ETF Edge on how the 60/40 portfolio is changing

>> WELCOME BACK TO THE HALFTIME REPORT. I'M DOMINIC CHU WITH TODAY'S ETF EDGE THE 40 PORTION SO TO SPEAK, OF THE TRADITIONAL 60/40 PORTFOLIO IS CHANGING. AND ANOTHER RELATIVELY NICHE PART OF THE INDUSTRY IS EXPANDING TO FILL THE GAP. JOINING ME NOW IS NATE GERACI, THE PRESIDENT OF NOVA DIAZ WEALTH MANAGEMENT WATCHES A LOT OF ETF TRENDS AND FLOWS. NATE LET'S TALK A LITTLE BIT ABOUT THE 40 BONDS. ARE THERE OPPORTUNITIES THERE. AND WHAT EXACTLY ARE THOSE OPPORTUNITIES GOING TO BE IN. >> WELL THERE'S CLEARLY OPPORTUNITY THERE THAT INVESTORS ARE SEEING BECAUSE IF YOU LOOK WE'VE HAD OVER 75 BILLION IN INFLOWS INTO FIXED INCOME ETFS JUST OVER THE PAST MONTH. AND WE'VE NOW SEEN A RECORD 525 BILLION IN INFLOWS THIS YEAR, DESPITE A LARGE NUMBER OF MAJOR BOND CATEGORIES POSTING NEGATIVE RETURNS. THERE ARE A LOT OF BOND ETFS IN THE RED THIS YEAR. OBVIOUSLY ANYTHING WITH DURATION, BUT DESPITE THAT, WE HAVE SEEN THESE INFLOWS INTO ETFS. AND TO ANSWER YOUR QUESTION, IT'S REALLY BEEN ACROSS THE YIELD CURVE WHERE YOU HAVE SOME INVESTORS CONTENT TO PARK ON THE FRONT END AND SCOOP UP THAT 4% PLUS YIELD AND NOT TAKE MUCH RISK. AND THEN THERE ARE OTHER INVESTORS WHO ARE BECOMING MUCH MORE ENTICED BY THE HIGHER YIELDS OFFERED MUCH FURTHER OUT ON THE CURVE. BUT REGARDLESS, I THINK THE STRONG INFLOWS ARE INDICATIVE OF THE FACT THAT THERE IS A BOND ETF. NO MATTER WHAT YOUR VIEWS ARE, RIGHT, YOU CAN EXPRESS THEM VIA AN ETF WRAPPER. AND THAT'S WHAT WE'RE SEEING. INVESTORS DO. >> YOU KNOW, NATE, I HAD MENTIONED BEFORE SOME BOND INVESTORS, TRADITIONAL ONES ARE ALSO LOOKING BEYOND BONDS FOR THAT 40% OF THEIR PORTFOLIO. WHERE ELSE ARE THESE BOND INVESTORS GOING TO? THE ANSWER IS A LITTLE BIT SURPRISING HERE. >> WELL, YEAH. IF YOU THINK ABOUT THE MARKET ENVIRONMENT WE'RE IN, WE NOW HAVE MAJOR STOCK INDICES HITTING RECORD HIGHS. AT THE SAME TIME, INTEREST RATES ARE AT MULTI-DECADE DECADE HIGHS. AND THINK ABOUT THIS IN THE CONTEXT OF A TRADITIONAL 6040 PORTFOLIO WHERE THIS ENVIRONMENT HAS WORKED OUT GREAT FOR THE 60% STOCKS, BUT IT'S BEEN A HUGE DRAG ON THE 40% BONDS. AND SO I DO THINK SOME INVESTORS ARE SEEKING ALTERNATIVE SOLUTIONS IN THIS TYPE OF MARKET. AND THEY'RE LOOKING FOR STRATEGIES WITH A LOWER CORRELATION TO STOCKS IN PARTICULARLY BONDS. SO SOMETHING LIKE MANAGED FUTURES ETFS I THINK CAN FIT THE BILL HERE BECAUSE THEY CAN GO SHORT BONDS. THEY CAN GO LONG THE DOLLAR LONG OIL. THEY CAN BE A DIVERSIFIER WHEN OTHER AREAS OF THE PORTFOLIO AREN'T WORKING. SO I THINK MANAGED FUTURES AND OTHER ALTERNATIVE STRATEGIES LIKE THAT ARE CATCHING THE ATTENTION OF INVESTORS. >> A SHIFT TOWARDS ALTS FOR SURE HERE, NATE, THANK YOU VERY MUCH FOR THAT. WE'RE GOING TO CONTINUE THIS CONVERSATION OVER@ETF.CNBC.COM. NATE'S GOING TO BE JOINED BY ANDREW BEER, THE FOUNDER AND MANAGING MEMBER AT DYNAMIC BETA INVESTMENTS,