Group 1: Industry Consolidation - The industry is expected to see consolidation, highlighted by Goldman Sachs' acquisition of Innovator ETFs, with over 400 unique ETF brands and 4,000 products in the market [1] - Raymond James' acquisition of Clark Capital Management Group indicates a trend, with expectations of three to five meaningful deals in the current year [2] Group 2: Smart Beta ETFs - Predictions suggest inflows for smart beta ETFs will double from $37 billion to $75 billion, with the Invesco S&P 500 Equal Weight ETF (RSP) being the fourth-largest fund by flows this year [3] - The record for smart beta inflows was set at $103 billion in 2022 [3] Group 3: Crypto Index ETFs - Skepticism exists regarding the prediction that crypto index ETFs will triple assets from $1.7 billion to $5 billion, as year-to-date flows have primarily gone to bitcoin and ethereum funds [4] - A survey indicated that 42% of advisors prefer crypto index ETFs over individual tokens [4] Group 4: International Equity and Fixed Income ETFs - Predictions on international equity and fixed income ETFs breaking records are endorsed, with bond ETFs capturing 32% of total flows this year, up from 29% last year [5] - Flows are shifting from short duration to the belly of the curve, approximately six years duration [5] Group 5: Active ETFs - Active ETFs experienced record inflows of $580 billion in 2025, contrasting with active mutual funds that had $640 billion in outflows [6]

Core Insights - Guggenheim Investments has re-entered the ETF market by filing for new products after selling its $37 billion ETF business to Invesco in 2017, including an Ultrashort Bond ETF and five other actively managed ETFs [2] - DoubleLine, led by bond investor Jeffrey Gundlach, has also filed for a new Ultrashort Income ETF, indicating a trend towards actively managed ultrashort income products [2][3] - The ultrashort income category is gaining popularity, with significant inflows into US Ultrashort bond ETFs, which attracted $90 billion last year, up from $57 billion in 2022, raising total assets in the category to $313 billion [4] Company Developments - DoubleLine currently manages about $2 billion across eight ETFs, while its mutual funds hold $51 billion, experiencing nearly $2 billion in net outflows in 2025 [6] - Guggenheim manages approximately $50 billion in mutual fund assets and saw over $400 million in net inflows last year, with eight US fixed income mutual funds that do not significantly overlap with its new ETF filings [6] Market Trends - The timing of new ETF launches is notable, as potential rate cuts by the Federal Reserve could lead to declining yields, prompting investors to shift assets from money markets and Treasurys [4][5] - The active management of fixed income ETFs has been a key area of development, with increasing investor interest in ultrashort income products, suggesting strong client demand [5]

Group 1 - The Conservative Income Portfolio offers timely investment picks focused on fixed income, aiming to provide the best ideas in the market for subscribers [1] - The investment group consists of analysts with over 40 years of combined experience, emphasizing capital preservation while generating income through options and fixed income strategies [2] - The Covered Calls Portfolio is designed for lower volatility income investing, while the fixed income portfolio targets securities with high income potential and significant undervaluation [2] Group 2 - The article does not disclose any stock or derivative positions in the companies mentioned, indicating a lack of conflict of interest [3] - The company is long on the bonds mentioned in the article, suggesting a positive outlook on those securities [4]

Core Insights - John Davi, founder and chief investment officer at Astoria Portfolio Advisors, discussed the firm's 15th annual report featuring ten ETF picks for 2026, emphasizing a constructive macro outlook driven by tax cuts, potential tariff cuts, and Federal Reserve rate cuts [1][2] Featured Portfolio Ideas - The iShares MSCI ACWI ex U.S. ETF (ACWX) is recommended for exposure to international equities, benefiting from a weaker dollar and attractive valuations, particularly in cyclical sectors like industrials and financials [3] - The PIMCO Multisector Bond Active ETF (PYLD), with over $10 billion in assets, is highlighted for its active management approach, outperforming the Aggregate Bond Index by 12% since its launch in July 2023 [4] - The SPDR Bridgewater All Weather ETF (ALLW), which has $700 million in assets, employs strategic asset allocation across four economic quadrants and operates with approximately 40% lower risk than the S&P 500 [5] - The Calamos Auto Callable Income ETF (CAIE), now over $500 million in assets, focuses on defined outcomes in a non-linear risk environment by selling low downside puts to generate yield [6] - The Bitwise 10 Crypto Index ETF (BITW) is included as a means to protect purchasing power against inflation, advocating a buy-and-hold strategy rather than tactical trading [7]

Group 1 - The Conservative Income Portfolio focuses on value stocks with high margins of safety and utilizes well-priced options to reduce volatility [1] - The Enhanced Equity Income Solutions Portfolio aims to generate yields of 7-9% while minimizing volatility [1] - The investment group Trapping Value, with over 40 years of combined experience, emphasizes capital preservation and income generation through various portfolios, including Covered Calls and Fixed Income [2] Group 2 - The recent shift in investment strategy has moved towards fixed income, particularly in Treasuries and Corporate bonds, with a notable tax-advantaged yield play available at a 40% discount [2] - The Covered Calls Portfolio is designed for lower volatility income investing, while the Fixed Income Portfolio targets securities with high income potential and significant undervaluation [2]

Report Industry Investment Rating - Not provided Core Viewpoints - The market effectively absorbed new bond supplies, with strong demand for 5-year duration bonds, while lower-yielding front-end papers faced selling pressure [2]. - Asian IG credits tightened by 1 - 3bps this morning, driven by flows into 5-year duration issues and FRNs with spreads over 90 [4]. Summary by Relevant Catalogs Trading Desk Comments - The new CASHLD 6.25 Perp rose 0.9pt from RO at 99.965; the new FRESHK 29 tightened 10bps from RO at T+178; existing FRESHK 26 - 28s tightened 5bps; EIBKOR 29 - 36s opened 1 - 2bps tighter but retraced and closed flat to 1bp wider; RESONA 31, SWIPRO 31, MITHCC 31s, CLFCAP 31 and BAYFIM 29 tightened 3 - 6bps; new NAB 29 - 31s and STANLN 30 - 37s traded 1 - 2bps inside ROs; EBIUH 31 rose 0.4pt while EBIUH 29 closed around RO; KSA 56s had profit - taking selling and KSA 36s closed 0.1pt higher [2]. - In the secondary market, there was demand for higher - spread FRNs of EU/Chinese/Japanese banks; Japanese/Yankee insurance subs, AT1s, and HYSAN Perps rose 0.3pt; NWDEVL/VDNWDL complex moved 0.2pt lower to 0.7pt higher; EHICARs were down 0.2 - 0.6pt; Macau gaming complex moved 0.1pt lower to 0.2pt higher; VNKRLE 27 - 29 dropped 2.6 - 2.8pts; FUTLN 28/FTLNHD 26 - 27 were unchanged to 0.1pt lower; VLLPM 27 - 29 rose 1.3 - 1.9pts; INDYIJ 29s rose 0.3pt; MEDCIJ 26 - 30s were unchanged to 0.2pt lower [3]. - PMBROV 30/NUFAU 30/EHICAR 26 were 0.7 - 0.9pt lower; LNGFOR 28 27 - 28 were 0.6 - 0.8pt higher; SJMHOLs were unchanged and other Macau gaming bonds were unchanged to 0.1pt lower; TOPTBs/PTTGCs were unchanged to 0.1pt higher [4]. Last Trading Day's Top Movers - Top Performers: CFAMCI 4.95 11/07/47 rose 2.4, VLLPM 7 1/4 07/20/27 rose 1.9, VLLPM 9 3/8 07/29/29 rose 1.3, CHGDNU 4.8 09/11/48 rose 1.1, NWDEVL 5 7/8 06/16/27 rose 0.7 [5]. - Top Underperformers: VNKRLE 3.975 11/09/27 dropped 2.8, VNKRLE 3 1/2 11/12/29 dropped 2.6, FZSZJJ 7 12/27/27 dropped 1.3, EHICAR 12 09/26/27 dropped 0.6, GWFOOD 3.258 10/29/30 dropped 0.5 [5]. Macro News Recap - On Wednesday, S&P was down 0.34%, Dow was down 0.94%, and Nasdaq was up 0.16%. US Dec'25 ADP Nonfarm Employment change was +41k (lower than expected +49k), ISM Non - Manufacturing PMI was 54.5 (higher than forecast 52.2), and Crude Oil Inventories were -3.932mn (lower than expected -1.2mn). UST yield was lower, with 2/5/10/30 year yields at 3.47%/3.70%/4.15%/4.82% [7]. Desk Analyst Comments SJMHOL - The FV of the new SJMHOL 31 is expected to be low - mid 6% vs IPT of 6.875%. The net proceeds will fund a tender offer for USD500mn SJMHOL 4.5 01/27/26 at par and for general corporate purposes. The new bond is puttable at par under certain conditions and has a Change of Control put at 101%. Holders of SJMHOL 26 subscribing to the new bond may get priority acceptance and preferential allocation. The tender offer expires on 12 Jan'26 at 4pm London Time [8]. - As of Sep'25, SJM had HKD3.4bn cash and short - term deposits and HKD2.7bn undrawn facilities. Its LTM adj. property EBITDA was HKD3.7bn. Budgeted capex was HKD2bn in 2025, HKD1.5 - 1.8bn in 2026, and below HKD1bn in 2027. Moody's/Fitch changed the outlook to negative and affirmed Ba3/BB - rating. Eight of nine satellite casinos ceased operation by 2025, and SJM acquired L'Arc Hotel for HKD1.75bn in Dec'25. The firm is neutral on SJMHOLs and prefers MPELs/STCITYs [9]. TOPTB - The FV of the new PerpNC5.25 is expected to be low 6% vs IPT at 6.625%. The coupon resets in Apr'31, steps up by 25bps in Apr'36, and another 75bps in Apr'51. Coupon payment is cumulative and can be deferred, with restrictions on shareholder distributions [13]. - Proceeds will fund a tender offer for up to USD550mn of 5 USD bonds. An early tender premium of 5pts is provided for tenders on or before 20 Jan'26 5pm EST [14]. - Thai Oil is a leading integrated refining and petrochemical company in Thailand, with a refining capacity of about 275k barrels per day (c22% of total in Thailand). PTT and PTT Oil and Retail are its main customers and PTT is the main feedstock supplier [15]. Offshore Asia New Issues Priced - Riyad Bank issued USD1000mn 10NC5 bonds with a 5.805% coupon at T+210, rated -/BBB -/BBB [20]. Pipeline - Korea Housing Finance Corporation plans to issue 3yr/5yr bonds, sized in USD, with coupons of SOFR+77/CT5+63, rated Aa2/AA - [21]. - SJM International Limited plans to issue 5NC2 bonds in USD with a 6.875% coupon, rated B1/-/BB [21]. - Thaioil Treasury Center Company Ltd plans to issue PerpNC5.25 bonds in USD with a 6.625% coupon, rated Ba2/BB -/- [21]. Onshore Primary Issuances - Yesterday, 79 credit bonds were issued with an amount of RMB64bn. Month - to - date, 258 credit bonds were issued for a total of RMB205bn, a 23.9% yoy decrease [26]. - Dalian Wanda Commercial sold Changde Wanda Property; Emperor International shareholders approved a HKD1.16bn sale of a Hong Kong commercial building to OCBC; Minmetals Land will repurchase USD251.174mn of MINMET 4.95 07/22/26; New World Development expects to redeem 2026 - 2027 bonds with internal cash after selling a project for HKD1.16bn; China Vanke will hold a noteholders' meeting on 21 Jan'26 for RMB3.7bn 22WankeMTN005 notes to vote on maturity extension [26].

Summary of Key Points from the Conference Call Industry Overview - The focus is on the financial sector, particularly the liquidity conditions and monetary policy in 2025 and early 2026. Core Insights and Arguments - **Liquidity Conditions in 2025**: The liquidity environment is characterized by a tightening in the first quarter followed by a loosening in the subsequent quarters. By the end of Q1, MLF net injection turned positive, indicating a warming trend [1][5]. - **Central Bank Actions**: In May, the central bank implemented a dual rate cut to address external disturbances, and by June, liquidity rates stabilized. From July to November, the overall liquidity remained loose, with DR001 weighted rates fluctuating around 1.31 [1][5][9]. - **Data Classification Changes**: The adjustment in data classification, merging large banks and policy banks into one category and small and medium banks into another, affects the observation of current bond transactions and the net lending capacity of large banks. However, the new indicator system still holds reference value [3][4][6]. - **Agricultural Commercial Banks' Strategy**: These banks are expected to focus on realizing profits rather than extending durations due to regulatory limits and their own duration ceilings. The anticipation of rate cuts may lead to adjustments in their business strategies [7][8]. - **Key Liquidity Events**: Significant liquidity events over the past year include the recovery of MLF net injections at the end of Q1, dual rate cuts in May, and the stabilization of interbank rates despite large maturities of interbank certificates [9]. - **Central Bank's Liquidity Management in H2 2025**: The central bank took measures such as large-scale reverse repos to manage liquidity and mitigate market volatility, especially around tax payment periods and new listings on the Beijing Stock Exchange [10][11]. - **Outlook for Early 2026**: The liquidity outlook for early 2026 is optimistic, with expectations that the central bank will maintain supportive measures to avoid significant tightening as seen in Q1 2025. Seasonal factors are anticipated but can be managed through appropriate central bank interventions [12][13]. - **Regulatory Pressures on Bond Market**: A potential downward trend in bond yields could exert pressure on regulatory frameworks, necessitating careful consideration of tightening measures to avoid adverse impacts on yield stability [14]. - **Impact of Narrowing Interest Rate Corridor**: The narrowing of the interest rate corridor is expected to enhance the transmission of monetary policy, allowing key rates like DR001 to align more closely with policy targets, thus improving policy flexibility [15]. Other Important but Possibly Overlooked Content - **Seasonal Disturbances**: Seasonal factors such as tax payments and new listings are unavoidable but can be mitigated through central bank support and careful monitoring of liquidity between banks and non-banks [13]. - **Cautious Optimism for 2026**: There is a cautiously optimistic outlook for overall liquidity in 2026, contingent on the absence of significant constraints and the stability of bond market yields [16].

Group 1: ETF Issuer M&A Activity - Goldman Sachs announced the acquisition of Innovator Capital Management for $2 billion, expected to close in Q2 2026, enhancing its ETF offerings in defined outcome ETFs, which have grown to over $80 billion industrywide [2][4] - The acquisition aims to address Goldman's stagnant ETF business by integrating a specialized product suite from Innovator, which has a proven track record [3][4] - Predictions indicate multiple transactions in 2026, with larger asset managers acquiring smaller ETF issuers, highlighting a trend towards consolidation in the ETF industry [5][6] Group 2: Smart Beta ETFs Resurgence - Smart beta ETFs, which combine elements of passive and active management, have seen a resurgence with several asset managers launching new products that align with smart beta principles [7][8] - The smart beta ETF category currently holds approximately $1.1 trillion in assets, with predictions of inflows doubling to $75 billion in 2026, driven by investor interest in systematic, factor-targeted portfolios [11][12] Group 3: Growth of Crypto Index ETFs - Spot crypto ETFs attracted around $35 billion in inflows in 2025, following a favorable regulatory shift in the U.S. under new SEC leadership [13][14] - The crypto index ETF category is expected to triple in assets to over $5 billion in 2026, as more investors seek diversified exposure to cryptocurrencies through index-based products [19] Group 4: International Equity ETFs - International equity ETFs experienced record inflows of approximately $250 billion in 2025, surpassing the previous record of $198 billion in 2021, with expectations for further growth in 2026 [24][26] - Factors such as last year's international outperformance and stretched U.S. equity valuations may drive reallocations towards international equity ETFs [26][27] Group 5: Fixed Income ETFs - Fixed income ETFs saw inflows of roughly $450 billion in 2025, significantly exceeding the previous record, with predictions for continued growth in 2026 [29][31] - Key drivers for this growth include capital migrating from money market funds and expectations of lower interest rates, which may prompt advisors to reallocate portfolios towards fixed income ETFs [32][35]

Report Industry Investment Rating - Not provided Core Viewpoints - The Asian IG credit market was actively traded yesterday with abundant primary supplies, and there is diversification demand from Chinese and other Asian investors for Middle East credits [2] - In the secondary market, there was solid deployment demand for wider - spread FRNs and better selling pressure for lower - beta, front - end FRNs [3] - Initiate a buy on the new CASHLD 6.25 Perp due to its higher YTC compared to peers and the stable credit profile of PCCW [9] Summary by Relevant Catalogs Trading Desk Comments - Yesterday, the multi - tranche new MUFG 32 - 37s and SUMIBK 29 - 47s tightened 1 - 3bps from ROs; Fixed - rate HYNMTR 31 - 33s traded 1–3bps wider; BOCAVI 33s closed 2bps tighter; EXIMBK 36s tightened 2bps and EXIMBK 56s tightened 8bps; new UBS perps were initially up and then retraced slightly; KSA 4.875 01/12/36 was up 0.3pt [2] - In the secondary space, there was demand for wider - spread FRNs and selling pressure for lower - beta, front - end FRNs; NWDEVL Perps were up 0.1 - 1.3pts; LNGFOR 27 - 32s were firm and up 0.7 - 1.0pt; FTLNHD 26 - 27 were up 0.3 - 0.5pt, FUTLAN 28 was 0.4pt lower; in SE Asia, GLSP Perps rose 1.4 - 1.5pts [3] - This morning, new BAYFIM 29 and CLFAP 31 tightened 3bps; FRESHK 29 was 5bps tighter; MITHCC 31s were 7bps tighter; RESONA 31/STANLN 30 - 37s/EIBKOR 29 - 36s tightened 1 - 2bps; SWIPRO 31 was 4bps tighter; ZHHFGR 28 and ZHHFGR 6 Perp were 0.5pt lower [4] - In the LGFV space, FZSZJJ 7 12/27/27 recovered 1.3pts, and the rest edged 0.1 - 0.4pt higher [5] Macro News Recap - On Tuesday, S&P (+0.62%), Dow (+0.99%), and Nasdaq (+0.65%) were higher; US Dec'25 S&P Global Services PMI was 52.5, lower than the market expectation; the US Supreme Court is expected to rule on tariffs on 9 Jan'26; UST yield was higher [8] Desk Analyst Comments - Initiate a buy on the new CASHLD 6.25 Perp as it offers higher YTC than peers with a similar first coupon reset date and PCCW has a stable credit profile; it is trading at YTC of 6.1% and rose 0.8pt this morning [9] Offshore Asia New Issues (Priced) - Agricultural Bank of China issued 600mn USD 5 - year bonds at SOFR+45 [16] - CAS Capital No.2 Limited issued 675mn USD PerpNC5.25 bonds at 6.25% [16] - Clifford Capital Asset Finance Pte issued 500mn USD 3 - year bonds at 3.852% and 500mn USD 5 - year bonds at 4.037% [16] - Emirates NBD Bank PJSC issued 300mn USD 3 - year bonds at 4.195% and 700mn USD 5 - year bonds at 4.529% [16] - Far East Horizon issued 400mn USD 3 - year bonds at 5.25% [16] - KFH Sukuk Company issued 1000mn USD 5 - year bonds at 4.563% [16] - Mitsubishi HC Finance America issued 500mn USD 5 - year bonds at 4.558% [16] - National Australia Bank issued multiple - tranche bonds with different amounts, tenors, and coupons [16] - Resona Bank issued 300mn USD 5 - year bonds at 4.286% [16] - Standard Chartered Bank issued multiple - tranche bonds with different amounts, tenors, and coupons [16] - Shandong Development issued 240mn USD 3 - year bonds at 3.9% [16] - Swire Properties issued 500mn USD 5 - year bonds at 4.25% [16] - The Export - Import Bank of Korea issued multiple - tranche bonds with different amounts, tenors, and coupons [16] Offshore Asia New Issues (Pipeline) - There are no offshore Asia new issues in the pipeline today [17] Company - Specific News - 96 credit bonds were issued yesterday with an amount of RMB71bn, and month - to - date, 183 credit bonds were issued with a total amount of RMB143bn, a 29.3% yoy decrease [23] - Fitch placed JSW Steel's BB rating on positive watch [23] - Longfor completed RMB1.0bn payment for onshore bond 21Longhu02 [23] - Mongolian Mortgage repurchased USD 17.54m of MGMTGE 11.5 01/18/27, and the o/s amount is reduced to USD185.149mn [4][23] - SJM Holdings aims to lower net leverage to 5x within two years and is in talks with banks about raising new loans and redeeming debt [23] - Standard Chartered priced SGD750mn PerpNC5.5 AT1 at 4.3% [23]

Core Insights - 2025 was a strong year for fixed income ETFs, driven by market uncertainty leading investors to bonds [1] - Vanguard dominated inflows with four funds in the top 10, highlighting diverse investor interest in fixed income [1][2] Inflows and Fund Performance - Vanguard Total Bond Market ETF (BND) and Vanguard Total International Bond ETF (BNDX) led with inflows of $21 billion and $13 billion respectively, indicating a broad interest in both U.S. and international bonds [2] - BND provides investment-grade exposure to U.S. debt, while BNDX focuses solely on international investment-grade bonds, reflecting a shift in investor preference due to macroeconomic factors [3] Short-Term Bond Demand - Short-term bond funds gained popularity in 2025, with Vanguard Short-Term Bond Index Fund ETF Shares (BSV) attracting over $8 billion in inflows, as investors sought to mitigate rate risk and earn returns on cash [4][5] - The potential for further rate cuts by the Federal Reserve may continue to enhance the appeal of short-term bond funds [4][6] Corporate Bonds Outlook - The forecast for more rate cuts in 2026 could tighten credit spreads, improving the outlook for corporate bond fundamentals and making them more attractive compared to government debt [6] - Vanguard Interim-Term Corporate Bond ETF (VCIT) saw inflows of approximately $8.6 billion, tracking U.S. investment-grade corporate bonds and balancing rate risk with higher yields [7]