(New York)

UBS just put out a very interesting warning to a large segment of the equity market. As part of their overall market outlook update, UBS explained their view on earnings and the direction of the S&P 500. There are two very notable points they made. Firstly, and most importantly, they reminded investors to stop fretting over valuations. In their words “While valuations are higher than average, we remind investors that valuations have no correlation with market returns over time horizons less than three years … And valuations typically don't contract meaningfully unless investors are concerned about a sharp growth slowdown or a policy error by central banks. And secondly, they think the S&P 500 will rise 11.5% by the end of 2022.

FINSUM: This is a brilliant reminder—equity valuations mean very little and are more a reflection of macro outlook than a concern in their own right.

(New York)

Morningstar has added a lot of coverage to their model portfolio universe this year. Earlier in 2021 they expanded their coverage of ratings to 1500 model portfolios, an increase of 50%. Of all those funds reported on, only two of them took home their coveted gold rating: the Vanguard CORE series and the BlackRock Target Allocation ETF. Vanguard was noted as having highly diversified index funds and rarely making portfolio changes. Other funds that got acclaim, such as their silver rating, include American Funds Growth & Income and the American Funds Tax Aware Growth & Income series.

FINSUM: The world of model portfolios has grown nearly as dizzying as that of ETFs so these Morningstar guides are a big help.

(New York)

Morningstar has added a lot of coverage to their model portfolio universe this year. Earlier in 2021 they expanded their coverage of ratings to 1500 model portfolios, an increase of 50%. Of all those funds reported on, only two of them took home their coveted gold rating: the Vanguard CORE series and the BlackRock Target Allocation ETF. Vanguard was noted as having highly diversified index funds and rarely making portfolio changes. Other funds that got acclaim, such as their silver rating, include American Funds Growth & Income and the American Funds Tax Aware Growth & Income series.

FINSUM: The world of model portfolios has grown nearly as dizzying as that of ETFs so these Morningstar guides are a big help.

(New York)

The new version of the fiduciary rule which is in the works will have a major effect on many financial advisors, but most think of this from a regulatory and customer interaction perspective. However, the rule will likely have an effect on some products too. One that seems likely to surge is usage are model portfolios. Model portfolios grew in prominence as the Obama era rule ascended. They tend to benefit clients and firms alike since they save time and money for advisors and give a great deal of outsourced investing expertise to clients. Also, because of their fee structure, they tend to create predictable revenue streams without any way to accuse an advisor of preferring specific funds which could be construed as not being in their clients’ best interests.

FINSUM: This makes total sense. Model portfolios were in part driven by the first version of the DOL rule, so a resurgence of the spirit of that rule will likely make firms and advisors push even further into this product.

(Washington)

Amazon is contacting third-party vendors who use their site to sell goods to tell them that Congress’s new antitrust regulation will limit or bar them from selling through Amazon. This is in response to a series of six bills that have passed the House Judiciary Committee in June that will be making their way to a House vote. The legislation will overall haul major U.S. antitrust regulations seeking to tackle big tech companies like Amazon, Apple, Facebook, and Google. It looks to make it more difficult for these companies to make mergers and acquisitions, discriminate against other businesses on their platforms, and make it easier for state attorneys to bring antitrust cases against them to court. Third-party vendors might be barred from paying Amazon fees for holding and storage, third-party vendors are one of Amazon’s fastest-growing segments of the company. Many of these companies are facing antitrust measures currently and this legislation could only spike that.

FINSUM: Don’t jump off tech just yet. The fundamentals are still great with the FAANGs having great earnings through the pandemic. The final bill could end up being very friendly for the tech giants.