Financial advisors understand that fixed annuities often face a perception hurdle. Their clients envision handing over most of their hard-earned wealth and relinquishing control, sacrificing legacy for guaranteed income. But this all-or-nothing perspective overlooks the nuanced role these annuities can play in a diversified financial plan.

Speaking at a Morningstar conference, Wade D. Pfau, PhD, CFA, RICP®, founder of Retirement Researcher, offered his suggestions to advisors. "The idea of a tradeoff between meeting a spending goal versus not being able to provide a legacy is misguided," he said. "With the conversation around annuities, it's important to remember it's not all or nothing. It's not, 'Do I put everything in the annuity, or do I put everything in investments?'"

Helping clients see fixed annuities as part of a balanced approach is essential. By providing a secure income floor, fixed annuities enable the remaining parts of the portfolio to meet their other financial objectives, such as growth and flexibility.

Building a portfolio need not be a zero-sum game. Fixed annuities don't have to steal the show – they can be valuable supporting actors, providing income stability while the rest of the investments shine in their own respective roles.

Finsum: Retirement expert helps advisors broaden their perspective on how to discuss fixed annuities with their clients.

As the Federal Reserve's battle against inflation unfolded, recessionary fears loomed large over the US economy. However, whispers of a "soft landing" – a scenario where the economy treads water instead of diving into recession – are gaining traction. While the future remains uncertain, this potential reprieve raises critical questions for investors: how will markets react, and could value stocks thrive in this environment?

Drawing from historical patterns, experts point towards a potentially favorable landscape for value stocks. Vanguard's mid-2023 report revealed a compelling trend: since 1979, value stocks have outperformed their growth counterparts during economic recoveries. Kevin DiCiurcio, CFA, head of the Vanguard Capital Markets Model® research team, underscores this historical relationship: "On average, value has outperformed during economic recoveries, historically speaking. So, if you believe that the Federal Reserve may have engineered a soft landing—that we're going to sidestep a recession and that the economy's next move is an acceleration—the case for value is strengthened."

While past performance isn't a guaranteed predictor of future returns, the allure of historical rhyme resonates in uncertain times. If the economy begins to climb out of its current lull, advisors and investors should keep a sharp eye on value stocks.

Finsum: Learn why some experts are revisiting value investing’s historical performance advantage during periods of economic recovery.

Separately Managed Accounts (SMAs) are widening their niche in the investment landscape, doubling assets under management to nearly $2 trillion in the past five years (according to Cerulli Associates). This rapid growth stems from their distinctive advantages over traditional options like mutual funds. SMAs offer direct ownership of underlying securities, personalized portfolio construction, and professional oversight, all within a flexible framework that enables personalized tax efficiency.

And they are projected to continue to grow, reaching $3 trillion in the next few years. In a recent Wall Street Journal article, Scott Smith, director of advice relationships at Cerulli, explains why SMAs are growing. “They are no longer just for high-net-worth individuals. As more baby boomers retire and have to move money from their 401(k) plans, SMAs have become an attractive option.”

While this tailored approach resonates with certain investors, particularly retiring baby boomers and those seeking strategic tax management, SMAs are not a universal solution. Consulting a financial advisor remains crucial to assess individual needs and weigh advantages against potential drawbacks. For instance, while the ability to harvest specific tax losses can be invaluable, it may hold little weight for investors with limited capital gains.

Finsum: Separately Managed Accounts doubled assets under management in the past five years and are projected to continue their steady growth.

A noteworthy development in 2024 has been soaring uranium prices. The radioactive metal was up more than 90% in 2023 and is now at its highest levels since 2007. According to Ole Hansen, the head of commodity strategy at Saxo Bank, this move is being driven by increased demand from ETFs holding physical inventory and utilities who were not hedging due to years of low prices. 

Prices moved past $100 per pound last week following an announcement from Kazakhstan's state uranium company that it may fail to meet production goals due to construction delays and difficulty sourcing raw materials. This follows a slew of production downgrades from a variety of producers in 2023, adding to pressure on the supply side. 

On the demand side, analysts point to the Sprott Physical Uranium Trust and Yellow Cake as marginal sources of gold demand, contributing to the ‘squeeze’. As a result, many now expect uranium to exceed all-time highs from June 2007 of $136 per pound, and uranium miner equities have also been following the metal higher. 

Longer-term, many believe that the uranium market is at a deficit given the gap between yearly production and consumption. Currently, the gap has been made up by huge amounts of secondary supply, yet this inventory is also rapidly being depleted.  

Finsum: Uranium prices have continued momentum from last year. Many believe new, all-time highs are in store given increased demand from ETFs and utilities, while production is impaired.

Aeon conducted a survey of pension funds, insurance asset managers, family offices, and wealth managers. Among the findings was that a majority plan to increase their allocation to active fixed income funds over the next 2 years. Currently, about 17% of respondents have less than 10% of their portfolios in active fixed income strategies, while 20% have between 50 and 75% of their portfolio in active fixed income. Overall, respondents are willing to trade liquidity for greater returns and diversification. 

The survey also indicates that 13% of respondents plan to ‘dramatically’ increase exposure, while 81% plan to do so ‘slightly’. In terms of return expectations, 55% are looking for between 3 and 5%, while 36% are looking for between 5 and 7%. 

In terms of alternatives, there was nearly unanimous consensus that the asset class would continue to grow as 74% see a slight increase over the next 2 years, while 16% see a dramatic increase. 

Another area of agreement is that these allocators are looking for fund managers with a ‘broad mandate’ to invest in several credit markets. The respondents also shared the view that they would be increasing allocation to private credit with 24% looking to ‘dramatically’ increase, and 67% seeing a slight increase. 

Finsum: Aeon conducted a survey of institutional investors. Among the findings was a consensus agreement that allocations to active fixed income strategies would materially increase over the next 2 years.