According to a recent report by Fitch Ratings, US insurers should continue to increase their holdings of bond ETFs. In December, New York introduced new guidelines that allowed a fixed income ETF to receive bond-like capital treatment if the ETF is rated by a nationally recognized statistical rating agency. . However, if rated, an ETF can only receive this treatment if it is invested in fixed income and cash, is passively managed, and has at least $1 billion in assets. assets under management, among other criteria. So far, Fitch has rated 10 fixed income ETFs from VanEck, Vanguard and Invesco. Insurers have previously sought to increase their ETF holdings due to a mix of diversification, increased liquidity and the ability to adjust overall portfolio allocations. According to data from SNL, insurers’ holdings of ETFs grew from $3 billion in 2016 to $9.8 billion at the end of 2021.
Final sum:Since New York introduced new guidelines allowing a fixed income ETF to receive capital treatment similar to bonds, insurers have increased their holdings of fixed income ETFs.
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