In an article for Benzinga, Piero Cingari discussed the bear market in office REIT stocks as the vast majority are now trading at their all-time lows. It’s not entirely surprising given that workers are not returning to the office, following the pandemic, despite the best efforts of many employers. 

As a result, many companies are giving up office space and/or choosing to move to a hybrid model. Of course, this has spillover effects on other areas such as the businesses that sell products and services to these workers. 

In the first week of May, office occupancy in the 10 largest US cities was at half the levels that were seen prior to the pandemic. Many analysts had predicted that office occupancy would gradually ‘normalize’ just like so many other parts of the economy have done so. Yet, this isn’t the case and occupancy hasn’t risen over the last 6 months which is an indication that the changes may be permanent. 

Adding to the sectors’ woes is higher rates leading to higher borrowing costs, heavy levels of short interest, and rising crime rates in many urban areas. 

Finsum: Office REITs have been crushed amid high rates and corporations reducing office space with occupancy at 50% of pre-pandemic levels.

All asset managers are adapting to this macro environment in their own ways. In terms of private real estate, funds are taking more time to make investment decisions, exploring new sources of financing, and structuring creative methods to deploy capital. Jenn Elliot covered the cautious behavior among private real estate funds for WealthManagement.

It’s a sharp turn from the last couple of years when funds were much more aggressive in terms of investing and raising capital. Now, raising capital has become much more difficult given that the risk-free rate of return is above 5%. Additionally, rising recession risk, stumbles in the banking system, and stress in commercial real estate have also muddied the picture. 

One silver lining is that many investors have been sidelined which means there is less competition for deals. Thus, private real estate funds have more time to evaluate ideas and can be more selective.

However, the most significant headwind is that a deflationary mindset has become pervasive. Essentially, most investors expect that prices will decline over the next year. In some ways, this becomes a self-fulfilling prophecy. So far, damage has been contained to commercial real estate where there have been a few high-profile defaults and redemption requests. 

Finsum: Private real estate funds are behaving much more cautiously due to higher rates and increasing economic uncertainty.

One reason for the growing popularity of direct indexing is tax-loss harvesting. However, many investors fail to capture the full benefits, because they are manually reviewing their portfolio for these types of opportunities.

In an article for Vettafi’s Direct Indexing Channel, James Comtois shares why automation is essential to unlocking the full benefits of direct indexing. With direct indexing unlike investing in indexes, losing positions can be sold to reduce an investors’ tax liabilities. Then, these proceeds can be reinvested in similar assets. 

However, the more frequently these opportunities can be uncovered, then the greater the potential alpha. Therefore, investors should look to automate this process in order to capture the most benefits. Unfortunately, many advisors continue to do this process on an annual or quarterly basis which means they are missing many opportunities. 

With the right software, these scans can be conducted on a daily or weekly basis, leading to more consistency and better outcomes in terms of tax savings. Automation can also help advisors find the best rebalancing opportunities. Overall, more frequent scans can lead to between 20 and 100 basis points of additional returns. 

Finsum: Direct indexing is rapidly growing, but many advisors fail to capture its full benefits, because they are not automating the process of finding tax-loss harvesting opportunities.

Over the last decade, ESG investing has grown increasingly popular among asset managers as a way to evaluate investments and reward corporations for considering environmental, social, and governance factors when making decisions. 

Like any trend, there has been a backlash as many conservatives believe that corporations should focus on financial metrics. And, there has been a wave of legislation from Republican governors and state legislatures banning the use of ESG factors by asset managers, managing state funds, when making investment decisions.

Given its prevalence in institutions and rising salience as a political issue, it’s interesting to look at recent Gallup polling which shows that the issue has had little impact on most Americans regardless of their political affiliation.

Even though the issue has entered the political arena in the last couple of years, only 38% of Americans are familiar with the term which is unchanged from 2021, the last time that Gallup conducted a poll on the issue.  In addition, 40% of Americans were not aware of ESG at all, while 22% were somewhat familiar with the concept.

Clearly, ESG investing is a big deal for institutions and politicians, it’s failed to break through to the public.

Finsum: ESG investing has grown in prominence among investors and politicians. However, Gallup polling shows that it’s not on the radar of most Americans.

In an article for Financial Planning, Erica Carnevalli discussed some best practices for financial advisors looking to bolster their digital marketing. For advisors looking to market their services especially to younger prospects, having an effective online presence is necessary. 

According to Broadridge Financial Solutions, over 40% of advisors have landed clients through social media marketing but only 28% of advisors have an online marketing strategy. Creating your strategy, targeting your ideal client, and ensuring that it aligns with your firms’ value is the first step.

The second step is to find the channel that aligns with your personality. Some options include podcasts, short form videos, or blogging. The key is to make small investments in terms of time and energy at first. Once, something gains traction, then you can double down on that particular approach. Another key is to stay consistent in terms of your output and timing so that you can be a consistent presence on your prospects’ feed.

Finally, advisors need to curate a professional online image that reflects the best version of you. This means keeping your content professional and curating any comments that could detract or distract from your aim.

Finsum: Digital marketing is increasingly necessary for advisors who are looking to grow their practice. Here are some important considerations.