Last year, active was the operative word, as passive management stared into the taillights of fixed income active managers, according to bsdinvesting.com.

In the midst of the Fed’s policy change and a rejuiced market, active management improved markedly in the second half of the year. Over the last two quarters, an average of 60% of active managers outdid passive management.

Meantime, in January, while Vanguard noted that additional volatility appeared to be in the cards this year, for active management, it foresaw a bigger opportunity for it to strut its stuff.

The decisions of active sector and security selection should carry a bigger stick in a market holding its own against macroeconomic forces or taking a back seat to central banks.

Across most segments, appealing yields are attainable, including some of the best value in higher quality bonds. Even in the face of watered down economic conditions, it should hold its own.

There is no question that investing in low-cost mutual funds or exchange-traded funds that mirror a benchmark index is a popular strategy to potentially reduce the impact of fees on a portfolio. In fact, many of these passive index strategies have often outperformed more costly actively managed funds. However, while tax efficient, they are unable to fully take advantage of short-term market volatility, according to Neale Ellis and Matthew Michaels of Fidelis Capital. On the other hand, direct indexing has become an attractive alternative to a portfolio of low-cost funds and ETFs, and unlike owning a mutual fund or ETF, an investor directly owns a basket of individual stocks that tracks a designated benchmark index. The strategy also allows greater flexibility during periods of volatility to selectively harvest losses while still closely tracking the benchmark. This is due to the fact that individual equities tend to see much higher volatility than a diversified mutual fund or ETF. This increases the opportunity for tax loss harvesting. Realizing losses in a portfolio can offset capital gains, which creates tax savings. Failing to harvest those losses during periods of short-term volatility could lead to lower results, essentially leaving money on the table.

Finsum:While passive index ETFs are tax efficient, they are unable to fully take advantage of short-term market volatility, which is something that direct indexing can do.

Investors have been expressing a growing interest in addressing ESG issues with the filing of a record number of shareholder resolutions to be considered this proxy season. According to As You Sow, the Sustainable Investment Institute and Proxy Impact in the Proxy Preview 2023 report, investors filed 542 shareholder resolutions concerning ESG issues in 2022 that they want public companies to take into consideration. The organization said that the leading concerns were climate change, corporate political influence, racial justice, and reproductive and worker rights. Many of these will be voted on at spring and summer corporate annual general meetings. While politicians are arguing over the merits of ESG investing, “Investors have shown long-term support for companies adopting for net-zero greenhouse gas goals and reporting on the management of climate risks and opportunities,” according to Michael Passoff, CEO of Proxy Impact and co-author of Proxy Preview 2023. He also added that “Shareholder resolutions have always been at the forefront of these efforts — first by educating companies and investors about climate risk and solutions, and more recently by calling for quantitative metrics on greenhouse gas emissions reduction targets, alignment with science-based targets, and incorporating climate-risk mitigation into executive compensation packages and company-wide business strategies.”

Finsum:Investors continue to show a growing interest in addressing ESG issues with the filing of a record 542 shareholder resolutions concerning ESG issues in 2022 that they want public companies to take into consideration.

In a recent article on WealthManagement, Charles L Ratner interviewed a baby boomer couple on how they interview investment advisors. One of the many things they consider when choosing an advisor is their website. A great website can help advisors attract new clients, but a bad website can turn off prospects. The first thing they mentioned looking for is “Who they are, their credentials, and their experience.” They noted that they began to see gaps between the advisor’s credentials and experience. They also said that an advisor’s clientele was the most important thing because they wanted to know that they would be playing to the advisor’s strengths and getting their fair share of attention and service. The couple also wanted to know what the firm does and who does what. They liked websites that clearly delineate an advisor’s services for each type of client. In addition, they wanted to know how their portfolios would be personalized. Pricing was also another topic. The couple said, “We realized early on that we were gravitating to the advisors who structured their fees in a way that allowed us to pick and choose the services that are of interest to us.” Another big plus for them was the strength, soundness, and continuity of their firm. They wanted to know that they will be with a strong firm today and tomorrow.

Finsum:A baby boomer couple interviewed on WealthManagement noted the things they looked for in an advisor website such as experience and credentials, clientele, who does what at a firm, personalization, pricing, and continuity.

Turnkey asset management platform and fintech provider GeoWealth has signed a deal to buy First Ascent Asset Management, a Denver-based registered investment advisor overseeing nearly $1.4 billion. Colin Falls, President, and CEO of GeoWealth, told FundFire that the deal is expected to close early in the second quarter. First Ascent, which also provides TAMP services, specializes in providing investment management and consulting services to independent advisors. The firm also provides non-discretionary model portfolios to technology platform providers. First Ascent will move to the GeoWealth platform and have access to its proprietary integrated tech stack, including back-office capabilities and customizable unified managed account offerings. GeoWealth’s platform includes advisor-managed models alongside a suite of third-party-manager-built models from about 40 providers, according to Falls. The firm also offers ETF model portfolios created by third-party ETF sponsors, including J.P. Morgan Asset Management. According to a news release, First Ascent’s investment offering and service model will remain unchanged, as will its flat-fee schedule. The firm charges a flat fee rate or percentage of assets under management, and annual fees range from .15% to .30% for accounts with at least $50,000.

Finsum:Managed-model providerGeoWealth is buying First Ascent Asset Management, an RIA that also provides TAMP services such as model portfolios.