Valtuna says, there's fear in the market and this product basically is a minimum volatility products So basically gives you SMP exposure, right, so you get large cap stocks. But it is designed in a way to give you less faulty, so it's about less the ups and downs. It's basically like taking the edge off of the marketer.
It's like a diet coke version of the market um in that you get to participate into some of the upside, not all of it, but you get less downside about you, and says low volatility ets are now big business, with about twenty five billion dollars invested in about thirty five low volatility products. That's your Bloomberg ETF report. I'm Katherine Caldary. You're listening to Taking Stock with Kathleen Hayes and Kim Fox on Bloomberg Radio. We're broadcasting live from Pershing's Insite
Tien conference at the Highatt Regency in Orlando. Kind of ready to take a look at the markets today broadly as we do every day around this time, going into the market close. Ralph Studley is joining us now. He's head of investment strategy for b n Y Melon. He's based in Boston, and of course he's here in Orlando today. Raul, thank you for joining us, Thank you for having so thig part. But what b and my mel and does Pershing?
This this very powerful uh organization, many services, all kinds of things invited to provided to investment advisors, but of course one of them is just market intelligence, a sense of trends where things are going. You started out as a muti bond trader. I did you know about dealing with volatility, which is investors have been dealing with that in spades this year. What what what would use? How whe would you start with the volatility? Where we are?
Where we're going? Yeah, I think you know it's it's certainly an interesting topic and one that's on everybody's minds. Myself and my team. We have a unique position within this you know massive organization that you talk about. We we have a unique little investment management business that has about one point six trillion in assets under managements. Were actually the seventh largest, and that's comprised of thirteen investment
management boutiques. So we have the ability, my team and I to sit in the middle of all that and listen to you know, a lot of really smart portfolio managers, a lot of really smart market strategist and economists talk about how they think about volatility, and then it allows us to go out and position that overall holistically to our clients. So when I think about volatility, when we think about volatility, our biggest concerns, how do we take
that out of portfolio today? How do we prepare prepare clients for things that they may not necessarily be prepared for. A lot of clients tend to have a significant US bias. A lot of clients tend to have forgotten maybe what two thousand and eight did to their portfolios and what a significant market turn can do to your overall glide paths. So we're we're very concerned about talking about those types of events and how they can head your position themselves
to whether those events are whether those storms. Is there a behavioral finance components all this in the conversation, I think there certainly is. There certainly is there's there's certainly a component of people, uh, you know, feeling comfortable with certain things. You know, you you mentioned uni bonds, you know, for there's plenty muni bond investors out there that, uh that are afraid to get away from municipal bonds because
it's what they know and what they love. And we've been telling people for years that, you know, interest rates are gonna rise and bonds are gonna work against you, but that hasn't happened yet. So there's certainly a behavioral finance component of how people invest in and getting them to think more broadly, about how to manage volatility. There's
no doubt about it. Okay, So since you are at heart a bond guy, let's take a look just at at the at the broadly, where bond yields haven't haven't gone four or five years in a row that Fed was supposed to start moving and then we'd have bond we have that tenure benchmark Treasury note up around three percent easily, we'll guess what here we are once again, it hasn't happened. What is your sense of where the where the risk and reward lies in the bond market
right now? Yeah? I think you know, there's certainly there's certainly the reality that we're going to be facing a rising interest rate environment at some point. It's just a matter of when. Right. The market doesn't seem to think that the Fed's gonna do anything and Jill in June, excuse me, and less likely in July. That's mostly because of there's no scheduled press conference. Um. But Yellen's comments yesterday give us some belief that will most likely see
something this year. And there's a lot of you know, people out there that believe we'll see one or two rises. I don't think it's gonna be dramatic and we're gonna see that, you know, the ten year ago from self to two to over three. But I do think it's something that investors need to be aware of. I think the beautiful part about the bond market though, is this it's not correlated globally anymore like it used to be.
So there's plenty of opportunity outside the US and good quality credits to get you know, diversification away from the potential monetary policy US that we have here in the US. So you know, while I think, you know, our our rise will be slow and steady, I do think that there is opportunity out them. What about opportunity in alternative assets, assets that are not correlated either to the bond market
or to the equity market. And I'm keep thinking, for example, of things such as annuities and insurance and other elements of a portfolio to plan for retirement. Yeah, I mean retirements a big components something that we we spend a lot of you know, spend a lot of time worrying about. You know, when we look at you know the majority of US investors have actually have not saved the proper amount for retirement when we look at you know, pensions
and endowments, most of them are unfunded. So there's certainly a huge focus now on looking at alternative sources of return um for you know, for for two reasons. One is to insulate those portfolios so you can stay on the correct clypath and look for alternative sources and return. I think the key to that, though, PIM is is manager due diligence. Right, it's not just the asset class itself, but who's investing that money for you? How have they done? Uh?
Through somewhat baldom markets. Have they stayed the course in terms of what their direction is. If you have a real return strategy that you know is looking to get you, you know, cash plus three or four percent, have they returned twelve percent in certain years? If so, maybe that's not exactly what you're looking for. So there's a lot of manager do a big manager due diligence component that I want to come back to this point you just
made about opportunities outside the US. High quality credits offer more yield because if you just look at the sovereign think at the government bond yields around the world, they're low and uh, just about negative in some cases. Right, Uh, Brazil, of course that the bench their benchmark tenure government's at five point three percent. Where where are you and your team looking for value? And again are you looking not just at a country, but at a sector like investment
grade corporates for example. Yeah, So just to be clear, I mean, we're not investing my team and I write so you know, I would look to our our our our our portfolio managers on our teams, and some of our boutiques for more specific comment. Ever, what I will tell you is that less about the yield and more specifically about the monetary policy and the environment. Right. So, you know, Australia is a perfect example. They seem to be going in a little bit of a different direction
than us. They tend to be you know, to be easy and as a result, you know that will be somewhat more beneficial to the fixed income markets, similar to what we've seen here in the US for the past several years. So when I talk about opportunity, that's more what I'm thinking through Japan, Australia peripherally, you based on the e c B. You know, those are places where we send tendency our fixed income managers with global lens,
with a global lens looking more proactively. We are here, obviously at at your conference inside sixteen, you've got over two thousand investment of professionals. Here is the conversation more about volatility or do you believe it really is? The subtext is I can't live on two percent, so you've got to give me more. And as a client, you're probably not going to tell the complete truth, which is, oh, yes, I can stomach lots of volatility if you get me
the return I want. Except when that doesn't happen. Yeah, you are you gonna make me pick one or the other? Well, I mean you can pick, you can, you can do both. But I but from a professional perspective, because it's as much about educating the client as it is about having the information as a as an advisor, what I would say is, I think those two things go hand in hand. Him.
I think, you know, there's certainly a concern from clients that I can't live on this, but you know, so let's find something else for me that I can live on. But you have to be willing to have that really difficult conversation with a client in terms of what taking more risk means to you what it can do to your overall portfolio, what it can do to your ride, or at least the perception of your you know, your investment, uh, your your investment return. So I think those two things
go hand in hand. I would say, you know, I spend the majority of my year traveling around and talking to financial advisors at times talking to their clients. I think, um, while the short search for yield is important, volatility is a big concern for people. People do not want to, you know, two thousand and eight, while it's you know, we we've had a relatively well, it hasn't necessarily felt great,
a relatively reasonable rights. Since then, it's still very much on the forefront of people's minds, and I don't think anybody wants to experience that again. So you do see people willing to give up some yield because of all. Thanks very much for spending time with us. Ralph Studley is the head of investment strategy at b N Y Melon. Thank you for being here and thank you for having us.
We're broadcasting live from Pershing Insights sixteen conference at the Highatt Regency in Orlando, Florida, and this year marks eighteen years of insight, eighteen years committed to the success of advisors. We're here with over two thousand financial professionals from Paul over Glow. We're gonna take you through to the clothes on Wall Street down on pim Fox my co host Kathleen Hayes. You're listening to Bloomberg Radio.