Eq: Total Market
Anyone see the copy desk? It appears the definition of the fiduciary might be in for a rewrite, according to winkintel.com.
At this point, the Department of Labor needs to rewrite its fiduciary definition to all but make all first time advice fiduciary is just about the lone thing still on the table, analysts concur.
In that event, the alternation would pull weight and basically revert the DOL back to its maiden 2016 fiduciary rule, said Brad Campbell, partner at Faegre Drinker law firm. As it stands, the DOL’s package known as the investment advice rule makes rollover advice fiduciary, the site continued.
Valuable investment advice consists of two primary elements. One evolves around a new prohibited transaction exemption. Here, advisors can provide conflicted advice for commissions. The other is a reinstatement of the 1975 “live part test” in order to ascertain that which constitutes advice on investments.
Campbell noted the initiative’s “likely to be a very substantial proposal that will harken back to legal fights of 2016, which the DOL ultimately lost,” according to fa-mag.com.
The DOL, he continued, “is taking the position that fiduciary starts with the initial or rollover conversation. That's a pretty aggressive reinterpretation of what they historically had said, which frankly was ... that most rollovers were not fiduciary,”.
Meantime, investors so far continue to quake over performance of fixed income assets.
The Fed’s expected to continue fueling interest rates not on through the second half of the year, but into next year as well, according to wellsfargo.com. Consequently, the degree of the yield curve inversion may top what had been the two cycles before.
Now, up to now for the year, a regular theme’s emerged: the trepidations among investors evolving around the performance of fixed income assets. Some of the top questions swirling in the noggins of fixed income investors that Wells identified:
- What is happening to bonds so far in 2022?
- Why continue to invest in bonds?
- Why is the Fed garnering so much attention this year?
- What should investors expect from the remaining three Fed meetings of this year?
- What does Fed quantitative tightening mean?
While some market activities are difficult project, one thing that can be pinpointed are long trends in fixed income investing, according to fi-desk.com. Why? Because we can see them and, among all fixed income managers, increasing rife with significance.
Six trends they’re picking up on in the industry include Direct Indexing or Custom Indexing; Increased use of home office model portfolios; tax-loss harvesting in SMAs; truly optimizing rather than sequentially allocating; insisting on system interoperability; aggregating various data sources; and a shift in the Build vs. Buy debate.
--And these developments should be embraced, according to the site. “We believe these six trends are changing fixed income portfolio management for the better.”
Stocks had one of their worst days in months as the market fell off 2% and sent volatility measures such as the VIX spiking. Wallstreet’s ‘fear gauge’ was up nearly 4% as a result. This all happens as the dollar is reaching very strong levels and almost parodies the euro. While that might be great for those on a summer vacation in the Mediterranean, it's bad news for investors, because it reflects a more fed tightening, rising treasury rates, and inflation. Investors are concerned about rising volatility once again after it felt like it was behind them. With healthy job numbers and inflation trying to turn a corner, things looked bright and the market felt it, but the reality of a one-off good inflation report is setting in.
Finsum: Advisors need strategies for resilience vs inflation and excess volatility because its persistence seems strong.
While model portfolios, of course, help pare down some of the labor inherent to the analysis of all investment positions, some advisors, nevertheless, outsource some – or all – of the investment management responsibilities by tapping third part model portfolios, according to flexshares.com.
Unlike funds, among other traditional investment vehicles, external solutions like third party portfolios provide financial advisors leeway over a gambit of aspects of managing a portfolio. They include underlying holdings, asset allocation, rebalancing frequency, and trading.
“Advisors are typically seeking a holistic, cost-efficient, outcome-oriented solution from a trusted brand. Our models seek to provide a robust framework to navigate global markets and offer a straightforward means to help advisors build scale, enhance client service and satisfy regulatory expectations,” according to Melinda Mecca, director of Investment Solutions, Northern Trust Asset Management.
Also referred to by some RIA in the industry as the separately managed account, they’re used by investment advisors for accounts with higher AUM or asset under management, according to synertree.io.
Now, trade and asset allocation decisions are beyond the wheelhouse of an RIA, but should have the chops to know the product without in extensive insight into each security within the model portfolio, the site continued.
The rumble for a trend called direct indexing seems to be accelerating, as a burgeoning number of investors are displaying a demand for specialized portfolios, according to markettradingessentials.com.
The upshot: eschewing ownership of a mutual or exchange traded fund, direct indexing’s flashing the wallet on stocks of an index, the site continued. The idea’s to hit to hit paydirt on, for example, tax efficiency, diversification or values-based investing.
“It says a lot that these large fund providers are leaning into direct indexing,” said Adam Grealish, head of investments at Altruist, an advisor platform with a direct indexing product.
So, in light of the ascension of direct indexing, investors might be asking, pre tell, how to build a portfolio in which this strategy’s incorporated, according to corporate.vanguard.com.
Well, presto, investors can cull ways to meet that goal through a framework available in Personalized indexing: A portfolio construction plan, a Vanguard research paper recently published.
“Our research represents a sensible starting point for potential direct indexing investors who want to include this strategy in their portfolios,” said Vanguard senior investment strategist Kevin Khang, Ph.D., one of the paper’s authors.
Made up of a diversified group of assets built to generate an expected return, model portfolios also come with risk, according to smartasset.com.
With your financial goals squarely in the cross hairs, a host of portfolios typically are offered by financial advisors or investment managers. With these portfolios, investors can leverage simple and effective investment methods under minimal management, the site continued.
Certainly, it seems, the popularity of model portfolios is hardly lukewarm. Within the landscape of the financial product distribution landscape, among advisors, their burgeoning use carries formidable power, according to brainbridge.com.
These portfolios, over time, are automatically rebalanced based on evolving market conditions or client needs. According to MMI, these models always have been a linchpin of the $6.5 trillion advisory solutions industry. Most prominently, they’ve played a big role in packaged mutual fund advisory programs, the site stated. That’s where discretionary investment management is outsourced by an advisor to an internal investment committee/research team at a distributor.
Creating the portfolio evolves around a plethora of decisions, according to forbes.com.
Through diversification, a model portfolio positions you to hedge your risks.
In an ideal world, the brains behind the portfolios are financial advisors. Their role’s to oversee the portfolios daily, allowing you, the customer, to be hands off.