FINSUM

Thursday, 09 June 2022 09:55

Around awhile, but Direct Indexing boasts different look

While not new, direct indexing’s come a long way. Catch was, it primarily was a tool of larger investors in light of its cost and daunting technology, according to smartasset.com.

But with those hurdles easing, the site continued, the time might be right to contemplate a few things it brings to the table. For one thing, gains on stocks with an uptick in value can be deferred.

Another juicy nugget: tax efficiency, according to barrons.com. Direct indexing’s viewed by advisors as a potentially game changing tool for their firms. Powered by computer algorithms, with direct indexing, advisors can cherry pick sales of specific shares that have headed south in value.

“Tax-loss harvesting is incredibly important now and may be even more so if tax rates go higher,” noted Jim Hagedorn, managing partner at Chicago Partners. In 2019, the company began offering direct indexing.

But there are catches.

For example, active management’s a prerequisite for direct investing portfolios while it’s mostly hands off with index mutual funds and ETFs or exchange traded funds, according to smartasset.com.

And this: tracking performance can be tricky. Investors in ETF and mutual funds receive relatively easy to digest statements with a few ticker symbols to track. It’s not so simple with direct indexing. A statement might be rife with individual stocks, which could stretch into the hundreds, the site stated.

Published in Economy

Thursday, 09 June 2022 09:47

ESG products might be losing their luster

According to reports, it appears the use of ESG products might no longer be in vogue.

A ballooning percentage of advisors are indicating their plans to reel back the recommendations of the investments, according to a recently published survey, reported investmentnews.com.

Of over a third of more than 400 advisors indicated they include ESG in the portfolio of clients in a Financial Planning Association survey. While that figure’s been on the uptick but has essentially stagnated over the past four years.

In the next 12 months, ESG use could turn downward, according to the 2022 Trends in Investing Survey, conducted by the Journal of Financial Planning and the Financial Planning Association, the leading membership organization for Certified Financial Planner™ professionals, reported yahoo.com.

ESG investing aligns individual principles, purpose, and values with the virtuous greater good of the human condition and the Earth. Sometimes such missions and esteemed purposes come with higher investment costs and slightly trimmed investing returns, said Dr. Preston Cherry, CFT-I, CFP-(I wouldn’t use these, but not sure about your policy), practitioner editor of the Journal of Financial Planning.

"If ESG investing has reached an inflection point, it could be due to several factors, including higher fees, lower performance, or a lack of ESG impact and index differentiation that inspires investment."

Published in Economy

Tuesday, 07 June 2022 09:44

Model portfolios: all that and more among financial advisors

To oversee an even larger portion of discretionary assets in light of a burgeoning spectrum of model options, a majority of advisory U.S. and Canada advisory firms are turning to model portfolios, found a survey conducted last year, according to napa-net.

-Reportedly, more than half of advised assets are in model portfolios – and over the next couple of years -- the proportion’s expected to hit 58%, reported wealthprofessional.ca. Why? Sixty five percent of financial advisors already onboard with them pointed to business scalability.

In the U.S. and Canada, six in 10 professional fund selectors say the primary upside of model portfolios stems from the fact they provide clients across the firm with an investment experience that’s more consistent, according to napa-net.

Model portfolios were offered by 84% of U.S. and Canada fund selectors in 2021, according to Natixis Investment Managers’ Global Survey of Professional Fund Buyers.

“The attractiveness of model portfolios reflects a heightened, industry-wide focus on the client experience and an evolving advisory business model that emphasizes the value of personalized planning and advice, including and beyond investment performance,” said Dave Goodsell, executive director of Natixis’ Center for Investor Insight, according to wealthprofessioal.ca.

“Models make sense, both from a firm brand perspective and for advisors managing the growth of their practice in a market that’s increasingly complex to navigate.”

Published in Economy

Monday, 06 June 2022 14:37

Balance Sheet Tightening Spiking Volatility

The Fed has begun its balance sheet reductions which those in the industry have labeled ‘quantitative tightening’. QT may be a leading cause of market volatility, as has historically been the case such as 2018. While the Fed poured trillions into the economy to mitigate the effects of the Covid-19 pandemic they are pumping the breaks as a response to rising inflation. One way to gauge the impact of these measures is surveys of consumer confidence which are at their lowest levels since the 2008 financial crisis as reported by the University of Michigan survey. Some experts think this won’t have a strong impact on the rampant inflation because many of the causes are symptoms of Covid related supply shortages. As a result investors are looking at various volatility based solutions to wade the Fed’s storm.

Finsum: The yield curve has begun to flash warning signs of a recession, but maybe the Fed can still orchestrate a soft landing.

Published in Economy

Monday, 06 June 2022 14:35

Vanguard Expands Model Portfolio Selection

Vanguard is expanding their model portfolio selection for their ‘LifeStrategy’ brand on two fronts an MPS Classic and MPS Global. The MPS will have a total of five model portfolios which will be based in index funds giving a variety of risk preference choices to investors. The least risky models have a 20% equity exposure while escalating all the way to 100%. The MPS will definitely favor UK investments in both bonds and equities, but the global funds will be strictly a market cap weight. Vanguard is hoping the development of more model portfolios will deepen their relationship with financial advisors, by giving them better options to suit their end clients needs.

Published in Wealth Management

FINSUM

Around awhile, but Direct Indexing boasts different look

ESG products might be losing their luster

Model portfolios: all that and more among financial advisors

Balance Sheet Tightening Spiking Volatility

Vanguard Expands Model Portfolio Selection

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