Eq: Total Market

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’. 

 

According to analysts at JPMorgan Chase & Co commodities could hit record territory and climb as high as 40% in the upcoming months. Investors tilting their portfolios into commodities are doing so in response to rampant inflation. Commodities might be at relative highs but there is lot of reason these prices could further elevate. Russia’s invasion pushed commodities prices higher as grains, metals, and fossil fuels were all affected. Goldman Sachs has also pushed raw materials as an inflation hedge.


Finsum: The trickle-down effect of Oil prices alone could further boost commodities in the coming month.

The predominant sentiment in financial markets is that active funds have an edge during volatile periods because picks are more apparent and therefore easier to execute. However, according to the Euro Securities and Market Authority, active funds didn’t outperform passive funds during the critical stressed market conditions from February 19th to June 30th, 2020. This full cycle in financial markets didn’t give active funds an advantage and actually underperformed by 6.6% annualized in that period. This research backs up previous reports by morningstar that active funds didn’t outperform during high volatility Covid-19.


FinsumCovid-19’s cycle was the K-shaped recovery Economists dream of, so this isn’t the nail in the coffin for active management.

 

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