There may be an untapped market for exchange-traded funds.
Matt Kaufman of Calamos Investments says there are trillions of dollars in assets in CD and money market accounts, a market that ETFs should capture.
“This is almost bigger than the ETF space itself,” the firm’s head of ETFs told CNBC’s “ETF Edge” earlier this week. “There’s a lot of money on the sidelines that could move into this.”
In the long-term camp, Kaufman believes interest rates will remain high and that structured and options ETFs designed to manage risk and generate income could provide stability.
“We thought it would be difficult to manage risk and generate income from bonds when interest rates were so low,” he said. “With interest rates…now coming down from zero or 4 or 5 percent, you can afford to provide capital protection over the outcome period. And if you can do that, there’s a lot of opportunity to use these products.”
Kaufman said ETFs in this high interest rate environment could be particularly beneficial for people looking for an opportunity to beat inflation, especially retirees.
“You can earn an interest rate that exceeds the risk-free rate. … Your funds are tied to the market and there is no further downside risk,” Kaufman added. “This is all tax-deferred growth.”
Mr. Kaufman’s company, Calamos, just launched a suite of 12 structural protection ETFs.
