According to a Bloomberg News survey of terminal and Bloomberg.com readers, sixty-five percent of the respondents expect ESG funds to trail the broader market in 2023. Out of the 691 survey respondents, 264 expect ESG funds to “slightly underperform,” while 184 are predicting they’ll “significantly underperform.” Of those 691 respondents, 235 identified themselves as being directly involved in ESG investing, and of this group, a little more than half said they expect the funds to “slightly” or “significantly” underperform. Fionna Ross of Edinburgh-based fund manager Abrdn Plc told Bloomberg, “Given the challenges of 2022, there will be some recovery next year, but it will remain mixed” because of inflation and other overhanging economic hurdles." While data shows that the average equity fund adhering to ESG factors lost slightly less money this year than products that track traditional broader market indexes such as the S&P 500, ESG funds have outperformed over a longer period. According to researchers at Morningstar, about 56% of U.S. sustainable funds beat rival category groups in the three-year period that ended on Sept. 30th.

Finsum:Based on the results of a recent Bloomberg survey, 65% of respondents believe that ESG funds will underperform the broader market in 2023. 

Altruist recently announced that it is adding unified managed accounts to its portfolio management capabilities. Altruist is a fintech company that offers a next-generation custodial solution built for independent financial advisors and their clients that combines software to manage a portfolio with and a powerful brokerage platform to invest. The new UMA capabilities will allow advisors to now mix and match models to create core-satellite or best-of-breed portfolios. The new feature will allow advisors to access third-party investment models from top asset managers through the firm’s Model Marketplace to create individual portfolios that meet clients’ investing goals. Advisors will also be able to include their own custom models as building blocks for client portfolios. The company launched its Model Marketplace in February 2021 featuring its own investment models, the Simplicity Series, as well as models from Vanguard and Dimensional Fund Advisors. Models from BlackRock, Redwood Investment Management, and State Street Global Advisors were added later on.

Finsum:Fintech firm Altruist announced the addition of UMAs to its model marketplace to allow advisors to mix and match models to create portfolios.

Skience, a leading financial services solution and consulting provider, recently announced an integration with CapitalROCK’s RightBRIDGE Best Interest Validation System. Skience offers consulting services and an award-winning platform that provides wealth management firms and RIAs with an efficient way to unify their technology. CapitalROCK, the makers of RightBRIDGE, provides financial services firms with a powerful and configurable rules engine to determine and document the best interest status of proposed rollovers, account types, and products. RightBRIDGE uses a scoring engine and ReasonText™ that explains why a recommendation fits a client’s needs and the licensing firm’s best interest requirements. By adding this integration, Skience will be able to provide advisors with an easy way to integrate Regulation Best Interest into their workflow process with a click of a button. The data can be used to update Skience records and be leveraged by Skience’s suitability checks as Skience’s client and household data will be prefilled into RightBRIDGE. The announcement comes as Robert Cook, FINRA Chief recently noted that more Reg BI-related enforcement cases are in the pipeline.

Finsum:Financial services platform Skience announced that it will be integrating with CapitalROCK’s RightBRIDGE solution that helps advisors meet Reg BI standards.

While politics have made ESG a controversial topic recently, there’s no denying the fact that its popularity is still soaring. That was made abundantly clear with the release of the Index Industry Association’s (IIA) sixth annual global benchmark survey, showing a surge in ESG benchmarks worldwide. According to the survey, the total number of indexes climbed internationally by 4.43% over the prior year, with ESG indexes worldwide increasing by 55%. However, the bigger news was that fixed-income ESG indexes surpassed equity ESG indexes for the first time. In fact, fixed-income ESG indexes increased by an unprecedented 95.8%. This breaks the previous record of 61.09% last year. While equity ESG index growth was slower, it still grew at a high rate of 24.15 percent. Muni indexes had the strongest year for non-ESG fixed income, rising 10.86%. Rick Redding, IIA’s CEO, said the following concerning the survey: “The index industry continues to meet the needs of the marketplace by creating innovative solutions. Highlighted again this year by record growth in ESG, index providers are empowering investors with the ability to define, track and better understand an ever-broadening range of financial markets, sectors, investment styles, and asset classes.”

Finsum:A recent index survey revealed that fixed-income ESG indexes have surpassed equity ESG indexes for the first time.

During a recent briefing, Blackstone's private wealth management solutions group explained that private equity and other alternatives have been well suited to perform during volatile times when traditional stocks and bonds have fallen. This has been certainly true this year as equities, government bonds, and most corporate debt have fallen as inflation and interest rates rise and recessionary concerns persist. Private markets and hedge fund strategies, on the other hand, have fared much better. However, the firm also believes that affluent investors are still under-allocated in alternative investments. According to the firm, affluent private investors typically only allocate about 5% to alternative investments. Joan Solotar, Global Head of Private Wealth Solutions at Blackstone told journalists at a briefing in London that “Investors remain under-allocated. Many advisors have found that if they hadn’t allocated to alternatives, then they underperformed. Some advisors, such as those working for decades without ever having broached the alternatives space, might lack the confidence to take the plunge.” Her colleague, Rashmi Madan, Head of EMEA for Private Wealth Solutions said the reason for this is due to a combination of burdensome administrative tasks and the difficulties investors have had accessing drawdown funds.

Finsum:Blackstone stated during a recent briefing that alternatives perform well in volatile markets when traditional securities falter, but affluent investors are still under-allocated.