The biggest hang up for most investors when it comes to direct indexing is the heavy minimum investment fees that usually accompany them. Fidelity shocked markets with their $5,000 minimum, but Altruist just lowballed them with a $2,000 product. This strategy used to be exclusively available to wealthy individuals but is now more accessible. Investors hold the underlying stocks that make up the indexing product which gives nice advantages when it comes to tax loss harvesting and green investing. The product will give investors exposure to global stock and bond markets as well as acap weighted 500 largest US stocks, and be available at a variety of risk levels.

Finsum: With the huge tax savings and lower investment minimums, direct indexing is more competitive with ETFs than it was even a year ago. 

MSCI Inc. has come out firing against the hedge funds' strategy in dealing with ESG. Many prominent hedge funds, like AQR, have not only invested in ESG but are shorting poor ESG scoring companies in an attempt to raise the cost of capital. MSCI VP of ESG, Rumi Mahmood, says this is not an effective ESG strategy because it decreases transparency and doesn’t align corporate and investor interests. On top of that, he believes shorting poor ESG metrics won’t affect the cost of capital for these companies. MSCI finds that engagement over time is the alternative and better pathway to influence a company's behavior.

Finsum:  There is not enough evidence out there as to the effect of short selling on capital formation, however, companies shorting traditional energy have taken a bath. 

The majority of financial advisors have one concern at the top of their priority list: inflation. As rates hit unprecedented levels in the modern Fed era, these numbers look more like the seventies than the 2020s. This has caused a mass exodus and outflows from traditional fixed income products having investors and advisors looking elsewhere to get income. Dividend strategies, commodities, and other alternatives are seeing huge inflows for clients who want to maintain an income position. Some Advisors are getting more intricate and using option overlay strategies to mitigate inflation. Tom Lydon of ETF Trends expects bond ETF outflows to continue as advisors are steering clients away from them.

Finsum: Model portfolios specifically geared toward inflation are a nice alternative for investors at the moment.  

Macro factors are coalescing in a way we haven’t seen in years to produce the perfect storm of potential Volatility, and the VIX is just hovering around medium to long-run averages suggesting a potential swell could be incoming. Advisors should push clients to strategies that can avoid volatility rather than trying to guess this uncertainty. The best option may just be options; a covered-call strategy is a great way to avoid volatility. Investors can lean into betting on medium to long-run growth and sit out excess volatility. This strategy has setbacks particularly if stocks over-perform, so advisors and investors need to carefully monitor the futures market to take full advantage. 

Finsum: Now is a great time to take advantage of anti-volatility strategies, yes they don’t have the long-run games but they have strong protections for market volatility. 

Inflation may be peaking, or at least that is what Treasury bulls are thinking. A rally started at the 20-year note and worked its way to shorter term rates this week: the 30-year yield fell 13 basis points and the ten-year yield fell by 12 basis points. Declining yields were driven by investors flooding into these treasury markets. Still, investors are pricing in a half-point rate increase by the Fed in the next two meetings with an almost 100% chance of reading the tea leaves in the options markets. The rally was really suppressed by Bank of America’s Forecast which said inflation peaked in March and will be on the decline. Similar patterns took place on the long end of the government bond market in the Euro areas as well with Germany and the U.K. seeing their yields fall.

Finsum: The flood in the TIPS market suggests that bond investors still see some persistent inflation in the near term.