Bonds: Total Market
Amid inflationary pressures and monetary uncertainty, investors have increasingly turned to short-duration U.S. Treasury bonds to protect income and reduce interest rate risk. With maturities under five years, these bonds are less sensitive to rate hikes than longer-term securities, making them a defensive yet reliable option in volatile markets.
The narrow yield spread between the 10-year and 2-year Treasuries highlights how long-term bonds are more exposed to macroeconomic swings, while short-duration bonds remain anchored to Fed policy.
Active management has further boosted performance, with funds like the Calvert Short Duration Income Fund (CDSRX) and iShares Short Duration Bond Active ETF (NEAR) outperforming peers by tactically adjusting credit quality and duration. Recent results show that actively managed short-duration funds have not only delivered weekly gains but also produced strong risk-adjusted returns, particularly in high-yield segments.
Finsum: As the Fed holds a cautious stance on rate cuts, short-duration strategies stand out as both an income generator and a stabilizer within diversified portfolios.
UBS strategists have warned that the artificial intelligence boom, fueled heavily by private credit firms and lenders, is raising the risk of overheating in the sector. Private credit, once focused on smaller businesses, has expanded rapidly into big tech, with tech-sector debt from non-bank lenders surging nearly 29%—or $100 billion—in the past year.
The warning echoes concerns from OpenAI CEO Sam Altman, who recently cautioned that excitement around AI may be inflating a bubble. UBS noted that while this influx of capital could support hyperscaler growth plans, it may also create vulnerabilities if assets sour or growth slows.
Tech giants including Meta, Amazon, Microsoft, and Alphabet are projected to spend $344 billion in 2025, much of it on AI-driven infrastructure such as data centers.
Finsum: With private credit now deeply embedded in the sector, analysts caution that investors should carefully monitor risks alongside the sector’s breakneck growth.
Farther has launched an AI-powered Investment Proposal tool, designed to help advisors generate customized client proposals in under 10 minutes. Built entirely in-house, the tool consolidates tasks that once required multiple platforms into a single secure system, ensuring both efficiency and compliance.
It analyzes a prospect’s existing portfolio, compares it against Farther’s investment models, and produces tailored recommendations that advisors can further refine. The goal is to streamline onboarding while delivering more personalized and client-friendly proposals, helping prospects better understand their options.
Advisors already using the tool say it allows them to focus more on strategy and client conversations, making their pitches more effective.
Finsum: AI continues to modernize wealth management by blending automation with human expertise.
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Annuities, once sidelined as overly complex or narrowly useful, are now experiencing a surge in demand as investors prioritize stability, protection, and predictable income in a volatile economic landscape. This shift is driven by pre-retirees and retirees rethinking traditional equity-focused strategies and seeking solutions that mitigate risks like sequence-of-returns.
Fixed and fixed indexed annuities, in particular, offer competitive yields, downside protection, and guaranteed income, features especially appealing to mass-affluent households with limited pension coverage.
The Great Wealth Transfer is also fueling interest, as boomers explore annuities not just for income but for legacy planning as well. Meanwhile, advances in digital tools and platforms have made annuities more transparent, accessible, and easier to incorporate into holistic financial plans.
Finsum: Even as interest rates fluctuate, annuities are expected to remain a core solution for those seeking long-term financial confidence over short-term market gains.
At the ETFs Summit hosted by S&P Dow Jones and the Mexican Stock Exchange, industry leaders predicted that active ETFs will continue growing rapidly, drawing market share not only from mutual funds but increasingly from structured notes. Structured notes—once prized for their customization—are losing ground as active ETFs replicate similar strategies with added liquidity, transparency, and without the counterparty risk inherent in notes.
Retrocession fees no longer necessary, ETFs provide institutional-class access with real-time pricing, something structured notes cannot offer. While structured notes often come with hidden complexities and limited tradability, active ETFs deliver the same exposure with the ease of public market trading and daily liquidity.
This shift is part of a larger industry trend: of 600 ETFs launched last year, 400 were actively managed, signaling innovation is now happening more through ETFs than through complex structured products.
Finsum: As ETFs expand their reach across asset classes, including private credit and crypto, their dominance over less liquid, opaque vehicles like structured notes seems increasingly likely.
Active ETFs have officially outnumbered their passive counterparts in the U.S. for the first time, with 2,069 listed funds as of mid-June. While passive ETFs still hold the lion’s share of assets under management, investor interest is clearly shifting—active strategies have attracted nearly 40% of total ETF inflows this year.
Many investors are turning to active ETFs for more agile, hands-on approaches in navigating today’s unpredictable markets, particularly in fixed income and equity sectors. The SEC is also weighing changes that would allow mutual funds to launch ETF share classes, a move that could dramatically expand access to active strategies and boost tax efficiency.
However, this flexibility may come at a cost for asset managers, as ETFs typically can't turn away new investors like closed mutual funds can, potentially limiting a manager's control over fund size and strategy execution.
Finsum: With U.S. ETF assets reaching $11 trillion in May, these structural shifts could fuel continued growth and reshape the way investors access actively managed portfolios.