The Biden Admin hasn’t been shy about wanting to tighten the regulatory belt on Wallstreet and the financial world, and another step is being taken. The SEC is considering changing the disclosure rules when it comes to acquisitions of public companies by hedge funds. Currently, HFs have a 10-day buying period to which the public doesn’t have to be made aware of a purchase. Chairman Gensler is making it clear they are eying tighter rules when it comes to disclosure. The current rules are over 50 years old and were meant to bring more information symmetry between the public and private investors. The SEC is looking to increase transparency and give the public more time to adjust.

FINSUM: This will definitely give the public an advantage, but we’ll see how the SEC votes when push comes to shove.

Fidelity is about to take direct indexing to a whole new level. The asset manager/custodian/broker-dealer is launching its new Fidelity managed FidFolios product, which is a retail-focused direct indexing suite with only a $5,000 minimum and a 0.40% fee. According to Think Advisor “The Fidelity Managed FidFolios combines direct indexing with fractional share trading, which allows clients to allocate assets among multiple positions based on dollar amount rather than share size”. Morningstar gives context to the launch, saying “This is the most mainstream form of direct indexing from a most mainline asset management and provider of investor services seen to date”.

FINSUM: Direct indexing is a heated battleground for asset managers right now, with Fidelity, Vanguard and others in the mix. This seems like a big step.

Advisors need to make sure their clients are paying heed to their crypto returns as they focus on tax loss harvesting. In the past, many investors “flew under the radar” with their crypto returns, but the IRS is now focused on the issue. Some clients may have major gains that they need to report. The IRS considers crypto to be property, which means investor have to pay taxes on their profits.

FINSUM: Despite how the market looks now, stocks had a great year in 2021, and combined with some potentially big crypto wins, there is a lot of capital gains to offset with tax loss harvesting.

If the treasury market isn’t upside down it’s certainly moving there. Yields are rising which means prices are falling. The worst part is with inflation picking up there is a lot of room to move in longer-term treasury bonds. So where should investors turn to? Fallen angel bonds and their associated funds. Fallen angels are investment-grade bonds that have been recently downgraded to junk status. The biggest benefactor is that these relatively riskier bonds have a way higher return but there is less interest rate pass-through. That means as the Fed begins to strangle the government bond market the lower-grade corporate bonds won’t feel much of the pain. Many of these corporations have relatively strong balance sheets and the risk is overblown, so profits can recover quickly.

FINSUM: The fallen angel fixed income ETF market has an incredible yield advantage, and there is so much fiscal and monetary support that the risk is probably smaller than the yields are saying.

Income investors are flummoxed by the turbulent bond market and many are left wondering what to do. Sure dividend stocks might be an okay option but for those closer to retirement times are too turbulent to rely on them. Instead, rather than sinking your teeth into longer-term bonds with so much interest rate uncertainty, investors should ladder or stagger their fixed rate annuities. Sequencing can allow you to fight the current inflation with better yields than bonds and CDs with more security than equity markets. Additionally, laddering can allow you to be ready to pull out in case bond yields rise to provide more income and on top of that get in at a lower price.

FINSUM: Sure short-run annuities have less return than an ultra-long option but if interest rates pick up you won’t be hung out to dry.