In the latest episode of ETF 360, Kirsten Chang was joined by Rockefeller Capital Management’s Director of Fixed Income Alex Petrone.
The ETF Pivot From Rockefeller Capital Management
Rockefeller Capital is new to the ETF space, after a history of managing daily liquid open end funds and offering financial services to institutions, family offices, and high net worth individuals. “We pivoted towards ETF for a few key reason,” Petrone said. “Certainly the added tax efficiency that you have and then acknowledging quite clearly that investors prefer interday liquidity, the ease of use, and the transparency ETFs offer.”
This wasn’t an easy decision, given how appealing the status quo can be, but Petrone noted, “Our view is very simple: the ETF vehicle truly can deliver on tax efficiency and best outcomes for clients.”
Three Actively Managed High Yield Bond ETFs
In August, Rockefeller Capital Management launched three municipals:
- Rockefeller Opportunistic Municipal Bond ETF (RMOP )
- Rockefeller California Municipal Bond ETF (RMCA )
- Rockefeller New York Municipal Bond ETF (RMNY )
Speaking to why they opted for ETFs with these strategies, Petrone shared, “We opted for ETFs because, candidly, we wanted to lean into the purpose of the asset class — tax efficiency.”
Munis on the Mind
The municipal market is deeply fragmented, according to Petrone. “It’s a retail orientated market. That can create all these opportunities when there’s liquidity challenges in the market.” Petrone believes active management makes tons of sense, given the shape of the market. This is an historically volatile market, which creates opportunities for active managers.
Asked why munis right now, Petrone said, “High tax efficient yield is absolutely the number one factor.” She also noted that credit fundamentals continue to remain resilient, given the healthy reserves of state and local governments. “Overall, historically, the credit quality of the municipal market tends to be on much more solid footing than other alternatives out there.
Finally, there is low correlation to equities in munis, creating useful diversification benefits.
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