ETFs
Money markets and CDs as the next target for ETFs
There may be an untapped market for exchange-traded funds.
According to Matt Kaufman of Calamos Investments, there are billions of dollars in CD and money market accounts, and it’s a market that ETFs should seek to capture.
“It’s bigger than almost the ETF space itself,” the firm’s head of ETFs told CNBC.Advantage of ETFs” earlier this week. “There’s a lot of money on the sidelines that could be invested in this.”
Kaufman, who is into interest rates stay higher longer camp, believes that structured and options ETFs designed for risk management and income can provide stability.
“We found it was difficult to get risk management and income from bonds when rates were so low,” he said. “As rates have gone…from zero or 4.5% now, we can afford to offer capital protection over an outcome period. And, when you can do that, there are plenty of opportunities to use these products.”
Kaufman mentioned that ETFs in this higher rate environment can be particularly beneficial for people looking for opportunities to outpace inflation, particularly retirees.
“You can get a rate higher than the risk-free rate. … Your money is tied to the market without greater downside risk,” Kaufman added. “It’s all tax-deferred growth.”
Kaufman’s Calamos Company Just Started launch of a suite of 12 structured protection ETFs.