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FINSUM

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الأحد, 23 حزيران/يونيو 2024 08:30

When to Avoid Buffer ETFs

Buffer ETFs have grown rapidly since 2018, now totaling 159 with nearly $38 billion in assets. They attract financial advisors by offering downside protection for the first 10% to 15% of losses while allowing market gains, making them popular during volatile periods like 2022.

 

Experts point out that these ETFs are easier to rebalance and offer daily liquidity compared to structured notes and annuities. However, buffer ETFs cap potential gains, limiting profits when the market rises, and their performance can be affected by market timing.

 

They typically have a defined 12-month outcome period, and buying or selling mid-series can negate initial protections and caps. Despite their benefits, buffer ETFs have higher fees and might not pay dividends, making them less suitable for long-term investors compared to direct equity investments.


Finsum: Sometimes it’s worth paying higher fees or sacrificing a little alpha to hedge some volatility

الأحد, 23 حزيران/يونيو 2024 08:28

Top Three Annuity Providers

While you’ll find salespeople peddling the pros of annuities littered across the industry and their detractors in equal force, but in reality, index annuities, under specific circumstances, can be a viable option for a steady retirement income. Here are three top providers:

 

  • MassMutual stands out as the top annuity provider with high ratings and a broad range of annuity types, making it a reliable choice for straightforward annuity products.

 

  • Athene, known for its no-charge income and death benefit riders, offers a variety of annuities, including fixed and index-based options, suitable for those seeking guaranteed retirement income. 

 

  • Fidelity Investments, partnering with several insurance companies, provides a wide range of annuities and offers the Fidelity Personal Retirement Annuity, notable for its low fees and no surrender charges. 

 

Each of these companies caters to different investor needs, from those desiring straightforward solutions to those looking for comprehensive investment and annuity integration.


Finsum: Index annuities in particular can be a goldilocks solution to income investments during higher volatility. 

 

الثلاثاء, 18 حزيران/يونيو 2024 06:16

Buffer ETFs are Getting Cheaper

PGIM, the investment management arm of Prudential Financial, launched two new laddered funds of buffer ETFs: the PGIM Laddered Fund of Buffer 12 ETF (BUFP) and the PGIM Laddered Fund of Buffer 20 ETF (PBFR) on the Cboe BZX. These ETFs offer U.S. large-cap equity exposure with limited downside protection and an upside cap on appreciation. 

 

BUFP invests equally in 12 PGIM U.S. Large-Cap Buffer 12 ETFs, while PBFR invests in 12 PGIM U.S. Large-Cap Buffer 20 ETFs. These funds, the lowest-cost buffer ETFs in the market with a 0.50% net expense ratio, aim to help investors navigate market volatility. 

 

Buffer ETFs provide the advantage of downside protection during market declines but come with the disadvantage of capped gains during market rallies.


 

Finsum: Lowering the costs of buffer ETFs could be wildly beneficial particularly when they seem so well poised for our current environment. 

الثلاثاء, 18 حزيران/يونيو 2024 06:15

Stock Bond Correlation Recalibrates Portfolio Construction

In wealth management, the portfolio is the product and it’s crucial for achieving clients' long-term goals. Despite the additional services offered, the portfolio's performance is paramount. 

 

One key challenge is adapting portfolio construction to ever-changing market conditions, such as the recent shift to positive bond/stock correlations. Previously, low or negative correlations enhanced diversification benefits, but this advantage has lessened. 

 

As a result, professionals are exploring new ways to diversify, though it's important not to over-rely on these new methods. While increased correlations make reducing volatility more difficult and investors should turn to alts in these types of environments, a measured approach to diversification is essential to maintain long-term returns.


 

Finsum: Privates and alts are more necessary than ever to hedge the current increased stock-bond correlation. 

الثلاثاء, 18 حزيران/يونيو 2024 06:14

Advisor Recruiting Unexpected Trends

Financial advisors frequently seek insights into the evolving landscape of advisor transitions and recruitment deals within the wealth management industry. To address this demand, a dedicated annual report analyzes raw data and offers tailored intelligence, unveiling notable surprises that challenge conventional wisdom. 

 

One such revelation was the modest uptick in advisor recruitment despite a thriving equity market, as well as the unexpected success of boutique and regional firms in attracting top talent through balanced approaches and competitive deals.  

 

Even firms perceived as laggards managed to secure notable wins, highlighting the diverse appeal of various business models. The final big finding is that while transition dollars have certainly increased it hasn’t really translated to a substantial increase in movement.


Finsum: Another trend we have noticed is the key piece the tools and tech, that are offered play in advisor recruiting. 

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