Altruist is launching a new direct indexing product at a low $2000 minimum coming at the end of May. Altruist is using fractional shares in order to be at the lower bound of direct indexing minimums. With direct indexing investors own the underlying asset, which comes with tax alpha but usually at a very high minimum footprint. The index will track a cap-weighted 500 stocks similar to the S&P. However, the penalty for this ultra-low minimum is that investors won’t have the ability to customize their final product, which greatly affects the value of the DI offers. They will allow value-based screens later thin the year according to management.

Finsum: Direct indexing without dropping for tax alpha is a bit of a puzzle because it’s hard to see the advantage over ETFs.

Markets are super volatile in response to a variety of macro Factors and a 50-basis point hike from the Fed last Wed. JPMorgan is touting its Equity Premium Income ETF (JEPI) as a solution for investors who tries to target the returns in the S&P 500 with less volatility. The covered call equity strategy is the way the fund tries to mitigate market volatility but those calls aren’t free. The fund is targeting  6%-9% yield scoring to the global head of ETF solutions at JPMorgan. The volatility has actually served the fund well allowing it to outpace its own expectations.

Finsum: Covered calls are by no means a new strategy but they are effective in limiting volatility. 

Model portfolios are a great tool to increase flexibility, growth, and optimization, and Principal is launching almost 40 new products in response to demand. Jill Brown, director of their U.S. Wealth Platform says they will give solutions that are easy to manage and deliver results to clients. These portfolios will leverage the full power of their fintech platform to help advisors hit their goals. The end products will include mutual funds and ETFs and will allow clients to personalize their portfolios with different risk-based suites. Capital appreciation will be the main goal of the three of the core suites, while total returns will be the main goal of the last suite.

Finsum: Third-party model portfolios give tailored solutions, and make customization easier than ever.

Goldman Sachs put out its views on the market’s volatility and how to handle it. The bank is not bullish on markets but thinks there are some very good stocks to help weather the storm. Unsurprisingly, Goldman says investors should buy stable stocks to help get through the turbulence, as such hum-drum stocks look like they have room to run. "Stable stocks also trade with undemanding valuations, supporting the likelihood that they will outperform if the macro environment grows increasingly challenging. Stocks with stable share prices and stable earnings growth generally trade with a valuation premium relative to more volatile peers and to the typical S&P 500 stock. However, relative valuations today are much lower than they have generally been during the last few years."

FINSUM: This is essentially a low-vol, value play, and that makes perfect sense right now. Very stable companies are likely to get through the economic upheaval better than their peers, so on a relative basis they should outperform.

Recession panic is rampant and over four-fifths of the US think the economy is going to turn into a recession in 2022 according to a CNBC poll. The rising inflation is the primary concern and a major factor give how well other area of the economy are performing. As a result, investors and hedge funds are turning to mid-cap stocks to prepare for the worst. Capri Holdings Limited is being held by over 40 hedge funds and carries an attractive P/E ratio of 14.23 for many investors. Next up is Valvoline Inc. which has seen its sales boom as it expanded into EV. Finally, nearly 50 hedge funds are holding luxury accessory company Tapestry Inc. and have almost $900 million in investments there.

FINSUM: Stable stocks could provide some recession cushion if things turn for the worst.