There may be an untapped market for exchange-traded funds.
According to Matt Kaufman of Calamos Investments, there are trillions of dollars in CD and money market accounts, and it's a market that ETFs should try to capture.
“That's bigger than almost the ETF space itself,” the firm's head of ETFs told CNBC's “ETF Edge” earlier this week. “There's a lot of money sitting on the sidelines that could end up in this.”
Kaufman, who believes interest rates will remain higher for an extended period of time, thinks structured and options ETFs designed for risk management and income can provide stability.
“We saw that it was difficult to get risk management and income from bonds when interest rates were so low,” he said. “As interest rates have fallen from zero to 4.5% now, we can afford to provide capital protection for a period of time. And if you can do that, there are a lot of opportunities to use these products.”
Kaufman said that in this higher interest rate environment, ETFs could be especially beneficial for people looking for opportunities to beat inflation, especially retirees.
“You can get a higher interest rate than the risk-free interest rate. …Your money is tied to the market with no greater downside risk,” Kaufman added. “This is all deferred growth.”
Kaufman's firm Calamos just started launching a series of twelve structured protection ETFs.