(New York)

Fund fees are a hot area, and not just in terms of them falling in absolute terms. While everyone is aware of Fidelity’s new zero fee index funds and the price war going on in top line fees, there are also new and interesting fund structures emerging. One kind of new fee model is called a fulcrum structure, where fees are low (ETF-like) unless the funds outperforms its benchmark, in which case the provider gets a performance fee. This kind of structure is more popular with mutual funds and can offer the best of both worlds—low fees for ordinary performance, or outperformance that comes with active management.

FINSUM: We think these kinds of funds offer a better alignment of interest while offering multi-sided benefits. However, the risk is that managers are incentivized to take excess risk in an effort to boost performance over the fulcrum threshold.

(New York)

Stable income is in the best place it has been for years. The yield curve has stabilized with rates at reasonable levels, which means finding decent-yielding investments isn’t nearly as hard as it was a few years ago. That said, income investments, especially at the higher-yielding end, have pitfalls. With that in mind, here are some good income ideas. The picks come from Franklin Templeton’s $73 bn Income Fund. Some of the top names held (holding assets across the capital structure) are Chesapeake Energy, Tenet Healthcare, JP Morgan Chase, Wells Fargo, Softbank Group, and Bank of America.

FINSUM: This is a very energy and financials heavy group, which has its risks.

(New York)

JP Morgan is joining the bullish bandwagon. While fear that the rally has been too fast permeates across the markets, JP Morgan is stepping in to say that they think the market has plenty of runway higher. The bank thinks stocks have a good tailwind behind them as a trio of positive factors exist: a dovish fed, a stable yield curve, and pending US-China trade deal. The bank thinks that stocks look like they did right after the 2015-2016 correction cycle, a period right before a big bull run.

FINSUM: We are starting to think that shares may have some good runway left. The correction in P/E ratios was a very healthy adjustment to end the year, and the macro situation is looking positive.

(New York)

One of the big outcomes of the huge rout to end last year was that stock pickers had reportedly gone back to doing what they did best—picking individual stocks based on fundamental value, signaling a diversity of holdings. However, in aggregate, that view appears to be hogwash, as new data shows that institutional equity ownership in stocks is at its highest point in years. Goldman Sachs follows this data and tracks how many companies are among the 50 most owned by hedge funds and mutual funds alike. Right now it is 13, which is the highest level since 2017. Industrial and tech stocks were the most held.

FINSUM: The most concentrated stock holdings are, the more risk there is for steep falls in those names.

(Detroit)

The auto sector has had a pretty wild ride since the Financial Crisis. The first half decade after the bailout was pretty strong for autos, with sales growing and high margin SUVs jumping in volume. However, the shift to SUVs and away from cars has grown so great that it is causing the industry some headaches. Further, self-driving cars are a new source of opportunity, but also anxiety. A new survey shows the car industry is likely to join energy and retail as the most embattled sectors this year. Sales are widely expected to fall across the industry, putting further stress on car companies.

FINSUM: In great industry-speak, the threats facing the industry are currently called the “Bermuda triable: unfavorable economic conditions, disruptive forces, and changing consumer preference”. We can’t help but agree.