Displaying items by tag: investors

Last month, the Vanguard Group decided to drop out of the Net Zero Asset Managers initiative, whose members commit to making their investment portfolios emission-neutral by 2050. The decision by Vanguard emphasizes the notion that retail investors are less focused on ESG priorities than institutional investors. The fund giant said that 80% of its nearly $8 trillion in assets are in index funds, which typically attract retail investors. The rationale for the decision, according to Vanguard was that it was responding to the desire of its clients to provide "clarity" and make its independence clear. Vanguard's largest competitors, BlackRock and State Street rely more on institutional investors such as pension funds and foundations. Todd Rosenbluth, head of research at VettaFi told Reuters that “Institutional investors focus more on climate and other ESG priorities amid pressure to do so by clients, regulators and investment activists. BlackRock and State Street are appealing to an investment base that cares more about ESG." Both BlackRock and State Street have stuck with the Net Zero Asset Managers initiative. Rosenbluth also stated that “Many retail investors are also interested in matters like climate change, but prioritize them less in building retirement portfolios.” That matches a FINRA Investor Education Foundation study of retail investors last year that found only 9% of respondents held ESG investments.

Finsum:Many retail investors are interested in climate change, but prioritize them less in building portfolios, while institutional investors focus more on ESG amid pressure from clients, regulators, and activists.

The real estate market took a big hit last year as interest rates rose substantially. As debt became more expensive, real estate investors lost purchasing power. For instance, the average 30-year fixed mortgage is more than double where it was in January 2021. This led to sales of luxury homes in the U.S. falling 38.1% from the previous year during the three months ending on November 30th. According to Redfin, it was the largest decline on record. Ari Rastegar, the founder, and CEO of Rastegar Property Company believes that if investors have the liquidity and the ability to execute on investment opportunities, this is a generational buying opportunity. He noted, "This is not 2008 where the banks are jeopardized. The banks have good bills of health, we don't have these subprime loans that are going to blow up. Additionally, we are beginning to see inflation soften. The Consumer Price Index, which peaked in June at 9.1%, has been gradually declining.” He also noted investors don't have to invest in property to take advantage of this opportunity. He told Business Insider that REITs are also on clearance. Rastegar expects the multi-family and industrial property to recover the fastest and recommends looking at the Blackstone Real Estate Income Trust (BREIT) and the Starwood Real Estate Income Trust (SREIT).

Finsum:Due to a record decline in luxury home sales in the U.S., real estate investor Ari Rastegar believes this is a general buying opportunity for investors.

Investment advisor and banking solutions provider Save recently announced that it launched a savings product that is focused on ESG investing. The firm said in a recent press release that its "Market Savings program offers an option that provides a yield from iShares ESG Aware exchange-traded funds (ETFs) and other ETFs.” According to the press release, the ESG Market Savings portfolio aims to maximize environmental, social, and governance characteristics and exclude companies with certain practices. The release also said that since the launch of this ESG portfolio, about 10% of the people who have signed up for Market Savings have selected the Save ESG portfolio. Save Founder and CEO Michael Nelskyla said the following in the release, “Consumers are increasingly turning to ethical choices in all aspects of life including investments. We see it as our fiduciary responsibility to offer ethical investing through our Market Savings program for those consumers who seek these choices.” The Market Savings program on Save’s Savetech platform offers a yield that varies according to underlying market performance. It also noted that customer deposits are FDIC insured.

Finsum:Save announced that it launched an ESG Market Savings portfolio that aims to maximize environmental, social, and governance characteristics and exclude companies with certain practices.

If advisors are looking to build out their practice, they should look no further than Millennials and Generation Z. That is according to Fidelity, which believes younger investors represent substantial, long-term wealth potential. According to a recent report from Fidelity Institutional, population and wealth are significantly shifting to the younger generations, who now collectively represent 47% of the U.S. population. These findings came from the Fidelity Investments 2022 Investor Insights Study, which included 2,490 investors who were 21 and older and had household investable assets of $50,000 or more. Fidelity also offered recommendations on how to approach younger investors. For instance, advisors should create an ideal profile of the young clients they would like to work with. They should also engage with the children of their current clients as a way to retain assets when wealth is transferred. Financial advisors can differentiate themselves by becoming a coach and elevating the client experience with frequent check-ins and establishing and monitoring financial routines. In terms of gathering clients, Fidelity recommends that advisors refine their social media strategy to capture their attention, while also telling younger prospects what they do for the community and the causes that they care about.

Finsum:According to a recent study by Fidelity, advisors should consider reaching out to Millennials and Generation Z as they offer substantial long-term wealth potential.

Direct indexing has been all the rage this year with many researchers predicting it will be the "next big thing" in investing. For instance, a few weeks ago, a report from Cerulli Associates estimated that direct indexing is poised to reach more than $800 billion in assets by 2026. But not all research firms share this sentiment. According to a recent study by asset management research firm Blackwater Search & Advisory, direct indexing is a “niche service that mostly benefits specific high-net-worth investors.” The firm believes that without a wide range of investors, the growth of direct indexing may not be as large as previously thought. According to the report, “Direct indexing is not necessarily the best option for everyone. Not everyone needs or wants the degree of customization that direct indexing offers, and the variety of funds already existing on the market is more than enough to craft interesting portfolios.” Many pundits talked about direct indexing as an “ETF Killer” due to greater personalization and tax advantages. However, ETFs offer a broad range of funds that appeal to a much wider number of investors. So, while direct indexing may continue to grow its market share, it appears that it isn’t the “ETF Killer” it was once projected to be.

Finsum:Based on the results of a recent study, direct indexing may not see as much growth as previously thought due to the strategy mainly benefiting affluent investors.