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FINSUM

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Monday, 28 April 2025 05:41

Research Shows Push for SMAs

Cerulli Research highlights how the growing wealth of retail investors is pushing advisors to prioritize tax efficiency, with ETFs becoming an increasingly attractive structure. ETFs offer significant tax advantages, such as low turnover and minimized capital gains distributions, making them particularly appealing in today’s uncertain economic climate. 

 

As a result, Cerulli expects more separately managed account (SMA) assets to shift into ETFs, driven by both tax benefits and operational efficiencies. High net worth advisors are also focusing more heavily on tax planning, with the percentage offering tax guidance rising sharply in recent years. 

 

Despite the $2.7 trillion currently held in SMAs, advisors are steadily increasing their ETF allocations, especially at larger practices. However, barriers like the high cost of launching ETFs mean wealth management firms will need scale — and may increasingly turn to white-label providers for help — to fully capitalize on this shift.


Finsum: Separately managed accounts could definitely see a spike in popularity in the coming years given technological ease. 

American Energy Fund (AEF) has broadened its asset-backed investment lineup, opening access to domestic oil and gas projects for qualified investors. The new opportunities include ventures in the Permian Basin and North Texas, featuring on-site briefings and a focus on operational transparency. 

 

AEF believes that in today’s turbulent markets, energy investments are regaining appeal as a reliable asset class. These offerings are limited to accredited investors, meaning participants must meet specific wealth, income, or professional standards set by financial regulators. 

 

By tailoring these opportunities to sophisticated investors, AEF aims to blend performance, visibility, and compliance into its energy investment strategy.



Finsum: The current administration is no doubt making it friendlier for the energy sector, but will tariffs hinder any regulatory ease. 

 

The rapid growth of open-end funds investing in illiquid assets—like real estate, private equity, and credit—has introduced both opportunity and fragility, particularly due to stale pricing risks that can lead to wealth transfers between investors. 

 

Research shows that these funds often experience artificially smooth and lagged returns, which can mislead investors about actual performance and risk, enabling NAV-timing strategies that exploit predictable price movements. Spencer Couts and colleagues developed a more advanced return unsmoothing method to correct for spurious autocorrelation and better measure fund risk and performance, especially in highly illiquid private credit funds. 

 

However, interval and tender-offer funds help manage these risks by limiting capital flows and allowing managers to avoid forced sales or purchases of illiquid assets.


Finsum: Pooling capital through regulated open-end structures with controlled liquidity offers a more stable way to invest in illiquid markets.

Monday, 21 April 2025 07:12

Blackstone Warns of Tariff Impact on PE

Blackstone beat first-quarter profit expectations, with distributable earnings rising 11% to $1.41 billion, or $1.09 per share, fueled by strong private equity and credit business performance. Despite the earnings beat, CEO Stephen Schwarzman cautioned that rising market volatility—driven largely by tariff uncertainty—may slow down asset sales in the near term. 

 

The firm brought in $61.64 billion in inflows, with nearly half directed toward its credit and insurance segment, pushing assets under management to $1.17 trillion. While the private equity division posted a 13% increase in earnings thanks to $6.5 billion in asset sales, the real estate unit remained a drag with a 6% decline in AUM. 

 

Schwarzman emphasized that a swift resolution to tariff disputes is vital to sustaining economic growth, echoing broader recession concerns from the business community. Despite turbulent markets, Blackstone sees potential in deploying its $177 billion in dry powder amid growing investor caution.


Finsum: Some alts will prove more fruitful in the face of tariffs but fund composition will matter greatly in the P/E space. 

CAIS has launched a dedicated capital markets division to unify and expand its offerings in defined-outcome strategies, responding to heightened advisor demand for portfolio tools that balance risk and return in volatile markets. 

 

The new CAIS Capital Markets unit consolidates the firm’s capabilities in structured notes, hedging solutions, managed referrals, and trade execution—all within its existing platform. Advisors now gain streamlined access to customized structured investments, underwritten by leading bank issuers, tailored for yield, growth, or capital preservation objectives. 

 

The platform has seen robust growth, with a 46% year-over-year increase in advisor allocations to structured notes as of Q1 2024 and 38% of advisors planning to further increase exposure, per a joint CAIS-Mercer survey. The expansion also deepens CAIS's relationships with major partners like Focus Financial and Osaic, both tapping into the new offering to better serve advisors and clients.


Finsum; The technological advancements are really aiding in the popularity of structured notes and other less liquid products

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