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(New York)

Model portfolios are getting ever more popular for advisors. Not only do they help outsource some portfolio management, but there is such a wide variety of them that they can be tailored to many different plans. In some cases, there are almost too many! One area where they make a lot of sense is in tax minimization strategies. Biden and the Democrats look like to hike taxes considerably, and that fact coupled with ultra-low yields and highly variant financial situations in muni bonds, means there is a lot to gain from models in this area.

FINSUM: COVID affected municipalities in very different ways, and spreads to Treasuries are historically low, so there is a of risk. Nuveen is seen as a leader in the munis space, so a good place to start the search.

One of the surest ways to deliver value as an advisor is to help clients identify stocks that are poised to see a step change in their growth. If the last decade has shown us anything, it is that tech companies can scale quickly, and their stock prices may move accordingly. With that in mind, we believe one of the best ways to find the next big thing is to check out the VictoryShares Nasdaq Next 50 ETF (QQQN).

The ETF tracks the Nasdaq Q-50 index, and deliberately invests in the 50 stocks next in line to be included into the Nasdaq-100. This accomplishes two critical tasks. First, QQQN puts client capital into Nasdaq stocks that are well established (ranked 101-150 based on market capitalization in the entire Nasdaq Stock Exchange; ex. Financial), but presumably at an earlier stage with still long runways of potential growth. In other words, high profile companies that could become household names. Since 2007, 110 constituents have “graduated” from the Nasdaq Q-50 (the “next 50”) into the full Nasdaq-100*. Just in the last few years, this includes names like Netflix, Facebook, Lululemon, and Expedia, which highlights the rapid pace of innovation that Q-50 stocks may experience and QQQN seeks to capture with its methodology. In 2020 alone, the graduates included Docusign, Peloton, and Moderna among five other companies. Since 2007, in the 12 months prior to “graduating”, these 110 graduates returned 76.2% on average**. QQQN allows investors access to these quick-growing companies before they have experienced the market appreciation that “graduates” them into the Nasdaq-100. Second, buying into QQQN also helps one diversify out of the hyper-concentrated top end of the Nasdaq-100, which is heavily weighted towards just three stocks as of 2020 year-end. We feel this allows potential returns of QQQN to be more in line with those of companies on the cusp of transitioning between mid-cap and large-cap or mega-cap. Taking these two points in combination, the ETF is quite distinct from strategies that track the Nasdaq-100, and tracks an index that is fully complementary rather than competitive.

Finally, another unique aspect of QQQN is that it rebalances quarterly. This construction allows the ETF to both capture the value of potential hyper-growth names and IPOs more nimbly and drop losers more quickly than half-yearly or annual rebalancers. In summary, QQQN offers unique value and relevant exposure to the next generation of innovators.

 N.b. this content was paid for by Victory Capital and is not FINSUM editorial.

Notes: *Source: Nasdaq as of 12/31/2020; Constituent counts by year include some double-counting. For example, Illumina was originally moved into the Nasdaq-100 in 2008, subsequently kicked back out to Q-50, then moved back in 2013. Of the 106 constituent “graduations,” there were 98 unique companies. In addition to Illumina, International; Green Mountain Coffee Roasters; Hansen Natural; Hologic; J.B. Hunt Transport Services; Netflix; and NXP Semiconductors moved from the Q-50 into the Nasdaq-100 twice during the 2007-2019 period.

** Source: Nasdaq as of 12/31/2020; In the case of the 12 month statistics, names added in 2020 were excluded from averages and medians.

Carefully consider a fund's investment objectives, risks, charges and expenses before investing.
To obtain a prospectus or summary prospectus containing this and other important information, visit Read it carefully before investing.

Investing involves risk, including the potential loss of principal. In addition to the normal risks associated with investing, investments in small- and mid-cap companies and narrowly focused investments typically exhibit higher volatility. International investing may involve risk of capital loss from unfavorable fluctuations in currency values, differences in generally accepted accounting principles, or economic or political instability. Technology companies are often subject to severe competition and product obsolescence. The Fund has the same risks as the underlying securities traded on the exchange throughout the day. Redemptions are limited, and commissions are often charged on each trade. ETFs may trade at a premium or discount to their net asset value. The Fund is not actively managed and may be affected by a general decline in market segments related to the Index. The Fund invests in securities included in, or representative of securities included in, the Index, regardless of their investment merits. The performance of the Fund may diverge from that of the Index.

The Nasdaq Q-50 Index is a market-capitalization weighted index designed to track the performance of companies that are next-eligible for inclusion into the Nasdaq-100 Index. The Index is comprised of 50 securities and reflects companies across major industry groups, except financial companies. Nothing in this illustration should be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes.

VictoryShares ETFs are distributed by Foreside Fund Services, LLC.

Victory Capital Management Inc. is the adviser to the VictoryShares ETFs. Victory Capital is not affiliated with Foreside Fund Services, LLC. Nasdaq is a registered trademark of Nasdaq, Inc. and its affiliates (together, “Nasdaq”) and is licensed for use by Victory Capital. The product(s) are not issued, endorsed, sold, or promoted by Nasdaq. Nasdaq makes no warranties as to the legality or suitability of, and bears no liability for, the product(s).

Top 10 Holdings as of 3/31/2021



Roku, Inc. Class A



CrowdStrike Holdings, Inc. Class A



Fortinet, Inc.



Old Dominion Freight Line, Inc.



Trade Desk, Inc. Class A



Zebra Technologies Corporation Class A



ViacomCBS Inc. Class B



Etsy, Inc.



Garmin Ltd.



Liberty Broadband Corp. Class C



Holdings are as of the date noted and subject to change without notice. 

©2021 Victory Capital Management Inc.


Thursday, 22 April 2021 08:15

Investing in the Gig Economy

More investors and their financial advisors are considering the gig economy as a potential high-growth investment and an effective way to have their portfolios benefit from long-term, global labor and technology trends. The “gig economy” refers to the group of companies that embrace, support or otherwise benefit from a workforce where independent consultants, contractors, temporary, or on-call workers are empowered to create their own freelance business by leveraging recent developments in technology platforms that enable individuals to offer their services directly to retail and commercial customers. In its best form it represents the personalization of employment and empowerment of workers. For businesses, it’s about being able to tap into on-demand talent in a convenient and customized manner.

Why Invest in the Gig Economy

Declining/Changing Work Force:

Many countries around the world have been seeing declining birth rates for decades, which is reducing their labor pools and therefore forcing companies to find an alternative workforce. COVID has forced the exit of millions of people who cannot work and meet the increased demands at home at the same time.

Many of them are looking for flexible schedules and prefer remote jobs so they can manage home learning and other personal demands, not just in the short term but also longer term.

More businesses are viewing talent as networked ecosystems and are taking steps to create business talent models that integrate internal and external workers in teams, blending full-time/permanent hires with freelance, contract, or on-demand talent for flexibility, speed and workforce sustainability.

Technology Advancements:

Rapidly accelerating technological changes in processing power and connectivity have created a data revolution, which is placing unprecedented amounts of information in the hands of consumers and businesses and enabling a proliferation of technology-enabled business models like GrubHub and Lyft.

The furious pace of technological innovation is shortening the lifecycle of companies, enabling rapid introduction and adoption of gig-related tools and platforms. Equally, it is changing the economies of scale equation, allowing small companies to compete in a global marketplace.

Ultimately, many believe the growing development and acceptance of technology may disintermediate the employment model*.

About the SoFi Gig Economy ETF

GIGE is the first ETF to seek long-term capital appreciation concentrating specifically on companies involved in the revolutionary shift towards a gig economy. GIGE is very much a theme of themes by tapping into the global trends in the workforce and technology, providing access to the companies that have transformed the way people access goods, services and work. The fund is actively managed by Toroso Investments to keep on top of emerging companies and market trends and conditions. The fund is structured so most companies that IPO and fit GIGE’s criteria can be included in the portfolio after one month of trading, as opposed to traditional passive funds that typically wait 60 to 90 days to include a new IPO.

GIGE’s breadth of holdings represents the broadest definition of the gig economy to tap into its high growth potential. GIGE’s holding are approximately 40-50% outside the U.S. and include large-, mid and small-cap securities. Their investment strategy considers many household gig names, but they also use a “pick-and-shovel” strategy, meaning they research many companies that support the gig economy.

GIGE companies include four categories:

Platform Businesses:

This is likely what most people think of when they hear gig economy. This category includes: app-based platforms, web-based stores, auction sites, and other commission-based platforms such as Alibaba, eBay and Etsy.

Services and Transactions Businesses:

This includes companies that facilitate transactions and support the operations of the gig economy such as DocuSign, PayPal and Square.

Marketing Businesses:

Traditional marketing is expensive and doesn’t work in the gig economy. However, social media and messaging companies work well and therefore make up a large portion of this segment. Examples include Eventbrite, Facebook, Tencent, and Twitter.

Ancillary Businesses:

This category includes non-traditional companies, such as HealthEquity, that are not directly related to the gig economy but support and/or benefit from the gig economy.


The SoFi Gig Economy ETF offers a compelling investment option for investors and financial advisors to position portfolios to help benefit from global demographic changes and technology innovations. Investors are already engaging with the rapidly growing gig economy and now they can more readily invest in it.

n.b. This is sponsored content and is not FINSUM editorial

Wednesday, 21 April 2021 19:32

Goldman Says the Bond Rally is Fake

(New York)

The big inflation-driven bond sell-off has decidedly ended. In fact, bond yields have fallen considerably (with prices rising) over the last few weeks. The gains have prompted some investors to wonder if it is time to jump back into the long-term bond market. Goldman Sachs and Bank of America say an emphatic “no” to that idea. Goldman said the market moves this month have been “Noisy (and potentially temporary)”. They do not believe that yields will continue to fall, only that the chances of a big overshoot of how high they go have diminished.

FINSUM: Yields still seem likely to trend higher, but the market has bought into the idea that the Fed is not going to taper support any time soon, which means the lid is now on long-term yields much more tightly.

(New York)

Not a lot of people think about the tax benefits of annuities. This is partly because 401(k)s are also a key retirement product and get most of the “tax-deferred” attention, and partly because annuities just aren’t all that well understood. But what they allow is the tax-free accumulation of interest and gains over time. This feature is growing increasingly popular, especially this year, as tax rates look likely to rise under the new administration/Congress.

FINSUM: This is just one of several reason why annuities are being seen as more valuable, but it is certainly a good one as taxes even on middle class Americans looks likely to rise.

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