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FINSUM

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Tuesday, 18 June 2024 06:16

Buffer ETFs are Getting Cheaper

PGIM, the investment management arm of Prudential Financial, launched two new laddered funds of buffer ETFs: the PGIM Laddered Fund of Buffer 12 ETF (BUFP) and the PGIM Laddered Fund of Buffer 20 ETF (PBFR) on the Cboe BZX. These ETFs offer U.S. large-cap equity exposure with limited downside protection and an upside cap on appreciation. 

 

BUFP invests equally in 12 PGIM U.S. Large-Cap Buffer 12 ETFs, while PBFR invests in 12 PGIM U.S. Large-Cap Buffer 20 ETFs. These funds, the lowest-cost buffer ETFs in the market with a 0.50% net expense ratio, aim to help investors navigate market volatility. 

 

Buffer ETFs provide the advantage of downside protection during market declines but come with the disadvantage of capped gains during market rallies.


 

Finsum: Lowering the costs of buffer ETFs could be wildly beneficial particularly when they seem so well poised for our current environment. 

In wealth management, the portfolio is the product and it’s crucial for achieving clients' long-term goals. Despite the additional services offered, the portfolio's performance is paramount. 

 

One key challenge is adapting portfolio construction to ever-changing market conditions, such as the recent shift to positive bond/stock correlations. Previously, low or negative correlations enhanced diversification benefits, but this advantage has lessened. 

 

As a result, professionals are exploring new ways to diversify, though it's important not to over-rely on these new methods. While increased correlations make reducing volatility more difficult and investors should turn to alts in these types of environments, a measured approach to diversification is essential to maintain long-term returns.


 

Finsum: Privates and alts are more necessary than ever to hedge the current increased stock-bond correlation. 

Tuesday, 18 June 2024 06:14

Advisor Recruiting Unexpected Trends

Financial advisors frequently seek insights into the evolving landscape of advisor transitions and recruitment deals within the wealth management industry. To address this demand, a dedicated annual report analyzes raw data and offers tailored intelligence, unveiling notable surprises that challenge conventional wisdom. 

 

One such revelation was the modest uptick in advisor recruitment despite a thriving equity market, as well as the unexpected success of boutique and regional firms in attracting top talent through balanced approaches and competitive deals.  

 

Even firms perceived as laggards managed to secure notable wins, highlighting the diverse appeal of various business models. The final big finding is that while transition dollars have certainly increased it hasn’t really translated to a substantial increase in movement.


Finsum: Another trend we have noticed is the key piece the tools and tech, that are offered play in advisor recruiting. 

Tuesday, 18 June 2024 06:13

Newest Inflation Data Fueling Bull Rally

Declining inflation rates have ignited a bullish frenzy in the equity markets after a turbulent start to 2024. Financial experts highlight the pivotal role played by waning price pressures in propelling the recent stock market surge. 

 

Fueled by promising inflation trends and the burgeoning artificial intelligence sector, analysts have revised their year-end targets upwards for major stock indices like the S&P 500. Consecutive record highs across key benchmarks reflect investors' optimism, bolstered by lower-than-anticipated inflation readings. 

 

Economists interpret the recent data as a harbinger of potential interest rate cuts, marking significant progress towards the Federal Reserve's 2% inflation target. While the Fed projects a solitary rate reduction in 2024, market sentiment leans towards two cuts. 


Finsum: The key will be how many cuts, if rates fall the cap to the market is very high.

Tuesday, 18 June 2024 06:11

The Future of Real Estate Looks Bright

Asset managers believe the next two years might be ideal for investing in private real estate, despite recent market challenges. Clients are increasingly interested in risk-adjusted returns, prompting RIAs to explore private real estate opportunities. 

 

Core real estate, with its stable returns and lower leverage, is seen as favorable. Despite last year's focus on falling property valuations, sentiment is shifting as investors seek to time market entry. 

 

Private real estate offers attractive returns but requires patience due to slow cycles and the need for market stability. Potential buyers should be aware that the price gap between buyers and sellers remains a challenge.


 

Finsum: The old adage of buying the dip could be especially in play for this current moment in real estate.

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