Wealth Management
Sustainable funds that invest based on factors such as a company’s carbon footprints and workforce diversity were able to attract new investments in 2022, despite a broad market selloff. According to Morningstar, investments into U.S. ESG funds including stocks, bonds, and other categories fell to $3.1 billion in 2022 from $69.2 billion a year earlier, while conventional funds that don’t consider ESG factors, saw more than $370 billion in withdrawals last year. Fixed-income funds accounted for about 75% of sustainable inflows or $2.4 billion. Sustainable products are benefitting from capital chasing greener investments in response to a warming planet, while governments and regulators are increasingly setting ambitious climate targets. This is pushing companies to shrink their carbon footprints. Morningstar’s associate director of sustainability research, Alyssa Stankiewicz, stated, “Investors are experiencing more and more the first or secondhand effects of climate change and societal inequality, and that’s driving their desire to want to have a positive impact.” Some of the ESG fixed-income funds with the largest inflows invest directly in renewable energy and low-carbon transit alternatives. For instance, the Calvert Bond Fund saw $413 million in inflows last year, the third-highest inflow of any sustainable bond fund last year, according to Morningstar.
Finsum:Amid a broad market selloff last year, sustainable bond funds continued to see inflows while non-ESG funds experienced $370 billion in withdrawals as investors chased greener investments in response to a warming planet.
Alternative investment platform CAIS recently announced that Graham Capital Management, L.P., a global alternative investment firm with approximately $17.9 billion in assets under management is adding select alternative investment funds on the CAIS Marketplace. Graham specializes in providing quantitative and discretionary macro strategies. The announcement coincides with positive performance across macro strategies over the last year. The Graham fund currently listed on the CAIS marketplace has undergone a third-party due diligence process conducted by Mercer and will be made available to thousands of RIAs and independent broker-dealers who oversee more than $3 trillion in assets. As part of the announcement, Brian Douglas, Chief Executive Officer of Graham, stated, “2022 was a strong year for macro and a reminder of the importance of portfolio diversification. We are optimistic that the opportunity set for our strategies will continue to be strong, so we are particularly excited about the timing of our partnership with CAIS.” While the private wealth channel has historically been under-allocated to alternatives compared to institutional investors, a recent CAIS-Mercer survey found that nearly 88% of advisors intend to increase their allocations to alternatives over the next two years. This follows news in January when CAIS announced that its platform is adding Reverence Capital Partners funds.
Finsum:Due to rising demand for alternative asset classes, CAIS announced that Graham Capital, which specializes in discretionary macro strategies is adding select funds to the CAIS marketplace.
UBS Wealth Management lured away a team generating $4 million in revenue from Merrill Lynch in Sarasota, Florida, as the wirehouse continues to keep up its recruiting efforts. The group, led by advisors Brian Mariash and James Barton “Bart” Lowther, had overseen around $640 million in assets. Their practice, called Mariash Lowther Wealth Management, joined UBS on February 24th and includes advisor Jesse Perez and client associates Shannon Murphy, Dionysios Skaliotis, and Sovanna Sok. Mariash had been with Merrill for the last 14 years. He started at the now-defunct firm GunnAllen Financial, moved to Wells Fargo predecessor A.G. Edwards after less than one year, and then joined Morgan Stanley in 2008. Lowther started his career at Merrill in 2010. According to the UBS announcement, Mariash and Lowther had been partners for the last 10 years. As part of the announcement, Greg Kadet, UBS’s Florida market director stated, “The team’s experience, dedication to clients, and passion for philanthropy are a great addition to our business as we look to continue to expand and enhance our ability to serve clients in this growing market.” UBS has been accelerating its recruiting efforts with a special bonus last summer and continues to court million-dollar-plus producers. For instance, it previously landed a Morgan Stanley team, led by Peter E. Black, who generated $3 million in annual revenue in Princeton, New Jersey.
Finsum: UBS continues its recruiting efforts with the announcement that it lured away a Merrill Lynch team generating $4 million in revenue in Sarasota, Florida.
More...
Financial technology platform 55ip reached new records for platform adoption, custom models, tax savings, and company growth last year. The 2022 tax savings benefit for model portfolios of ETF and Mutual Funds was a record 2.70% (2.66% when annualized since 2020). In addition, market-driven demand helped increase the number of advisory firms on the 55ip platform by more than 50%, to 234 firms, which represents $234 billion in discretionary assets under management for 2022. Individual advisors that partnered with 55ip grew by 122%, while the growth of custom models on the platform increased by 134% from 2022. They now comprise 45% of all assets on the 55ip platform. The demand for personalization among advisors also increased, which led the firm to significantly increase the output of custom models. Paul Gamble, Chief Executive Officer of 55ip, stated “We’re incredibly proud of the increased value we provided last year to our clients. The growth we experienced demonstrates that our value goes well beyond tax savings benefit to investors, which reached an all-time high last year. We doubled our trade volume last year as well, completing more than 1.8 million trade orders on behalf of our advisors. That translates to more than 500 hours in time saved for each firm using our platform – a benefit that is invaluable to advisors.”
Finsum:The demand for personalization among advisors increased last year, which led 55ip to significantly increase the output of custom models while driving new records for platform adoption, custom models, tax savings, and company growth.
According to Man Group boss Luke Ellis, investors should get used to volatility in the markets. Last Tuesday, Ellis predicted inflation will remain high because of strong wage growth in much more volatile markets. He stated, “It will take a lot of years before inflation is put to bed again. We’re in a different paradigm.” He added, “The base effects are running out and we still have very significant wage inflation. It’s not squeezing services [sector] wage inflation, and services is such a big part of the economy. You can’t get consistently to [a] 2 percent [inflation target] when you have 6 to 7 percent wage inflation.” Ellis also said that he did not believe stocks had yet bottomed out. He compared the current environment to the 1970s when the real return from equities after inflation was about zero. His comments come as U.S. stocks fell in February with investors growing concerned that the strength of the economy might require higher interest rates, and the Fed’s preferred measure of inflation rose more than expected in January. In addition, both France and Spain also reported a rise in inflation, beating forecasts.
Finsum:Man Group boss Luke Ellis predicts inflation will remain high due to strong wage growth in volatile markets.
According to a Cogent Syndicated report from Escalent, advisors are not optimistic about the future of ESG investing partly due to growing political tension. Last year, 58% of advisors used ESG investments, down 10 percentage points from 2020, according to the Livonia, Michigan-based firms survey of over 500 financial advisors in September. In addition, only 15% of advisors who used ESG agree with its importance, while the majority of advisors don’t think ESG investing is a significant factor in attracting new clients. As part of the report, Linda York, a senior vice president in the financial services research division of Escalent, stated, “In the past six months, the topic of ESG investing has become even more divisive as political tensions rise. With firms suffering public backlash from using what many call ‘woke’ investment strategies, many advisors are waiting for clarity from regulators before using ESG investments. Increased supervision from federal or state legislature with added qualifications and reporting can only help in terms of ESG becoming more popular among advisors and investors alike.” In examining the reasons for the growing tension, Escalent said that advisors were concerned by the inconsistent definitions and perceived negative public sentiment of ESG.
Finsum:Based on the results of a recent report from Escalent, advisors are not optimistic about the future of ESG due to inconsistent definitions and perceived negative public sentiment.