Displaying items by tag: ETFs

Dividend investors may find the S&P 500's current 1.2% yield underwhelming, but targeted ETFs offer an appealing solution. The Schwab U.S. Dividend Equity ETF delivers a 3.6% yield by focusing on high-quality companies with strong financials and a history of at least 10 consecutive years of dividend growth. 

Alternatively, the SPDR Portfolio S&P 500 High Dividend ETF emphasizes pure yield, offering a 4.3% yield by selecting the 80 highest-yielding stocks in the S&P 500. While the Schwab ETF prioritizes financial strength and diversification, the SPDR ETF leans into concentrated sectors like real estate and utilities, introducing some risk. 

Pairing the two ETFs can balance yield and quality, creating a diversified income stream for investors. 

Finsum: For those pursuing passive income, these ETFs provide accessible, tailored options that cater to varying investment goals and risk tolerances.

ETF issuers are continually innovating to meet the demand for buffer strategies, appealing to financial advisors and clients who prioritize downside protection, even if it limits potential gains. Often dubbed "boomer candy" for their popularity among retirees, buffered ETFs offer a sense of security akin to a safety net for nervous investors. 

The market for these ETFs has grown exponentially, with over 200 options managing nearly $46 billion in assets, a significant leap from just $200 million in 2018. These strategies typically shield against initial market declines, like the first 10%, while capping upside returns and are often tied to indices like the S&P 500. 

Variations now include funds offering complete downside protection or innovative approaches like Calamos Investments’ product, which protects bitcoin’s price, but caps gain at 10%. 

Finsum: Investors looking for stability particularly as they are aging could benefit from these strategies. 

Separately managed accounts (SMAs) are gaining traction among investors, offering personalized portfolios with features like tax optimization and tailored investment preferences. Once reserved for the wealthy, advancements in technology have made SMAs more accessible, with minimum investments as low as $5,000 through platforms like Fidelity. 

While SMAs allow for benefits such as tax-loss harvesting and charitable stock donations, they often come with higher fees compared to ETFs, which can make them less cost-effective for many retail investors. 

Critics argue that customization can lead to active management pitfalls, with most SMAs historically underperforming benchmarks after accounting for fees. 

Finsum: Innovations in AI and portfolio management tools are enabling financial advisors to efficiently manage larger numbers of accounts with greater precision. 

As the Federal Reserve moves toward eventual rate cuts, investors may want to diversify their fixed income strategies, especially if their portfolios are bond-heavy. Options-based strategies offer a compelling alternative, providing income generation without being directly tied to interest rate changes. 

Invesco has introduced three ETFs that combine exposure to key indexes with active option overlays, aiming to deliver income, downside protection, and equity upside potential. These funds include QQA, focusing on the Nasdaq-100, RSPA with its S&P 500 equal-weight approach, and EFAA, which targets international diversification via the MSCI EAFE Index. 

Each fund employs actively managed option strategies, regularly adapting to market conditions to optimize performance and manage volatility. 

Finsum: For investors seeking steady income with professional oversight, these ETFs present an innovative way to supplement fixed income while navigating a dynamic rate environment.

BlackRock is set to achieve a record year in net inflows, driven by the popularity of its active ETFs and their integration into model portfolios, according to CFO Martin Small. The company reported over $360 billion in net flows during the first three quarters, with $220 billion coming in Q3 alone, boosting its total assets under management to $11.5 trillion. 

The iShares Bitcoin Trust also saw unprecedented success, amassing $50.8 billion in assets within six months of its January launch. BlackRock’s strategy of embedding its ETFs into its expansive model portfolio business has significantly enhanced its flows, a tactic that has resonated with model builders seeking active exposure and cost efficiency. 

State Street Global Advisors’ research underscores the growing adoption of model portfolios, with 39% of advisers' assets now allocated to these investment tools, further fueling BlackRock’s momentum.

Finsum: There is certainly a nesting doll affect to these technological innovations, but the swell of popularity of active options can somewhat be attributed to macro signals being easier to read.