The private REIT market was recently rocked by the decision of Blackstone and Starwood, which manage two of the nation's largest private REITs, to limit and prorate investors' repurchase requests because they exceeded redemption restrictions. Private REITs are real estate investment trusts that are exempt from SEC registration and whose shares do not trade on national stock exchanges. While the private REIT market flourished during the low interest-rate era between 2017 and 2021, the expectation that interest rates will continue to rise could make it difficult for these private funds to perform well in the future. That and a perceived gap between the performance of nontraded private REITs and public REITs led to a surge in investor redemptions for Blackstone and Starwood. Both firms are trying to shore up their funds’ liquidity through redemption restrictions. The Blackstone Real Estate Income Trust (BREIT), which has $125 billion in assets under management, announced the closing of redemptions for this quarter in a letter to shareholders last week. The announcement from the Starwood Real Estate Income Trust (SREIT), which is valued at about $14.6 billion, came more recently over the weekend. 

Finsum:Rising interest rates led to a surge in investor redemptions for private REITs, resulting in Blackstone and Starwood restricting redemptions this quarter.

LPL Financial recently announced that Financial House has joined its broker-dealer, RIA, and custodial platforms. LPL was able to lure Financial House from Lincoln Financial, where the team managed around $650 million in advisory, brokerage, and retirement assets. The Financial House team, which was based in Centreville, Delaware, includes partner advisors Joseph Biloon, Robert Griesemer, and Emily Woodson as well as advisors Joseph Blair, Leo Strine, and Gary Ulrich. According to Griesemer, the team left Lincoln because its business had model changed. He said the following in a statement, “Financial House was founded primarily as an insurance and planning firm, but that’s changed over the years. We now offer more comprehensive, complex investment strategies and planning, so working with an insurance-based partner no longer suited our business model.” He added, “At the end of the day, we recognized LPL would provide us with more independence and flexibility to grow our practice as we see fit.” According to Biloon, “Financial House expects LPL to provide it with opportunities to add advisors and potentially acquire other practices because of LPL’s access to retiring advisors who want to sell part or all of their business.”

Finsum:A $650 million team left Lincoln Financial for LPL due to its changing business model that no longer fit with Lincoln’s insurance-based model.

According to the results of a recent survey, fixed-income investors want more ESG data than what is currently available. A survey of 111 senior buy-side fixed-income investors, which was conducted by analytics firm Coalition Greenwich, found that 90% believe ESG is important to decision-making, but only a third have fully integrated ESG into their risk analysis. The reason for the large difference is a lack of ESG data. Coalition Greenwich’s senior analyst Stephen Bruel stated “It boils down to risk management. If you don’t have reliable ESG data about an issuer or issuance, then it’s harder to calculate what the negative consequences might be.” More than half of the respondents said it was “important to incorporate ESG in fixed-income portfolios to perpetuate corporate values,” but there’s a “gap between where the survey participants want the industry to be and where it actually is.” Data was listed as the largest obstacle to achieving these ESG goals. The concerns about ESG data quality included greenwashing and inconsistent ratings. Essentially, if the data isn’t reliable, then quantifying risk becomes harder, which could open up investors to sizeable losses. This is especially true with the calculation of climate risk, which would certainly benefit from more data.

Finsum: Based on the results of a recent survey, fixed-income professionals believe ESG is important, but a lack of data is preventing more of them from implementing an ESG strategy.

The energy sector has been the top-performing sector so far this year, but it may be time to sell. That is according to JPMorgan's Marko Kolanovic. Kolanovic, who is JPMorgan’s chief global markets strategist, recommends that investors sell out of energy stocks to capitalize on the performance divergence between oil and energy stocks. Oil prices surged more than 72% at the beginning of the Russia-Ukraine war, but have since plunged almost 50% and are now down for the year. The decline in WTI and Brent Crude Oil can be seen at the pump as the average price for a gallon of gas in the U.S. fell to $3.32 on Friday after previously hitting $5 earlier in the year. However, as oil prices have fallen, oil stocks are still trading near their multi-year highs. Historically, oil prices and energy stocks have been highly correlated, but the large difference this year and a broad pullback in the equity market could result in a selloff in energy stocks. Kolanovic believes that investors could take advantage of this by selling energy stocks now and then buying them at a lower price before the next upswing.

Finsum:JPMorgan strategist recommends selling energy stocks now before a major pullback that could be driven by the divergence between falling oil prices and rising energy stocks.

You go, ETFs. More and more, they’re a key component in the evolving fixed income terrain, according to insuranceaum.com. That tidbit surfaced in a survey of 700 institutional investors and investment decision makers.

The download on ETFs: 

• Being leveraged for portfolio construction – and that includes non-core allocations
• Playing a liquidity role as investors step up allocations to non-liquid sources of income
• Helping to facilitate the internalization of fixed income management
• Enabling investors to implement, with precision, ESG objectives

Meantime, the New York Stock Exchange’s not only about the peaks and valleys of the market.

And, hey, who doesn’t need a respite from that maddening merry go round?

Assets under management in fixed income ETFs swelled from $574 billion in 2017 to $1.28 trillion last year, according to data recorded by the exchange, reported ssga.com. Wait, there’s more: during the same timeframe, the number of funds leaped from 278 to almost 500.

Jump starting the juices on current income is the primary intent of ETF’s, according to entrepreneur.com. The story appeared originally in Stock News. Capital appreciation’s a secondary objective. The fund’s hopping, too, with $4.78 billion in assets under management, not to mention 1307 holdings.