In an article for Vettafi, Todd Rosenblum covers the growth of active equity and fixed income funds, and how they are taking an increasing share of the ETF market. 

The category has seen 50% growth in assets over the last 3 years and now comprises 6% of the total ETF market. In response to this demand, there has been an increase in the issuance of active ETFs. 

It’s particularly relevant for fixed income as active funds can take advantage of opportunities unavailable to passive funds. One example is the Blackrock Flexible Income ETF which is designed to give investors opportunities for yield in more obscure markets. 

Blackrock is a major presence in the active ETF market and also recently launched the BlackRock Ultra Short-Term Bond ETF and the BlackRock Short Maturity Bond ETF. Overall, Blackrock is looking to create a comprehensive ‘active ETF platform that complements its existing lineup of passive ETFs and active mutual funds. It gives advisors and investors access to its investment resources and management while retaining the benefits of an ETF. 

Finsum: Active ETFs are booming, and Blackrock is looking to capitalize with several recent offerings in the space.

A new breed of end to end third party operating models could provide handsome cost savings, spawn new and innovative business models and stoke up new streams of revenues, according to bcg.com. That outlook’s based on a new report, titled Scalable Tech and Operations in Wealth and Asset Management,    by Boston Consulting Group and FNZ, a global end to end wealth platform.

“Wealth and asset managers are faced with a myriad of challenges, and it’s clear that partnering with end-to-end third-party operating models can yield benefits and create competitive advantage if done right, despite running counter to certain long-established practices,” said Akin Soysal, a BCG managing director and partner and coauthor of the report.

"Customer demands for personalized wealth solutions are steadily rising along the value chain, requiring wealth and asset managers to make further investments," noted Din Mustaffa, group chief strategy officer at FNZ, according to finance.yahoo.com. "It's important to note that while most of these changes will require technology as an enabler, operating models will also need to be adjusted to navigate the shifting landscape in a cost-effective manner."

Jamie Dimon, JPMorgan Chase C.E.O, has his eye on the road. Significantly down the road.

While he’s expected to outline his plans for the bank for years down the line, according to the New York Times, when it comes to the issue of who his successor will be, he’s likely to encounter questions anew.

While he’s not expected to climb down from the saddle anytime soon, the issue could rise to the surface among shareholders once again in light of succession plans at two rivals of JPMorgan. At Morgan Stanley, James Gorman recently announced he planned to step away within the next 12 months, while there are reports that Ken Jacobs, CEO of Lazard, is prepping to depart.

Meantime, whenever he decides the time’s right to hit the exit, Dimon will do so with considerably more than a gold watch. If he’s in his current position in 2026, he’ll pocket an additional $50 million payout, according to the site.  

Speaking of which, in terms of compensation changes around the big boys of broker-dealers – save for a few exceptions among some of the regional national firms – the year, it seems, is destined to be relatively quiet, according to financial-planning.com.

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For banks, the last couple of years have brought significant challenges due to higher rates. For Main Street banks, they are forced to pay higher rates on deposits, while they have made loans at much lower rates. Wall Street banks are facing an environment where IPOs, M&A activity, and corporate issues are at low levels, in part due to the Fed’s hawkish stance according to a Bloomberg article by Sridhar Natarajan.

However, one area of growth for Wall Street-centric banks has been in wealth management. For Morgan Stanley, its wealth management division produced $6.6 billion in pretax profits in 2022. However, it recently set a goal of $12 billion in pretax profits for its wealth management division in the coming years. 

It sees growth in the division coming from more assets, an increase in lending, and markets growing in size. It also is targeting $1 trillion in net new assets over the next 3 years. 

For the full year, it’s expected to earn $10.8 billion in net income which is a drop from $11.4 billion last year. Most of the decline is due to investment banking fees which are projected to be about 40% of their 2021 levels. 

Finsum: Morgan Stanley is projecting that its wealth management’s pretax profits will nearly double over the coming years with asset growth a key driver. 

In an article for ETFTrends, James Comois discusses how direct indexing can lead to increased customization of portfolios which isn’t possible to the same extent as with ETFs and mutual funds. However, it’s important to note that the primary benefits of index investing are retained with direct indexing as it comes with lower costs and diversification.

The major differentiation is that investors own the actual components of the index in their portfolio in order to replicate its performance. At one time this would be too unwieldy for the vast majority of investors, however direct indexing is increasingly available to all investors due to technology which makes its implementation and management simple for any advisor.

In addition to tax benefits, another major positive is that it can result in increased customization of portfolios. For instance, an investor can track the S&P 500 but negate stocks or sectors that they would like to avoid. Many investors are not comfortable holding stocks that are related to gambling or tobacco, while others are unwilling to invest in fossil fuel companies. However, the index can still be tracked as these stocks are replaced with other stocks that have similar factor scores. 

Finsum: Direct indexing is growing in popularity due to the increased flexibility and customization it allows for investors while retaining the benefits of index investing..