First Look ETF: Active ETFs for New Sources of Yield and International Stocks

Hello everyone.

You're watching the August episode of First Look ETF.

I'm Stephanie Stanton with ETF Guide. want to give a warm welcome to all and we are very happy to see you again.

Coming up on today's program, we'll examine a new active ETF from Recker Capital that offers exposure to an area of the fixed income market that some investors may miss or overlook.

Also, we'll tell you about a pair of active ETFs from Cohen and Steers that target the preferred securities and REIT market.

And finally, we'll examine a new ETF from the Swiss-based Vontoble Asset Management that scour the globe for companies with strong fundamentals and low debt.

But first, before we go any further, we want to welcome ML Leum with the New York Stock Exchange.

It is great to see you again, ML. >> Great to see you, Stephanie, and great to be back for another packed episode. >> So, as we always do, let's begin with the latest update on ETF launch activity.

How are things looking?

There's absolutely no summer slowdown in this hot market.

We just wrapped up July with a bang as over a hundred and new ETFs hit the market.

And get this, we just saw a record-breaking $120 billion in new asset flows, making it the strongest month of 2025 so far.

The momentum is unreal, and we're unpaced to see more than a thousand new ETFs launched this year with inflows soaring past $1 trillion for yet another year.

So, for those keeping track, we've got over 4,420 listed ETFs right now, and the asset under management are closing in on over $12 trillion.

The ETF market is firing on all cylinders, and there's no sign of it cooling off anytime soon. >> Behind the impressive expansion of the ETF marketplace is innovation.

What types of innovative ETFs are shaping the 2025 landscape? >> The spotlight continues to be on active ETFs.

For the past few years, active ETFs have been gaining serious momentum and now they've officially overtaken passive ETFs in number on the market.

One of the areas driving this growth is the income space where we've we've seen incredible product innovation.

State Street Investment Management recently launched a select sector suite of ETFs layered with an option strategy so to generate steady income.

Meanwhile, Calamos made waves in the world's first audible autocallable ETF, opening up a sophisticated income strategy once reserved for institutional investors to a broader audience.

And there's more on the horizon.

With the ETF share class proposal nearing potential approval, expect a flood of wellestablished strategies to hit the market in an ETF rapper, making them more accessible than ever.

And let's not forget digital currencies.

The crypto ETF landscape is also growing with a wide range of products hitting the market over the past few months.

And with more proposals under review, this space is only going to heat up further. >> And as always, we have a great guest lineup in this episode.

What are you looking forward to most about today's show? >> This episode is jam-packed with another set of great NYC listed issuers that are no strangers to the industry.

First up, we've got Vontoble, a globally renowned investment firm, bringing their top tier expertise to the US with an international equity listed fund.

Recker's shaking things up with the first ever leverage CLLO ETF, wrapping their deep knowledge into an innovative ETF package.

And of course, we can't forget Cohen and Steers, longtime partners of the New York Stock Exchange.

They've made a big splash this year, launching their first three ETFs and delivering their signature expertise in an ETF rapper.

Stay tuned.

You do not want to miss the insight from today's guests. >> Thank you, May.

Thanks so much for the update.

Keep up the great work and we will see you soon. >> Great to see you, Stephanie. >> And just a quick reminder to watch First Look ETF on Amazon Fire TV and Roku.

Also, we simal cast First Look ETF on iTunes, Spotify, Amazon Music, and other major podcasting platforms.

So, don't miss it.

Today's fixed income landscape is challenging.

Some investors are still chasing yield, often in a world of low interest rates and limited options.

But what if there was a way to diversify beyond traditional bonds?

What if you could tap into a new source of high yield income with professional guidance?

Well, here to answer those questions and more is John Kim, co-founder, CEO of Recker Capital.

John, it's a pleasure to have you with us today. >> Hi, Stephanie.

Thanks for having me on.

So before we talk about your recently launched ETF targeting collateralized loan obligations or or CLLOs's, can you familiarize our audience with CLLO's?

What are they and how do they work? >> Sure.

Um CLOS's are really becoming a mainstream asset for a lot of people.

So it is a good idea to sort of get up to speed on how CLOS's work.

What you need to know is that CLOS's are essentially pools of corporate loans.

So they're very diverse pools.

There could be 150 to 300 loans in a single CLLO pool.

And then what the CLLO does is aggregate those loans together into one box.

And we have a slide here that I can that will show you that visually.

You see a lot of different types of names going into that box.

A loan manager will select those names and underwrite the credit in those names.

The CLLO will then issue uh the stack that you see on the right.

So you'll see AAA's down through double B's normally. uh those are rated bonds rated by a major credit agency and then there will be some inrated portion at the bottom that's a residual portion that sort of captures the rest of the return.

So what's great about a CLO structure is that investors can really choose their level of risk and return.

Um obviously if you're at the top of the capital structure and you have a AAA rated bond, you're going to be the first person paid in that entire stack that you see on the right.

Um the the money flows from top to bottom.

So you are the first one in line to get paid both in interest and in principle.

You have a higher credit rating because you have less chance of loss and uh you'll get paid a little bit less than people who are taking risk at the bottom of the stack, but you have a very safe bond that um basically implies a lot of principal protection for your bond.

Um, so what's great about CLOS's is that they um basically make it very easy for people to choose their level of risk and and base it on a on a portfolio of assets that has proven to be over over time a very stable uh kind of good returning income asset.

So for many reasons uh these are among them we we think that CLO should be a part of everyone's portfolio.

We're really excited to bring this particular product to market. >> Yeah.

Uh thanks for breaking that down.

So on that note then the recker leveraged AAA clo ETF and your ticker is RA AAA it is an actively managed exchange traded fund.

It is designed to enhance yield on a diverse portfolio of AAA rated CLLO bonds.

What does this fund own a compelling solution for fixed income investors? >> The fund will own basically senior AAA bonds from tier one managers in the market.

So if you look at the CLM market, there's about 130 140 managers in the US.

A lot of them are issuing several deal deals a year.

Um all of these deals will have a AAA trunch normally uh embedded in that structure.

So we are going to go in and buy a diverse portfolio of AAA bonds.

Um we underwrite the managers, we underwrite the loan pools, we underwrite the structures that the CLOS's um you know bas basically have you know financially their structure.

So what we are trying to do is pick the best of the best.

Pick the safest bonds and the most liquid bonds because of course in an ETF rapper uh liquidity is key.

Um you really want to to be able to sell your portfolio on one day if you need to because it is a daily fund.

So we are very highly concentrated on finding bonds with a lot of bid depth in the market.

Meaning there's a lot of buyers for these bonds. um managers that are really name brand managers um have a long track record in history of selecting good assets to back their bonds and uh and and enough diversity to sort of make um you know make it such that you are not taking risk on any individual name any individual structure so it's very important that that that we select in a way that creates diversity for the investors so that if you buy one share of our ETF you are getting access to all of those um diverse portfolio uh you know benefits right so you have um not only manager and bond but you know the underlying assets which are very diverse >> yeah and you know I heard you say minimizing risk and of course you know that's something that all investors uh would like to do um how do you see investors then and advisers potentially using RAA inside a diversified investment portfolio >> so one very important thing to know about RAA and and one of the reasons we were really excited excited to bring it to market is it is taking a very safe asset class and it's applying a little bit of leverage which is which has not been done in this market before.

Um we are applying about 50 cents of leverage.

So what that means is if you have a dollar of a AAA bond we can finance 50% of that bond inside the portfolio.

So it's inside the ETF.

It's dynamically managed.

Now to put that in context some people might feel like oh that's quite a lot of leverage but it's actually um we believe it's quite a modest amount.

And the reason for that is you have to understand that AAA bonds in the CLO world are are a very you know popular um you know common institutional product in the institutional market.

If you go to finance aaa bond with a bank um they could give you 80 90 cents of leverage right so they're they're willing to finance these assets because of their track record and their history.

They're very safe.

They're they're very price stable.

So um in many cases um if you're an institutional investor you will take on a lot more leverage and you'll do that fairly easily uh with banks you you'll do it gladly because of course um you know you think it's a very safe underlying asset.

So for this particular ETF we're only doing 50 cents of leverage and we think that that's going to add a modest amount of yield to the portfolio compared to an unlevered uh portfolio.

We believe somewhere between 40 and 60 basis points of additional yield.

So, you know, a meaningful pickup for most retail investors.

Um, just also remember that, you know, uh, CLO bonds are floating rate bonds, right?

So, in in an uncertain rate environment, right, you don't know really where rates are going.

I mean, it looks more like we're going to cut now.

You know, that there's a big debate going on obviously in the markets, but if rates were to go up, you would capture that base rate in the bonds.

If rates go down, your yield go down goes down a little bit, but your credit spreads are still quite good.

And then on top of everything else, CLOS's generally historically have been um you know wide in a spread basis to corporates.

So if you take AAA rated assets in the credit markets generally uh many of them are going to be a lot tighter than a CLO bond.

So you're getting more yield for for the reigning and safety of it is is unparalleled in the credit market.

So, we think it's a great asset overall and applying a little bit of leverage at the margin uh can help to enhance the yields a little bit. >> All right, we will leave it there.

John Kim with Rucker, thank you so much for joining us today on First Look ETF and breaking down all things CLOS's.

Thank you. >> Thank you. >> Are you chasing income in a world that feels more volatile than ever?

Well, the rules have changed.

Zigzagging interest rates and unpredictable markets have created a minefield for anyone seeking a steady stream of income.

Well, here to discuss a pair of recently listed income focused ETFs that could be the solution is Alex Berg, head of ETF sales, Cohen and Steers.

Alex, it is great to see you.

Thanks for joining us. >> Pleasure to be here, Stephanie.

Thanks for having me.

Okay, before we talk about your firm's latest ETF additions, can you bring our audience up to speed about some of today's challenges facing investors who are seeking income and of course whether that be from equity dividends or bond yield income? >> Yeah, today's income seeking investors face uh what we feel is a really unique mix of both opportunity and complexity.

You know, on the surface, higher interest rates have brought yields back into fixed income, which is something that we haven't really seen for much of the past decade, but we have to keep in mind that rate volatility continues to remain pretty high.

And valuations for both equity as well as uh credit markets are arguably stretched as well.

And we have to keep in mind as well that inflation, it's still a key concern for many of investors today. uh even with yields north of 4% and some of the more you know conservative fixed income sectors real returns they can be modest once you account for rising costs and this is especially uh problematic for retirees um drawing steady income for their portfolios on the equity side of things dividend yields they simply haven't kept pace with inflation and investors are also having to grapple with the fact that elev elevated valuations are are a thing and high concentration risk in many parts of the market, particularly uh large cap US stocks are very real risk.

Um we're also seeing a lot of yield seeking behavior as well.

Investors looking into areas like high yield and private credit have been really popular areas, but that introduces more more credit risk and also less liquidity as well.

Um and and lastly, something that we talk a lot about at coers is is is uh income and taxes. you know, investors need to navigate the whole tax treatment of income.

Not all income is treated the same, um, which can have a big impact on after tax returns.

So, you know, while we look at the the market and the search for income out there and we see it's alive and well, we think it requires a more nuanced and diversified approach to generate income that's both durable and tax efficient.

So, two recent additions to your firm's ETF lineup are the Cohen and Steers Real Estate Active ETF, and your ticker there is CSRE, and then the Preferred and Income Opportunities Active ETF, and that ticker is CSPF.

Now, both funds offer a compelling solution for income seekers, but each has a different approach.

Can you break them down uh one by one for us?

CSRE and CSPF collectively, they are really two great examples of our overall capabilities here at Cohen Steers as a uh specialist manager in real assets and alternative income.

If we look at CSRE first, our real estate active ETF, this reflects our over 38 years of innovation as an industryleading real estate platform.

That's what many of our clients know us for.

And to your point, uh you're spot on.

Investors often look to real estate as an income source.

Just to give you a sense, if you look at US REITs right now, they're yielding around 3.9% versus the S&P 500 yielding around 1.2 or so.

But it's not just about income.

You know, if we look at the last 25 years, for example, listed real estate, it's delivered really strong returns as well.

It's averaged around 9.9% annually versus 7.7% for the S&P 500.

And at the same time, it's provided a lot of meaningful diversification benefits as well as inflation hedging properties as well.

So there's a lot going on with REITs that we think uh present an attractive opportunity.

And we have to consider also that though REITs are they're exchange exchange traded securities, uh they're also real assets.

They're hard assets.

This presents a lot of inefficiencies in the market and a lot of opportunity for a manager like Koma Sears to add value. you know, we look at both security selection and sector allocation and and as major drivers of our alpha.

Um, if we look on the preferred side of things, our preferred and income opportunities active ETF ticker CSPF, uh, this focuses primarily on generating high tax efficient income.

If you look at most preferred securities, they pay QDI, right?

Qualified dividend income, which is taxed at a much much lower rate of uh typically around 20% versus your typical taxable bond that's taxed as ordinary income, which is for top earners 37%.

So if you look today, uh preferred yield approximately 6.6% before taxes and on an after tax basis, it's about 4.6% for top earners.

If you compare this to the landscape of fixed income, this puts them as, you know, one of the highest yielding sectors in the bond world, especially on an after tax basis.

Um, they also offer a lot of uh diversification from a sector standpoint.

You know, they have low sector overlap to other areas such as investment grade bonds and high yield bonds.

And they also have attractive correlations relative to other bond sectors as well, which we spend a lot of time talking about with our investors in terms of divers diversification and fixed income.

I mean, sometimes it's not just about earning that income, but it's also about that tax mitigation, which is really an important component for a lot of investors, especially those retirees or those approaching retirement.

So, how do you envision financial adviserss and investors potentially using these ETFs? >> Look, the uh the ETF marketplace, it's really completely revolutionized investing over the past 30 years.

It's brought a lot of benefits to investors. uh whether it's daily transparency, liquidity, tax efficiency, lower cost typically.

And while historically it's been driven primarily by passive ETFs, the landscape for ETFs has shifted a lot.

You know, over 35% of net flows have gone into active ETFs this year.

Um this is a dramatic increase from just a few years ago.

And CSRE and CSPF, they are uh two great examples of a lot of innovation that's going on right now in the ETF marketplace. and they provide investors really a new way to access these types of asset classes in an active management way and also in in a wrapper where you can access a lot of the benefits that ETFs that that offer which I spoke about. uh we're finding a lot of our clients are using both CSRE and CSPF primarily as a complement to core asset classes really to looking at you know like generating higher income u stronger returns increased portfolio diversification a lot of the stuff I spoke about and when we talk about you know active versus passive with our clients we don't necessarily see it as like an all or none story you know we finding that many investors still use passive for a lot of the more efficient asset classes like large US uh equities.

Um and then looking at areas like listed real estate and preferred as uh really key examples where you know skill really matters and they're less efficient markets.

So now that we're in the market you know with CSRE and CSPF we're seeing a lot of investors who have historically used passive for these areas used ETFs uh elsewhere for these areas begin to look at coasters begin to migrate uh given our history and our you know reputation here in these two asset classes.

So, we're uh happy to be out there and eager to uh talk with more investors >> and you know, we've seen that shift towards the active managed ETFs as well right here on First ETFs.

So, that trend continuing.

Um, Alex Bird, thank you so much for joining us.

Good luck with your ETFs. >> Thanks for having me.

Have a good day. >> In a world where international markets are more complex than ever, how do you find the companies that are truly built to last?

Well, our guest today is here to talk about a unique investment approach to this question and share more about the newly launched Vontoble International Equity Active ETF.

Let's welcome David Sukar, CIO, Vontoble Quality Growth.

David, it is a pleasure to have you today. >> Thanks so much, Stephanie.

Great to be here. >> Oh, sure.

Very welcome.

Okay.

Uh before we discuss your recent ETF edition, can you familiarize our audience with Vontoble Asset Management?

You are a company that started in Switzerland.

I checked out your website and it stressed the Swiss quality approach to business and investing.

Tell us more about it. >> That's right, Stephanie.

So, Vontobo Quality Growth is a boutique based in the United States.

We're fully owned by the Vontobo Bank based in Switzerland, but we're independent in the way we invest our money.

So we follow uh a simple philosophy that we call quality growth and we apply this this this philosophy across different strategies global international US and emerging markets and we're managing today close to $25 billion. >> Amazing.

Okay.

First of all congratulations on the launch of the Vontoble International Equity Active ETF.

Uh we understand that it is your first step into the US ETF market. um tell us a little bit about the strategy behind the fund and then what types of companies does the fund seek and what does it own? >> So the strategy is to apply the quality growth approach to international.

What is quality growth?

We focus in companies that we define as quality.

Those are companies that have a competitive advantage.

They have a mode and they have a growth above the the market average.

So we want companies that have these characteristics but they also have a track record of excellent.

They have a long-term growth.

They have high margins, high returns, strong balance sheet, and a very skill management behind it. >> Okay.

And can you uh give us a little bit more meat on the bone?

Maybe some of the specific companies are those always changing? >> Sure.

So, we run a concentrated portfolio of the best companies that we can find outside the United States.

Some of them are very well known by most of uh of investors like Ferrari, Hermes, SAP and they're not only great international companies but they are the best in the world.

So it's really an opportunity to give us investors diversification to great companies that are not available in the US market. >> And uh I want to let our audience know that your ticker for your ETF um is VNIE.

So I just want to make sure that we put that out there.

Um, how might the Vontobal International Equity Active ETF, uh, again your ticker VNIE be deployed by investors and financial adviserss inside an overall investment portfolio? >> Sure, we're very excited about the launch of the ETF.

Um, it the United States is going right now through a very uh uncertain period in terms of policy, in terms of the fiscal policy. we we start to see uh dollar depreciation and we start to see international markets actually outperforming the US markets.

So the ETF is a great opportunity for US investors to start to start diversifying outside the US market.

Most US investors are still very much underweight uh the international markets but in a way of investing of accessing international market through the best companies in the world.

Um and the the goal of the strategy is to give investors a participation on the upside but protect on the downside.

So you get the upside but you have uh risk protection and diversification >> and and as you said it sounds like a great opportunity for investors to step outside of the US if that's something that maybe they hadn't thought about before. >> That's right. um you know it makes sense that uh most US investors are overweight the US market because the that's a market that has delivered the best performance.

Yes, the United States have great companies but not all great companies are based here.

So it's a great opportunity to give investors a way a rapper to diversify to international markets in a way that's tax efficient transparent and gives them liquidity.

All right.

Well, David Sukar, thank you for joining us, sharing more about the Vontoble International Equity Active ETF, your ticker VNIE.

We appreciate your time today. >> Thank you so much.

Great to be here. >> Well, that does it for today's episode of First Look ETF.

If you enjoyed the show, please tell us in the comment section below and by hitting the like button.

Want to give a big thanks to all of our guests along with Mel Leam at the New York Stock Exchange.

Be sure to check out ETF central.com to learn more.

I'm Stephanie Stanton with ETF Guide.

Thank you so much for watching.

We'll see you next time.