Displaying items by tag: ETFs

Renewable energy stocks, once at peak valuations in 2020-21, are struggling with investor pullbacks and face extended uncertainty partly due to U.S. election concerns. Interest in the sector has been eroded by competition from Chinese renewables, strong returns on conventional energy, and issues like supply chain disruptions and grid connection challenges. 

Although the Inflation Reduction Act has supported renewable investments in the U.S., analysts warn that the potential return of Donald Trump to office could redirect funds to fossil fuels, while a win for Democrat Kamala Harris might revive confidence in renewables. 

Even with lower interest rates, a new boom on the scale of 2020-21 is unlikely, as renewable growth has slowed. The sector has seen 17 consecutive months of net outflows, losing over $11 billion in 2024 alone, with major funds like the iShares Global Clean Energy ETF losing 28% in unit numbers. 

Finsum: There could be a serious opportunity to find value in these ETFs at the current price levels. 

BlackRock has introduced two new ETFs: the iShares Technology Opportunities Active ETF (TEK) and the iShares A.I. Innovation and Tech Active ETF (BAI). According to Tony Kim, BlackRock’s head of fundamental equities technology, these ETFs aim to capitalize on the rapidly expanding AI and tech landscape. 

The TEK fund focuses on global tech leaders and disruptors, incorporating companies across various market caps to balance stability and potential growth. Meanwhile, BAI seeks strong returns by investing in innovative companies within the AI sector, applying rigorous fundamental research. 

The fund covers a diverse range of cap sizes globally, emphasizing groundbreaking advancements in AI. BlackRock now manages over $3.1 trillion in U.S.-listed ETFs across 430 funds.

Finsum: Using ETFs to target a clients interests presents an already more balanced approach for portfolios

ETFs remain a favorite for investors due to their diversification and tax efficiency, making them easy additions to retirement portfolios. However, direct indexing is an increasingly attractive strategy, allowing investors to hold individual stocks that mirror an index and personalize holdings.

This approach enables adjustments for specific preferences, such as excluding certain sectors, while also offering tax advantages through targeted loss harvesting.

Direct indexing can lower tax liability by selling underperforming stocks to offset gains, a flexibility that ETFs don’t provide. Costs have decreased, making direct indexing more accessible and competitive with ETFs. 

Finsum: A combination of direct indexing and ETFs could form a well-rounded balance for customization and tax needs

Innovator Capital Management has launched a new ETF targeting the Russell 2000, adding to its Managed Floor suite. This ETF offers small-cap exposure with a built-in downside cushion, limiting potential losses to around 10% over a rolling 12-month period. 

Unlike traditional defined outcome ETFs that lock in a fixed downside and upside cap, this fund employs a laddered options strategy for more flexibility and dynamic risk management. As volatility looms due to uncertainties around the election and interest rates, the fund aims to attract investors who are cautious about small-cap risks but still want exposure. 

This move capitalizes on increased investor interest in small-caps while addressing concerns about potential market downturns. Ultimately, Innovator's strategy is designed to provide both growth opportunities and a safeguard against significant losses.

Finsum: Small caps can outperform in a falling rate environment and this could be a great option for new buffer ETF investors. 

Around two-thirds of active bond funds outperformed their average passive peers during the 12-month period ending June 30, according to Morningstar's latest Active/Passive Barometer. The report, which examines the performance of over 8,000 funds across various categories, highlighted that intermediate core bond funds led the way, beating passive funds 72% of the time. 

These active bond funds benefitted from narrowing credit spreads and inflation that kept interest rate cuts on hold. However, over a 10- and 15-year horizon, only 45.5% and 15.9% of these funds outperformed, respectively.

Additionally, actively managed real estate funds outperformed their passive counterparts 66% of the time over the same 12 months, with U.S. and global real estate funds seeing strong short-term success.