BlackRock sent waves through the market announcing they were slashing fees from 0.04% to 0.03% for the largest bond fund in the world the iShares Core U.S. Aggregate Bond ETF (AGG). This wasn’t the only move they made as equity funds LRGF and INTF got their fees reduced as well. The fee battle is a prominent part of the game as lower expense ratios definitely garner more attention from investors. Previously BR had reduced fees on other fixed-income products as part of the escalating competition with Vanguard.

Finsum: FI income investors should keep an eye out, with prices and fees at lows, bond market ETFs could be in the ‘buy the dip’ territory’. 

Schwab made a splash when they announced they were tossing their hat into the direct indexing ring, but details are coming surrounding what the final products will look like. Schwab is going to limit investors to eliminate up to 3 stocks from their Direct Indexing, which means its only use will really be for tax purposes. Even starting with a relatively green index, if investors want to eliminate greenwashing their options are limited. Fidelity will offer more options to investors when it comes to custom indexing, and also has much lower minimum investments. Specific ESG focus portfolios are in production and can eliminate two more stocks or an entire industry providing more flexibility.

Finsum: Fidelity has an ESG edge and lower minimum investments. Schwab will need to develop more options if it wants to compete with ESG options.

Inflation is now everyone’s primary concern, including the Fed. A strategy to outpace inflation is to find an income strategy that can keep up. Closed-end funds with high returns are a great way to do this. Virtus AlllianzGI Diversified Income & Convertible Fund is a great option as it has an 8.96% yield and has averaged over 8% in the last 5 years. Calamos Convertible & High Income is also a great option along with Advent Convertible and Income. Investors looking to rely on Treasury inflation-protected securities have gotten hammered because the rising yield has destroyed their value, and TIPS funds have equally suffered.

Finsum: High yield corporate debt is a great pace to look for yield right now, and is less sensitive to Fed risk than many other bonds.

Firms have quickly ramped up the incentives to recruit and retain financial advisor talent, but those efforts are even stronger for women and minority groups. Merrill Lynch chair of Diversity and Inclusion said the “war for talent is alive and well” and they are trying hard to hire women and people of color in their ranks. No firm is outright saying they are paying women more money in advisor roles, rumors are trickling out that women are seeing higher salaries in order to be attractive to firms. There has been a huge increase in press events and speeches pairing ‘women’ and ‘wealth management’ from major brokerages. UBS, Edward Jones, and Merril Lynch have set high bars for their target percentage of their advisors are women or people of color.

Finsum: Women are an extremely valuable part of financial firms and efforts to attract and retain them will only intensify. 

In this episode, Marty Nesbitt joins Melissa Francis and Magnifi by TIFIN to share his views on Private Equity and how the asset class is poised for periods of rising prices.

To watch the full interview with Marty Nesbitt, in addition to interviews with Anthony Scaramucci, Kyle Bass and Jeffrey Gundlach, check out Magnifi by TIFIN.

Melissa Francis: We have a very special guest to talk about private equity investments, Marty Nesbitt. He is co-CEO of The Vistria Group, which is a Chicago based private equity firm. 

He is also on the board of directors of publicly traded companies like CenterPoint Energy, Norfolk Southern Corporation, and American Airlines group. Marty, thank you so much for being here. 

First of all, tell us a little bit about Vistria, some of your founding principles and maybe some of your current assets or maybe the deals you like the most.

Marty Nesbitt: Yeah, sure. I'm happy to do so. Vistria was birthed from a set of personal experience by my co- founder Kip Kirkpatrick and I, who had both been in the investment world, in public service and obviously operated as entrepreneurs. 

And we thought, as we harvested our experiences, that at the intersection of public and private interest, there was a value proposition that we felt hadn't been recognized in the marketplace. 

And so we thought if we invested at the intersection of what was important to the public and what was important to the private sector, we could figure out how to harvest value. 

We thought about the three industries where that opportunity set was greatest and settled in on healthcare, education and financial services, where we thought the value or the opportunity set was greatest. 

And so, Vistria is a name that we made up because that's one of the hardest things there is to do when you start any business, that's find a name, but it means the power of three. 

And it's the power of investing with the requisite amount of investment experience and expertise, the requisite amount of operating expertise, but then also a long term policy perspective so that you can be invested in places that are not only good for the businesses, good for employees, customers, and investors, but also good for the broader public. 

That policy perspective is the third dimension that we invest behind. 

Watch the full episode with Marty Nesbitt HERE

Melissa Francis: Yeah, I know, that brings up so many questions. Let me start with just a few. Private equity in general, you see really great out sized returns. How do you keep that up when stocks and bonds are having such a rough time like they are right now? 

Marty Nesbitt: Well, look, one of the beautiful things about building a private equity platform is the opportunity to be really focused in an industry or a sub- sector of an industry where you can develop real expertise. 

And so we spend a lot of time developing themes that we want to invest behind and then going very, very deep so that we know the levers to create value what the long term proposition is. 

And so even in an environment where we see prices rising, as there's so much capital competing for these opportunities, we have confidence about the value creation plan we can put in place and the way that we can generate our return objectives in a very difficult, challenging pricing environment. 

So being focused is a way to mitigate some of that risk. 

Watch the full episode with Marty Nesbitt HERE

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