According to a report by US SIF Foundation, a trade group for the sustainable investment industry, the U.S. market for ESG products is less than half of the size previously reported. Assets in U.S. sustainable investments fell 51% from $17.1 trillion at the beginning of 2020 to $8.4 trillion at the start of 2022. The difference is mainly due to changes in the methodology used to calculate the numbers and the impending tightening of regulation, according to the trade group. Ahead of new fund labeling rules by the SEC, the foundation noted that asset managers were being “more circumspect in what they consider to be assets that incorporate ESG criteria”, which led to “modest to steep” declines in ESG AUM reported compared to 2020. In addition, the 2022 report made a new distinction between firm and fund-level claims to sustainability. For example, it did not include “The AUM of investors that stated they practice firm-wide ESG integration without providing additional information on specific ESG criteria that are used in decision-making and portfolio construction.” Rather, they only included the assets of investors or vehicles that “incorporate one or more specific ESG criteria, plus the assets of funds which specify that ESG or sustainability is integral to its decision-making or portfolio construction.”

Finsum:Due to impending regulatory changes and a new calculation methodology, the U.S. market for ESG products is less than half of the size previously reported.

Invesco continues to expand its ETF lineup with the launch of four new actively managed ETFs. The new fund offerings include the Invesco AAA CLO Floating Rate Note ETF (ICLO), the Invesco High Yield Select ETF (HIYS), the Invesco Municipal Strategic Income ETF (IMSI), and the Invesco Short Duration Bond ETF (ISDB). All four funds were launched last Friday and trade on the CBOE. ICLO, which has an expense ratio of 0.26%, invests in floating-rate note securities issued by collateralized loan obligations (CLOs) that are rated AAA or equivalent. HIYS invests in higher quality below investment grade fixed income securities, such as corporate bonds and convertible securities. The fund charges 0.48%. IMSI has an expense ratio of 0.39% and invests in municipal securities exempt from federal income taxes and in other instruments that have similar economic characteristics. ISDB invests in fixed-income securities such as high-yield bonds and other similar instruments and aims to maintain a portfolio maturity and duration between one and three years. The ETF charges 0.35%.

Finsum:Invesco bolsters its active stable of ETFs with the launch of four fixed-income ETFs that invest in CLOs, high-yield bonds, munis, and short-duration bonds.

Seems there’s plenty of affection for alternatives these days. Yeah; endearing, right? More and more people are holding alternatives closely, maybe, warmly, even, a vivid reflection of an ability to access a deep variety of products like those – not to mention the supporting technology, according to thinkadvisor.com.

Looking volatility squarely in the kisser, advisors are putting the pedal to the metal when it comes to turning to private funds and alternative investments, according to a bi annual survey of 400 financial advisors reported in October by Broadridge Financial Solutions, as reported by prnewswire.com. "Advisors are acutely feeling the need for diversification in their clients' portfolios but remain dissatisfied with the private fund and alternative investment products and resources available to them, largely due to limited availability and restrictive options. Asset managers are not adequately meeting financial advisors' needs, despite an understandable surge in demand against the backdrop of volatile public markets," said Matthew Schiffman, principal of Distribution Insight at Broadridge Financial Solutions. 

"We see this as a strong, long-term opportunity for asset managers to showcase their value by providing product options that meet the growing demand for alternative investments among retail investors."

You could say when it comes to blue plate specials, ESGs are on the menu.  Make it two. Take a look at the environment. The GOP’s gearing up and, almost inevitably, when the new year hits, a gaggle of House committees will kick off hearings to deal with what some members of the grand party see as the threat ESG poses to a host of issues: investor returns, the country’s oil and gas industry, energy security, universal equal opportunity, according to forbes.com.  

And, hey, stick around. More very well might be lurking around the corner. Then there’s Europe’s stake. With assets managers taking in fresh regulatory proposals that could send the Europe’s largest ESG fund category into a tailspin, there’s a plan by its markets watchdog, ESMA, according to linkedin.com. The upshot of the plan: set quantifiable ESG and sustainable investing standards, which is compelling portfolio managers to think twice about the way they design and market an ESG fund class – Article 8.

The model target segment, it seems, get around. Even without an Uber app. It goes like this: the segment represents 26% of industry advisor asset, with advisors checking in at 46% and advisory practices, 61%, according to fundssociety.com. Yep; spreading the wealth, so to speak.

So, what’s the draw? Well…if you have to ask. That said, if you do, tax efficiency’s among the headline requests for financial advisors deep diving the upside of the portfolios. Particularly noteworthy; 60% of model providers report receiving at least some requests from advisors surrounding this objective.

“This aligns with a broader industry trend regarding the importance of effective tax management as a way to add value to client portfolios,” says Matt Apkarian, associate director. “Advisors want to be able to effectively tax-loss harvest, and to be able to reduce the tax impact of changing investment solutions.”

What’s more, the popularity of model portfolio’s isn’t hightailing it out of doge anytime soon. Along those lines, the clients of advisors should keep an eye on the mail. Eighty two will be the recipients of targeted or comprehensive financial planning services by next year, according to napa-net.org.