Displaying items by tag: ETFs

Wednesday, 15 December 2021 20:39

How Direct Indexing Outperforms ETFs

Direct and Custom Indexing is swallowing up the financial world interests like ETFs have over the last 20 years, but this new trend isn’t without its drawbacks, specifically for retirees. Most investors will utilize direct indexing to weed out stocks they don’t want or minimize their tax burden, Lawrence Tint formerly of BGI voiced some critiques of custom indexing. Tint believes the tax advantage over traditional indexing is minimal because of the turnover in the funds. Additionally direct indexing will have higher fees and even if brokers don’t charge for fees investors will incur the bid-ask spread costs. Finally, direct indexing will make it very hard for income investors to reinvest dividends in a way to mirror the existing or custom index, and the more custom the index the more likely the traditional problems of stock pickers will riddle the custom portfolio.


FINSUM: These drawbacks to direct indexing provide a more complete view of the pros and cons to the financial trend, but it still has a leg up in tax loss harvesting over traditional ETFs.

Published in Wealth Management
Wednesday, 15 December 2021 20:28

Active Fixed Income ETFs Get Booming Inflows

Saying the bond market is difficult would be more than an understatement, and while yields are creeping it's still hard to get the historic performance. However, many investors are turning to active fixed income ETFs. This has led to a swelling of inflows into the market category making up 16% of ETF inflows in 2021 through October. Turmoil at the Fed and the continual threat of a taper tantrum have many investors looking to pros to sort out the difficulties in the bond market. Active FI ETFs can also fit narrower targets and accommodate the rapidly shifting macroeconomic environment.


FINSUM: Seasoned veterans at the helm make the most sense when the environment is shifting, and active ETF can edge out when the future is uncertain.

Published in Bonds: IG
Wednesday, 08 December 2021 22:13

Direct Indexing: Fighting Back Against ETFs

ETFs have been a fee destroyer since their inception, and advisors/companies have been forced to either play along or bleed AUM. However, direct/custom is putting the power back in in the hands of the advisors. BlackRock, Vanguard, and Morgan Stanley are all buying their way into the direct indexing craze. Direct Indexing is giving investors and advisors the best of both active and passive investing worlds. While stock picking might not have the best record, starting from a base index and then stripping or adding based on preference could give investors. Custom Indexing can be for a preference for/or against a stock but more importantly it gives investors the reins when it comes to their tax burdens.


FINSUM: Direct Indexing is the goldilocks solution to the low fee/advisor specialty conundrum, and will be the dominant trend in investing over the next decade.

Published in Eq: Total Market
Monday, 06 December 2021 19:47

The Best ESG Funds of 2021

With 2021 almost coming to a close it's worth looking back at the biggest ESG funds of the last year, and three have stood out in a very saturated market. Goldman’s Future Planet Equity ETF is an active fund that addresses environmental problems and has raked in $107m since its launch in mid-July. Invesco’s MSCI Sustainable Future ETF focuses on corporations utilizing natural resources more efficiently and has outperformed the previous Goldman’s Future Planet fund by 4.7% since July. Finally, the Humankind U.S. Stock ETF is an ESG focused fund that is weighted by proprietary data and varies greatly from the traditional cap-weighted ETF. HKND has raised over $106 million since its launch in February.


FINSUM: These are stand out performers in a highly saturated market, equity focused ETFs are the route to take as far as ESGs.

Published in Eq: Tech
Wednesday, 10 November 2021 22:48

Envestnet is Going Big on Direct Indexing

Envestnet’s CEO told investors that it oversees $49 billion in direct investing assets and that they see this number going higher in the future. Direct investing is a part of a growth area for the company along with other personalized portfolios, tax overlays, and ESG and impact investing. Direct indexing allows investors to hold the underlying assets and then add or drop stocks for offsetting tax purposes or to hit other financial objectives. Other giants in the financial industry such as Vanguard and Franklin Templeton have acquired direct indexing portfolios and many firms are ramping up competition in this space.


FINSUM: Direct investing makes a lot of sense over traditional hard indexing because of the customization and tailoring to your financial needs, but it does usually come at the cost of higher fees.

Published in Eq: Total Market
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