Displaying items by tag: macro

The industry is entering a new macro environment that challenges long-standing assumptions about returns, inflation, diversification, and governance. After decades in which strong returns and easy diversification masked deeper structural risks, asset owners now face a paradigm where high valuations and slower economic growth may limit future returns. 

Inflation appears contained in the short term, yet structural forces such as deglobalization and rising public debt suggest it remains a long-run risk that investors must manage more deliberately. These shifts elevate the importance of real returns and purchasing-power protection as core objectives for DC plans, endowments, sovereign wealth funds, and retirement savers. 

They also imply that traditional diversification is less reliable than it once was, requiring new approaches to allocating across asset classes and seeking differentiated return streams.

Finsum: In this environment, multi-asset investing becomes inherently active, demanding broader use of private markets.

From 2021 to 2024, the U.S. saw a record surge in immigration, much of it from people crossing the southern border without visas. Many were released into the country to seek asylum or given temporary protection, and millions entered the labor force. 

By mid-2024, tougher policies and more deportations slowed the inflow sharply. Economists say fewer immigrants could mean slower population and job growth, which may weigh on the broader economy. 

Studies show immigration tends to boost economic output while having little effect on inflation. Looking ahead, stricter policies could further reduce growth if fewer workers are available, especially if mass deportations are carried out.

Finsum: For now, the lasting impact will depend on whether immigration levels stabilize or continue to decline.

The July jobs report showed nonfarm payrolls rising by just 73,000, with major downward revisions to previous months, signaling that the U.S. economy may be slowing more sharply than expected. This has fueled recession concerns, especially as three-month average job gains dropped to just 35,000 and consumer spending, the key driver of GDP, remains tepid. 

Economists point to Trump-era tariffs and weakening labor market data as contributing factors, with some suggesting we may be on the brink of a recession, though GDP still rose 3% in Q2 due to import timing. 

Market reactions were swift: the Fed is now widely expected to cut rates in September, while stocks wavered amid political backlash and uncertain economic signals. Despite the White House expressing confidence, housing and manufacturing data continue to falter, and experts warn of potential consumer pullback. 

Finsum: While some remain optimistic about a soft landing, the outlook is increasingly clouded by high inflation, policy risk, and weakening employment trends.

Active ETFs have officially outnumbered their passive counterparts in the U.S. for the first time, with 2,069 listed funds as of mid-June. While passive ETFs still hold the lion’s share of assets under management, investor interest is clearly shifting—active strategies have attracted nearly 40% of total ETF inflows this year. 

Many investors are turning to active ETFs for more agile, hands-on approaches in navigating today’s unpredictable markets, particularly in fixed income and equity sectors. The SEC is also weighing changes that would allow mutual funds to launch ETF share classes, a move that could dramatically expand access to active strategies and boost tax efficiency. 

However, this flexibility may come at a cost for asset managers, as ETFs typically can't turn away new investors like closed mutual funds can, potentially limiting a manager's control over fund size and strategy execution. 

Finsum: With U.S. ETF assets reaching $11 trillion in May, these structural shifts could fuel continued growth and reshape the way investors access actively managed portfolios.

American consumers are increasingly uneasy about the economy, as reflected in multiple sentiment surveys. The Conference Board’s Consumer Confidence Index fell sharply in February, marking its third consecutive decline amid rising inflation expectations. 

Small businesses and homebuilders are also voicing concerns, with uncertainty reaching record levels among independent business owners. The Federal Reserve is closely monitoring inflation expectations, as shifts in consumer sentiment could influence spending behavior and long-term price stability. 

While consumer confidence doesn’t always predict spending, a new Wells Fargo survey suggests many Americans, particularly younger generations, plan to cut back due to economic uncertainty. 

Finsum: Rising costs for essentials like dining out, fuel, and entertainment are prompting noticeable changes in financial habits and part of weakening sentiment.