Merrill Lynch recently announced that a $1 million plus producer from Ameriprise Financial has joined its private wealth unit team. Alex Miller, who was part of an Ameriprise Financial team with a billion-dollar book in Houston, joined Merrill’s Massey Schmidt Harper Group in Houston. The team is led by managing director Craig Lambert Massey and has $2.1 billion in team assets. At Ameriprise, Miller was part of Pennington Wealth Management, led by Darrell Pennington. The announcement follows several other new hires at Merrill in recent months, including producers in community markets that are outside its parent Bank of America’s branch footprint and junior brokers with fewer than 12 years of experience. The firm has also expanded its search to include higher offers for veteran brokers. For instance, last month it hired a team of private bankers managing around $1 billion from Citigroup in New York. They also nabbed a million-dollar producer from Morgan Stanley in Huntsville, Alabama, who joined through the firm’s community markets initiative. However, the firm is still seeing several high-producing teams heading for the door.

Finsum:As Merrill Lynchcontinues to lose several high-producing teams, the firm is making a recruiting push with the addition of a $1 million plus producer from Ameriprise Financial.

Last month, LPL Financial announced that it was acquiring Financial Resources Group Investment Services, an LPL branch office that supports financial institutions and advisors. The firm comprises approximately 800 advisors and serves approximately $40 billion of advisory and brokerage assets. Now that deal is paying off as LPL is adding another large team to Financial Resources. The firm was able to lure advisors David Rimkus, Donald Sharko, and Thomas Phelan to LPL and Financial Resources from LaSalle St. Securities. The three-advisor team rebranded its Orland Park, Illinois-based practice as Harbor Lighthouse Wealth Management. Harbor Lighthouse managed about $285 million in client assets at its previous firm and plans to use LPL as its brokerage, registered investment advisor, and custodian, and align with Financial Resources. Rimkus said in an interview that “The choice of Financial Resources enables Harbor Lighthouse to remain part of a firm more closely resembling the size of their prior midsize brokerage even as they became three out of the more than 21,000 advisors with LPL.” He also stated that “The need for technology enabling growth among new and existing clients and succession planning played a role in the move as well.”

Finsum:LPL's recent acquisition of Financial Resources Group is starting to pay dividends as another team of advisors that manages a combined $285 million in assets aligns with the branch.

According to a report by US SIF Foundation, a trade group for the sustainable investment industry, the U.S. market for ESG products is less than half of the size previously reported. Assets in U.S. sustainable investments fell 51% from $17.1 trillion at the beginning of 2020 to $8.4 trillion at the start of 2022. The difference is mainly due to changes in the methodology used to calculate the numbers and the impending tightening of regulation, according to the trade group. Ahead of new fund labeling rules by the SEC, the foundation noted that asset managers were being “more circumspect in what they consider to be assets that incorporate ESG criteria”, which led to “modest to steep” declines in ESG AUM reported compared to 2020. In addition, the 2022 report made a new distinction between firm and fund-level claims to sustainability. For example, it did not include “The AUM of investors that stated they practice firm-wide ESG integration without providing additional information on specific ESG criteria that are used in decision-making and portfolio construction.” Rather, they only included the assets of investors or vehicles that “incorporate one or more specific ESG criteria, plus the assets of funds which specify that ESG or sustainability is integral to its decision-making or portfolio construction.”

Finsum:Due to impending regulatory changes and a new calculation methodology, the U.S. market for ESG products is less than half of the size previously reported.

Invesco continues to expand its ETF lineup with the launch of four new actively managed ETFs. The new fund offerings include the Invesco AAA CLO Floating Rate Note ETF (ICLO), the Invesco High Yield Select ETF (HIYS), the Invesco Municipal Strategic Income ETF (IMSI), and the Invesco Short Duration Bond ETF (ISDB). All four funds were launched last Friday and trade on the CBOE. ICLO, which has an expense ratio of 0.26%, invests in floating-rate note securities issued by collateralized loan obligations (CLOs) that are rated AAA or equivalent. HIYS invests in higher quality below investment grade fixed income securities, such as corporate bonds and convertible securities. The fund charges 0.48%. IMSI has an expense ratio of 0.39% and invests in municipal securities exempt from federal income taxes and in other instruments that have similar economic characteristics. ISDB invests in fixed-income securities such as high-yield bonds and other similar instruments and aims to maintain a portfolio maturity and duration between one and three years. The ETF charges 0.35%.

Finsum:Invesco bolsters its active stable of ETFs with the launch of four fixed-income ETFs that invest in CLOs, high-yield bonds, munis, and short-duration bonds.

Seems there’s plenty of affection for alternatives these days. Yeah; endearing, right? More and more people are holding alternatives closely, maybe, warmly, even, a vivid reflection of an ability to access a deep variety of products like those – not to mention the supporting technology, according to thinkadvisor.com.

Looking volatility squarely in the kisser, advisors are putting the pedal to the metal when it comes to turning to private funds and alternative investments, according to a bi annual survey of 400 financial advisors reported in October by Broadridge Financial Solutions, as reported by prnewswire.com. "Advisors are acutely feeling the need for diversification in their clients' portfolios but remain dissatisfied with the private fund and alternative investment products and resources available to them, largely due to limited availability and restrictive options. Asset managers are not adequately meeting financial advisors' needs, despite an understandable surge in demand against the backdrop of volatile public markets," said Matthew Schiffman, principal of Distribution Insight at Broadridge Financial Solutions. 

"We see this as a strong, long-term opportunity for asset managers to showcase their value by providing product options that meet the growing demand for alternative investments among retail investors."

You could say when it comes to blue plate specials, ESGs are on the menu.  Make it two. Take a look at the environment. The GOP’s gearing up and, almost inevitably, when the new year hits, a gaggle of House committees will kick off hearings to deal with what some members of the grand party see as the threat ESG poses to a host of issues: investor returns, the country’s oil and gas industry, energy security, universal equal opportunity, according to forbes.com.  

And, hey, stick around. More very well might be lurking around the corner. Then there’s Europe’s stake. With assets managers taking in fresh regulatory proposals that could send the Europe’s largest ESG fund category into a tailspin, there’s a plan by its markets watchdog, ESMA, according to linkedin.com. The upshot of the plan: set quantifiable ESG and sustainable investing standards, which is compelling portfolio managers to think twice about the way they design and market an ESG fund class – Article 8.

The model target segment, it seems, get around. Even without an Uber app. It goes like this: the segment represents 26% of industry advisor asset, with advisors checking in at 46% and advisory practices, 61%, according to fundssociety.com. Yep; spreading the wealth, so to speak.

So, what’s the draw? Well…if you have to ask. That said, if you do, tax efficiency’s among the headline requests for financial advisors deep diving the upside of the portfolios. Particularly noteworthy; 60% of model providers report receiving at least some requests from advisors surrounding this objective.

“This aligns with a broader industry trend regarding the importance of effective tax management as a way to add value to client portfolios,” says Matt Apkarian, associate director. “Advisors want to be able to effectively tax-loss harvest, and to be able to reduce the tax impact of changing investment solutions.”

What’s more, the popularity of model portfolio’s isn’t hightailing it out of doge anytime soon. Along those lines, the clients of advisors should keep an eye on the mail. Eighty two will be the recipients of targeted or comprehensive financial planning services by next year, according to napa-net.org.

Tidal Financial Group recently announced the launch of the Senior Secured Credit Opportunities ETF (SECD), its first actively managed credit ETF. The fund, which is managed by Gateway Credit Partners seeks to generate consistent income and preserve capital by investing in a combination of first-lien senior secured loans and secured bonds to businesses operating in North America. Gateway is a value-based credit manager that focuses on capturing fundamental and technical inefficiencies in the leveraged loan and high-yield bond market. The firm focuses on generating true alpha which they define as yield per turn of leverage significantly greater than their representative indices. It believes a “size arbitrage” exists in credit markets as rating agency models can over-emphasize size vs credit fundamentals. Tim Gramatovich founder of Gateway had this to say about the ETF launch, “At over $3 trillion, the US loan and high-yield bond markets offer investors a tremendous opportunity to generate yield. We believe SECD fills a much-needed gap in the actively managed corporate credit space particularly as it relates to the loan market.”

Finsum:Tidal Financial Group recently launched an actively managed credit ETF that aims to take advantage of higher yields in the loan market.

With bond mutual funds experiencing record losses this year, many investors are headed for the exit. But most are not leaving fixed income altogether, they’re just swapping mutual funds for ETFs. The main reason is taxes. Many investors are selling positions in bond funds and putting the cash into similar ETFs to harvest tax losses. According to The Wall Street Journal, “This year is shaping up to be the biggest 'wrapper swap' on record.” About $454 billion has been pulled from bond mutual funds, while $157 billion has flowed into bond ETFs through the end of October. According to macro research firm Strategas, it would be the largest net annual swap to ETFs by a wide margin.” Todd Sohn, ETF strategist at Strategas stated, “The Fed is at its most aggressive in 40 years. Along with inflation, that has absolutely crushed bonds. It’s set off the acceleration of wrapper swapping that we have seen in equities for a while. Now we’re finally getting it in bonds.” Many of these swappers are also taking their money out of mutual funds that hold riskier bonds and putting them into safer Treasury ETFs.

Finsum:With the bond market experiencing its worst year since 1975, bond investors are trading mutual funds for ETFs at a record pace.

The private REIT market was recently rocked by the decision of Blackstone and Starwood, which manage two of the nation's largest private REITs, to limit and prorate investors' repurchase requests because they exceeded redemption restrictions. Private REITs are real estate investment trusts that are exempt from SEC registration and whose shares do not trade on national stock exchanges. While the private REIT market flourished during the low interest-rate era between 2017 and 2021, the expectation that interest rates will continue to rise could make it difficult for these private funds to perform well in the future. That and a perceived gap between the performance of nontraded private REITs and public REITs led to a surge in investor redemptions for Blackstone and Starwood. Both firms are trying to shore up their funds’ liquidity through redemption restrictions. The Blackstone Real Estate Income Trust (BREIT), which has $125 billion in assets under management, announced the closing of redemptions for this quarter in a letter to shareholders last week. The announcement from the Starwood Real Estate Income Trust (SREIT), which is valued at about $14.6 billion, came more recently over the weekend. 

Finsum:Rising interest rates led to a surge in investor redemptions for private REITs, resulting in Blackstone and Starwood restricting redemptions this quarter.