Asian currencies experienced a significant rally, reaching their highest levels in seven months. This surge was driven by diminishing concerns about a U.S. recession, expectations of Federal Reserve rate cuts in the near future, and a more favorable economic outlook within the region. 

The Bloomberg Asia Dollar Index increased by 0.6%, with notable gains from the South Korean won, Malaysian ringgit, and Thai baht. These currency gains were supported by stronger-than-expected economic data and political developments in key Asian markets. Additionally, regional equities also rose, reflecting growing investor confidence in Asia’s economic prospects.

The South Korean won and the Philippine peso were among the top performers, with the won reaching its highest level since March and the peso marking its biggest gain since November. Meanwhile, the Japanese yen also appreciated, with traders closely monitoring potential hints from the Bank of Japan's governor on the future direction of the country's monetary policy.

Finsum: The demand driving these currency shifts could really come into full swing if the Fed successfully dodges a recession.

Investors are increasingly turning their attention to small-cap stocks and ETFs due to a combination of favorable valuations, historical trends, and recent market dynamics. This renewed interest has been highlighted by a significant rally in small-cap stocks, particularly during July when the Russell 2000 recaptured much of its earlier underperformance relative to large-cap indices. 

Analysts suggest that small-caps are still undervalued, with some estimates indicating a 20% to 30% discount compared to larger stocks. This presents a potential opportunity for prolonged outperformance in the small-cap sector. Notable options include the iShares Russell 2000 ETF (IWM), which tracks a broad index of small-cap companies, and the Vanguard Small-Cap Value ETF (VBR), which focuses on value-oriented small-cap stocks.

 Each of these ETFs provides investors with a strategic entry into the small-cap market, with varying levels of risk and potential return depending on their investment goals.

Finsum: Also note that as interest rates come down small caps are historically in a position to take advantage because they are more levered. 

Direct lending, once a niche market for companies with lower credit ratings, has expanded into a powerful alternative for both middle-market and large-cap firms, managing nearly $1.7 trillion by mid-2023. 

This growth has been fueled by private credit’s ability to offer flexible, borrower-friendly terms, even in billion-dollar deals traditionally dominated by banks. Banks, recognizing this trend, are now entering the direct lending space themselves, fostering competition that benefits borrowers with better pricing and more tailored financing solutions.

 As direct lending continues to grow, it's poised to play an increasingly vital role in funding mergers, acquisitions, and other corporate transactions, especially as the market prepares for potential interest rate changes later in 2024.

Finsum: It’s worth monitoring banks direct involvement in direct lending, because this could change the evolution of the industry. 

Golub Capital is increasingly active in trading private credit deals, reflecting a broader trend in the industry as interest in secondary markets for direct loans grows. The firm traded approximately $1 billion in private debt during the first half of the year, positioning itself as a key player alongside others like JPMorgan Chase. 

While secondary trading in the $1.7 trillion private credit market remains relatively uncommon, there's growing demand for liquidity and flexibility among investors. However, some industry participants argue that trading could undermine the appeal of direct lending, which traditionally offers privacy and stability. 

Despite this, Golub and other firms are exploring these markets, balancing the benefits of liquidity with the traditional advantages of private credit.

Finsum: For investors not concerned with liquidity, private credit could prove a strong investment in this fall cycle. 

J.P. Morgan Asset Management has appointed Travis Spence as the global head of ETFs, underscoring its strategic focus on leading the active ETF market. Spence, a 20-year veteran at the firm, will manage ETF product development, capital markets, and the newly established ETF insights team, while continuing to lead distribution across Europe, the Middle East, and Africa (EMEA). 

His previous leadership in expanding J.P. Morgan's active ETF presence in Europe positions him well to guide the firm’s next phase of growth. The global ETF platform has already expanded to nearly $190 billion across more than 100 products, securing J.P. Morgan's position as second in active ETF assets under management (AUM) and eighth overall globally.

Active ETFs continue to make strides in growth along their passive counterparts and have made substantial strides this year. 

Finsum: Active management is really about the harmony of merging quantitative insights with the best portfolio risk practices.