In an article for ETFTrends’ Direct Indexing Channel, James Comtois discusses how direct indexing essentially means that advisors and investors become portfolio managers, since they own the stocks directly and can customize their holdings based on their goals, preferences, and individual circumstances.

Contrast this to passive ETFs which continue to be the dominant investment vehicle for investors and advisors in which stocks are indirectly owned with no possibility of customization. Some drawbacks to indirect ownership are no shareholder rights in terms of voting on Board members or other issues. Additionally, there is no possibility of harvesting tax losses during periods of volatility to offset capital gains in other holdings. 

Many younger investors are passionate about their investments reflecting their values. This is simply not possible through passive ETFs. For instance an investor may not want to own companies in the defense industry, direct indexing allows them to exclude these companies and replace them with stocks that have similar factor scores to ensure integrity with the underlying index.

Given these benefits, it’s understandable why the category has seen major growth in the last couple of years. And, this growth will continue especially as direct indexing is no longer only available to high net worth investors. It’s increasingly being offered to those with smaller sums to invest through firms like Vanguard and Schwab. 

Finsum: Direct indexing is rapidly growing due to the benefits it offers investors which include increased customization and tax loss harvesting. 

In an article for MarketWatch, Isabel Wang details comments from Blackrock’s Gargi Chadhuri who is the Head of Investment Strategy for iShares. The major uncertainty for fixed income investors is whether the Fed’s current pause is temporary or the end of the hiking cycle.

According to Chaudhari, the market is too optimistic that the Fed is finished in terms of further hikes given that inflation has proven to be more resilient than expected. Therefore, Blackrock is recommending medium-term duration fixed income to take advantage of elevated yields with reduced volatility.

At the latest FOMC meeting, Chair Jerome Powell surprised market participants with a more hawkish tone than expected, implying that the job isn’t done yet in terms of tightening policy. Further hikes are bearish for the long-end, while the budding signs that the economy could stumble into a recession are bearish for the short-end. 

As a result, the strategist recommends medium-duration fixed income such as the iShares 3-7 Year Treasury Bond ETF or the iShares Core US Aggregate Bond ETF. Overall, he sees more opportunity in fixed income given higher rates and an uncertain outlook especially following a decade of a lack of opportunity in the space during the period of zero percent rates. 

Finsum: iShares head of Investment Strategy, Gargi Chadhuri believes that medium-duration fixed income offers the best combination of risk and reward for investors.

In an article for Bloomberg, Will Mathis covers how Shell and BP are retreating from its renewable energy projects in wind and solar due to lackluster returns and increased competition. It’s leading to opportunities for renewable firms who are no longer facing competition from Big Oil who are subsidizing projects with profits from oil and gas. 

As these oil & gas companies entered the renewable space, they were willing to bid at lower prices than renewable firms in order to win government contracts, notably in offshore wind. However, returns on these projects have been middling, in part, due to inflation and supply chain constraints for key components. 

Less than 4 years ago, Shell’s ambition was to be the world’s biggest producer of renewable energy. Now, it no longer has any sort of goal for renewable energy capacity and recently announced that it is upping capital expenditures on fossil fuels, likely due to continued, higher returns in the space. Similarly, BP is shifting away from solar and wind for similar reasons. Instead, it’s increasing spending on its biofuels and service stations while cutting back on renewables. 

Yet, cumulative, global investments in renewables continue to increase with an expected $1.7 trillion in 2023 according to the IEA which is the 8th straight year of growth. 

Finsum: Fossil fuel companies like BP and Shell are pulling back from renewable energy projects. However, global investment in renewables continues to increase, reaching an expected $1.7 trillion in 2023. 

Pacific Investment Management Company (PIMCO) is launching two new active fixed income ETFs. The firm is already a leader in the active fixed income space, and it continues to offer new products to meet growing demand for the category. Compared to active equity funds, active fixed income has a better track record of outperformance vs passive. Active fixed income funds are also able to take opportunities in different parts of the capital structure that are unavailable to passive fixed income funds.

Its two new offerings are the PIMCO Multisector Bond Active ETF (PYLD) and the PIMCO Ultra Short Government Active ETF (BILZ). PYLD will invest in investment-grade and high-yield fixed income securities globally with a focus on long-term appreciation, diversification, and maximizing yield. PIMCO CIO Daniel Ivascyn sees major opportunities given the turbulence and volatility over the past couple of years.

Its second launch is the PIMCO Ultra Short Government Active ETF (BILZ) which will invest in short-term US Treasuries and mortgage-backed securities with the goals of maximizing yield and capital preservation. It’s designed to be an alternative to cash and a way for investors to take advantage of lofty short-term rates. 

Finsum: PIMCO is launching 2 new active fixed income ETFs. One is a global, multistrategy fund looking at long-term opportunities following recent dislocations. The other invests in short-term government debt and is designed to serve as a cash alternative.

Talk about the quintessential utility player.

What can model portfolios do? The wind up and the pitch: by leveraging research, market insights and a deep well of experience, these offerings, crafted for clients by asset managers salted away time for advisors, allowing them steer the focus onto clients, according to etfdb.com.

That said, the questions hanging in the stratosphere, according to WisdomTree Investments research, is the way in which advisors, on behalf of clients, enter the terrain of model portfolios. Not only that, which clients will most enthusiastically embrace working with an advisor all in on the models.

“Smaller accounts” might be the way some advisors kick things off – or they might do so with tax exempt accounts. 

Meantime, scoop de jour: investing’s a tough enough nut to crack. Meaning you need every advantage you can leverage.

For example, socking money into a model portfolio means you’ll be packing the insights of indust4ry experts who not only know their stuff – but, heck, in all likelihood, they designed them, according to smartasset.com.

After all, prior to tabbing the assets for each portfolio, financial advisors and investment managers, for the most part, tap their analysis as professionals and deep will of research to generate investment strategies that show that detail’s king.