Displaying items by tag: financials

In an article for InvestmentNews, Palav Ghosh discussed the growth in capital allocated to alternative investments by global asset managers. There was a 10% increase from 2021’s $130 billion to $144 billion in 2022 according to a report from Vidrio Financial.

Some of the largest destinations for this capital were private equity and venture capital which accounted for $61.6 billion. This was a slight drop off from $64 billion in 2021 albeit not surprising given the struggles of these two asset classes. However, inflows into credit and real estate remained the same at $27 billion.

Interestingly, there was a more than 100% increase of inflows into hedge funds which went from $8 billion in 2021 to $16.6 billion in 2022. Inflows into infrastructure and real assets also slightly increased to $7.3 billion and $4.9 billion, respectively.

Some of the top allocators to alternative investments were the New York State Common Retirement Fund, the State of Wisconsin Investment Board, and the California State Teachers Retirement System.

Overall, allocators are moving away from the typical 60/40 model and closer to a balanced mix of private and public investments.


Finsum: Allocators are increasing exposure to alternative investments. This isn’t surprising given the volatility for stocks and bonds over the past year. 

Published in Wealth Management

In an article for InvestmentNews, Jenny Zhang of Beyond Investments laid out a quick guide for advisors to evaluate alternative investments. It’s not surprising that interest in the asset class has soared in recent months given the various macro headwinds and poor performance for stocks and bonds in 2022. 

Another factor leading to increased interest in alternative investments is that credit is tightening up amid a slowing economy, high-profile bank failures, and a hawkish Fed. This will force many companies to seek capital in private markets, leading to more opportunities for investors in this niche. 

From an advisor perspective, it’s quite challenging especially as there is more risk and less transparency around alternative investments. The key is to understand that the asset class can be part of a diversified portfolio. 

In terms of fundamentals, advisors should first focus on a client’s specific needs and risk tolerance. Then, they should understand the size of the total market and the borrower’s collateral in the vent of a default. Additionally, two more important factors are the capital structure of the deal and its time horizon.


Finsum: Alternative investments are rapidly growing due to the uncertainty of today’s environment. Here is a quick guide on how to evaluate these investments.

Published in Wealth Management
Monday, 12 December 2022 06:20

The Bonds that Reg Bi

The mother lode of sweeps? And, nope, Mr. Bond, it’s nothing quite as clandestine as an undercover patting down of a room for listening devices.

Overactive imagination much, James?

According to fa-mag.com, there’s a gargantuan sweep of multiple states of broker dealers to gain a sense of just how effective their Regulation Best Interest implementation will be completed early next year. 

Last November, violations and, rampant, at that -- centering around retail advice and sales – reared themselves through similar multi state exams, which encompassed 443 firms, the site continued. That was despite the fact that, for more than 15 months, by then, Reg Bi had been in place.

Meantime, someone say “grace period?”

--Yes, indeed, and quite succinctly at that. And the one that pulled up to the station in the aftermath of Reg Bi’s implementation date wound to its conclusion with financial firms starting to face the first round of enforcement actions from regulators under Reg BI, according to stradley.com.

--Reg Bi was earmarked a priority by the Securities and Exchange Commission. What does that mean for firms? Well, it’s incumbent upon them to have in place the right people, processes and technology in place so they’re still in compliance.

Published in Eq: Financials
Thursday, 27 October 2022 11:58

Age is just an annuity

Okay, sure, there’s the old adage: age is just a…..well, you know where it’s going.

That said, what’s the ideal age to pluck down cash on an annuity?

How about this for a little calculus: the age at which you invest in an annuity, coupled with your life expectancy, determines how much money you pocket from this monthly income over the course of your life, according to annuity.org. Your personal lifestyle, financial position and goals pinpoint the ideal age to invest in an annuity.

“It really kind of depends on the annuity investor, but I’d say that sweet spot is anywhere from 45 to 70 years old,” Joe Liekweg, a licensed agent at Insuractive told Annuity.org.

Most financial advisors are on the same page: 70-75 is the idyllic age to buy a fixed income annuity to get the biggest bang out of your payments while sidestepping tying an overabundance of your savings into the annuity, according to entrepreneur.com

 

According to annuity.org, among questions to bear in mind prior to purchasing an annuity:

  1. When Will You Need the Money?
  2. How Much Will It Cost?
  3. What’s Your Life Expectancy?
  4. What Are Your Risks?
  5. Will the Annuity Work Well With Your Other Income?
Published in Eq: Financials
Thursday, 10 February 2022 19:14

Financials Get ESG Boost

The latest data from MSCI Inc. regarding the environmental social and governance criteria gave updates to America’s largest Financial companies like Wells Fargo, Citigroup, and Morgan Stanley. However, some are accusing rating agencies of ‘greenwashing’ the criteria because these same companies lent a combined $74 billion to fossil-fuel companies. This is the exact reason the SEC is looking to step into ESG ratings in one of their latest announcements. In fact, only 3 lenders in the S&P 500 received ESG rating downgrades. This is mostly because MSCI only considers the fraction of loans to polluters, not their total value.


FINSUM: Total existing outward loans might just be a way the SEC could come down on future ESG rating regulation if these stories gather more headlines.

Published in Eq: Financials
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