There’s a lot going on in the market right now. So, Michael Lane, Head of iShares U.S. Wealth Advisory at BlackRock, sees “a lot of different opportunities in different spaces.” One area where he sees some “outsized opportunities” is “in the factor space.”
“Factors have been a little quiet lately,” Lane told NYSE’s Judy Shaw at Exchange: An ETF Experience 2022. And while “value had a good run during the initial reopening,” and he still thinks “value is a good play… if you were to barbell… quality with value, we think quality would be a good trade-off.”
Bundling and Unbundling
Within the institutional space, Lane said that BlackRock is seeing more insurance companies “replacing individual bonds with ETFs.”
“They’re bundling those into an ETF to get the credit and duration risk that they’re looking for,” he said.
Meanwhile, on the advisor side, BlackRock is seeing questions about how to “unbundle emerging markets.”
“So, [investors are asking], ‘Instead of having 30% in China, should I take control over my China exposure and by emerging ex-China and then add whatever exposure I want to China?’” said Lane.
Protecting Against Inflation
When preparing portfolios, “inflation is a big question mark,” according to Lane.
“Because of the double-edged sword right now with rising yields and inflation, we like the front end of the curve,” he said. “So, we are looking more towards inflation protection but on the shorter end.”
Lane added, however, that “there may be a time to come back into duration if we see Treasury yields rising above 3%.”
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