Displaying items by tag: mutual funds

According to a Bloomberg News survey of terminal and Bloomberg.com readers, sixty-five percent of the respondents expect ESG funds to trail the broader market in 2023. Out of the 691 survey respondents, 264 expect ESG funds to “slightly underperform,” while 184 are predicting they’ll “significantly underperform.” Of those 691 respondents, 235 identified themselves as being directly involved in ESG investing, and of this group, a little more than half said they expect the funds to “slightly” or “significantly” underperform. Fionna Ross of Edinburgh-based fund manager Abrdn Plc told Bloomberg, “Given the challenges of 2022, there will be some recovery next year, but it will remain mixed” because of inflation and other overhanging economic hurdles." While data shows that the average equity fund adhering to ESG factors lost slightly less money this year than products that track traditional broader market indexes such as the S&P 500, ESG funds have outperformed over a longer period. According to researchers at Morningstar, about 56% of U.S. sustainable funds beat rival category groups in the three-year period that ended on Sept. 30th.

Finsum:Based on the results of a recent Bloomberg survey, 65% of respondents believe that ESG funds will underperform the broader market in 2023. 

FactSet recently announced the launch of FactSet Model Center, their new no-cost marketplace for wealth advisors to access the industry’s best-of-breed investment solutions within a single, integrated platform. The Model Center will provide advisors with pre-built model portfolios from leading asset managers, product metadata, and detailed marketing materials, including factsheets. Advisors will be able to access model portfolios through the FactSet Model Center application inside the FactSet workstation to perform portfolio analysis, implement models, and create reports for their end clients. Asset managers that will be hosting model portfolios and funds on the FactSet Model Center include BlackRock, Goldman Sachs Asset Management, Janus Henderson Investors, KraneShares, PIMCO, Principal Asset Management, Russell Investments, Simplify ETFs, and VanEck. Wealth advisors will be able to do a deep-level screening to discover models that fit their client’s investment criteria, while asset managers will benefit from scalable model data delivery to tens of thousands of retail wealth advisors.

Finsum:FactSet launched a new no-cost model center where advisors will be able to access model portfolios from leading asset managers.

While hundreds of mutual funds are expected to lose their ESG designations under new EU rules, money continues to flow into these funds. The fund class is called Article 9, which is Europe’s top environmental, social, and governance disclosure designation. Analysts and industry lawyers say a large number of Article 9 funds don’t currently meet the EU’s strict sustainability requirements, with dozens of funds having already lost their Article 9 tag. Hortense Bioy, Morningstar’s global director of sustainability research, said in an email to Bloomberg, “There could be hundreds of Article 9 downgrades in the next six months.” However, the fund class brought almost €13 billion ($13 billion) in inflows last quarter. This brings the total amount over the first nine months of this year to €29 billion, according to Morningstar data. But industry experts don’t know why. Hugo Gallagher, senior policy adviser at the European Sustainable Investment Forum told Bloomberg, “I am somewhat mystified at the continuing inflows. I can only suspect that it’s due to many end-investors not being entirely cognizant of the ambiguities around Article 9.”

Finsum: Billions continue to flow into sustainable funds that are likely going to lose their EU ESG designation and industry experts don’t know why.

Independent wealth management firm Private Advisor Group recently introduced WealthSuite, its new investment management platform. The multi-custodian platform, which is exclusive to its network of over 750 financial advisors, offers bespoke mutual fund, ETF, and blended mutual fund/ETF model portfolios. The platform also provides custom indexing and tax-optimized solutions delivered through an SMA structure. The portfolios are managed by investment strategists including BlackRock, Fidelity Institutional Wealth Adviser LLC, Orion Advisor Solutions, and WisdomTree. Private Advisor Group partnered with Orion Advisor Solutions to handle the technology powering account opening, management, and servicing of the platform, while Private Advisor Group's internal portfolio administration team will manage the day-to-day. The company has plans to continually evaluate and expand its lineup of available strategists with a focus on providing differentiated solutions for advisors and their clients. Verne Marble, Private Advisor Group's Director of Business Development had this to say about the platform, “On average, investment management accounts for 19% of an advisor's time, and WealthSuite is structured to free up capacity so advisors can focus more of their time with investors.”

Finsum:Private Advisor Group launched its new model portfolio platform WealthSuite to help free up time for its network of financial advisors.

It’s no secret that many active fund managers fail to beat their benchmarks over the long term, but investor trading activity in those funds is even worse. A Morningstar examination of investor returns in the largest active bond funds revealed self-destructive behavior by investors. According to Morningstar, investors in the 20 largest Intermediate Core Plus Bond funds, which have 10-year records, were so bad over the last ten years that they gave up more return than the Bloomberg US Aggregate index delivered. The average fund returned 2.11% annualized for the last ten years ending in August, while the Bloomberg US Aggregate index returned 1.35% return. Surprisingly, every single one of the 20 funds outperformed the index, but investors were not able to take advantage of this outperformance. Investors lost 75% of the average return the funds delivered, ending up with an 0.53% annualized return. Poor timing can account for the dismal returns for investors. Between 2021 and 2022, investors added $91 billion to the category looking for extra yield over the aggregate index. Unfortunately, this coincided with inflation which led to intermediate-term bond prices falling.

Finsum: Investors poured money into active fixed-income funds at the worst possible time, leading to massive underperformance compared to the funds.