At the latest FOMC meeting, Fed Chair Jerome Powell made some headlines when he struck a dovish tone despite resuming its normal schedule of quarter-point rate hikes. He also slightly upped his assessment of the economy declaring it growing at a ‘moderate’ pace while it has been described as growing at a ‘modest’ pace previously. 

In terms of fixed income, the asset class initially saw a decent rally due to many investors interpreting Powell’s dovishness as an indication that the Fed is in the final stages of its hiking campaign. But, these gains were quickly given back with yields spiking higher following the stronger than expected GDP print which came in at 2.4% vs expectations of 1.6%. 

Following this print, odds of the Fed cutting rates in the first-half of 2024 declined, and many market forecasters pushed back or revised thier prediction of a recession as well. With the economy robust despite higher rates, it’s likley that rates stay elevated for longer. Adding to the weakness was unemployment claims coming in lower than expected, adding to evidence that the labor market is re-accelerating following a period of softness. 

As a result, Treasury yields spiked hihger and are now approaching their 52-week highs.

Finsum: Fixed-income enjoyed a nice rally following the dovish FOMC meeting. But, the asset class weakened following a stronger than expected GDP print and lower than expected unemployment claims. 

REITs are attracting attention from investors for a variety of reasons. For one, it’s looking increasingly likely that the US will avoid a recession which bodes well for occupancy rates, property values, and home prices. Second, the Fed is in the final stages of its rate hike cycle which means interest rates will go from a strong headwind to a mild tailwind especially if inflation continues to move lower. 

Due to weakness over the past year and a half, REITs are quite compelling from a value perspective while also offering juicy yields to investors. For Benzinga, Kevin Vandenboss identifies 2 REITs that investors should consider buying.

He likes SL Green Realty which is an owner and operator of premium Manhattan commercial real estate property. While many areas of commercial real estate like offices and retail may never recover, SL Green is a bet that premium properties will recover - a historically savvy bet. Currently, the stock yields 8.8% and has a stable payout ratio of 59%, indicating a stable dividend.

Another is Medical Properties Trust which focuses on hospital facilities and has properties in 10 different countries, leading to a diversified portfolio. Also, medical facilities tend to be much more stable than residential or commercial real estate especially given an aging population in most parts of the world. Finally, it also has a dividend yield of 11% and a track record of annual dividend increases. 

Finsum: While REITs have been an underperformer for much of the past couple of years, the sector offers juicy yields and tantalizing upside given recent macro developments.

One of the most puzzling developments over the past 18 months is the wide gap between public and private real estate. Many publicly traded REITs are down between 30% and 40% from their highs in 2021, while private real estate funds are flat or have losses in the single-digits. 

There are a variety of theories to account for this disconnect, including expectations of mounting losses in commercial real estate (CRE) given that office occupancy rates are not returning to pre-pandemic levels. However, it’s also fair to note that in recent months publicly traded REITs have outperformed and somewhat shrunk the gap. In Institutional Investor, Hannah Zang covers why many investors are seeing an opportunity in REITs and believe that the market is overreacting to weakness in CRE especially given that it only accounts for 3% of the total REIT market.  

Currently, the cap rate for REITs is 50 basis points higher than private real estate. Historically, this has indicated a buying opportunity in the sector especially as some of the macro headwinds of the sector seem to be dissipating with the vast majority of real estate prices holding steady and the Fed in the final innings of its rate hike cycle. 

Finsum: There’s an interesting divergence between private and public real estate. However, many investors see opportunity in publicly traded REITs and believe that investors have overreacted to macro and CRE issues.

What firm doesn’t need a pick me up; you know, from time to time? Well, you might want to try on a model portfolio for size, according to investmentnews.com.

Addressing part and parcel of the financial picture of a client’s key to helping advisors erect a business. 

Streamlining the management of the portfolio process – yet not to the detriment of client trust or the performance of a portfolio is an approach. One way to make it click is through the use of a model portfolio.

A few ways to go about it:

MODEL PORTFOLIOS FOSTER MORE EFFICIENT RELATIONSHIPS

MODEL PORTFOLIOS OFFER CONSISTENT ANALYTICS

MODEL PORTFOLIOS IMPROVE RELIABILITY

MODEL PORTFOLIOS PROVIDE BLENDED STRATEGIES TO IMPROVE CUSTOMIZATION

Consequently, probably not surprisingly, increasingly, model portfolios are finding their mojo, gaining greater popularity, according to smartasset.com.

The proof’s in the bottom line. According to Morningstar, as of March of last year, assets following model portfolios swelled to $349 billion. Between June 30 of 2021 and March 31 of last year, that’s a hopscotch of an estimated 22%.

The cultivation of talent’s come a long way. Baby.

At its center: succession planning, according to sigmaassessmentsystems.com.

SIGMA – with the intent of providing organizational leaders with a snapshot of what’s unfolding today in succession planning – produced a report on where things stood this year. Several emerging trends were revealed: 

Most organizations are focused on recruiting and retaining staff.

Many organizations recognize that they must keep up with industry innovation.

Many leaders are committed to improving customer experience.

A significant number or organizations want to transform their brand and culture

Interestingly, new financial advisors are setting a high rate of bolting from the industry, according to a Cerulli Associates report, reported financial-planning.com.

The importance of new talent in wealth management is further stoked given the fact financial advisors, who oversee trillions of dollars of assets, are riding into the sunset.

Yet, those making their maiden voyage into the profession aren’t exactly being received with a steaming mocha latte and scone, according to Cerulli, which reported that while 13,169 of new trainees left the industry in the rearview mirror, offsetting the more than 18,000 it picked up,