It appears that the Office of Management and Budget (OMB) has finished its review of a new rule on ESG investing in retirement plans. The regulation was submitted for review on October 6th to the White House’s OMB as “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” in a “final rule stage.” “The rule implements Executive Order 13990 from January 20, 2021, titled Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis, and Executive Order 14030 from May 20, 2021, titled Climate-Related Financial Risks.” The rule was listed on the OMB’s review dashboard as of Friday but was removed over the weekend, suggesting that the review has now been completed. This means the Labor Department can now proceed with issuing the regulation.

Finsum:TheOffice of Management and Budget finished its review of a new rule on ESG investing in retirement plans which means that the Labor Department can now proceed with issuing the regulation. 

Fixed income ETFs – and non core fixed income, especially? You go. According to a survey by State Street Global Advisors, they “play an expanded role in portfolio construction” for institutional investors, stated etftrends.com.

As reported in last month, over the next 12 months, the 700 global institutional investors surveyed by SSGA plan to up their exposure to high yield corporate debt; in all likelihood, 62% will do it through ETFs, per “The Role of ETFs in a New Fixed Income Landscape.” Last year was a different story. Just 27% of investors were significantly using ETFs to expand their allocation of to non core fixed income, according to the last year’s fixed income survey.

“Our conversations with investors have reinforced what we already knew – there is significant demand for more targeted fixed income products,” said Tom Kelly, an ETF industry leader co founder. “Our initial product suites aim to create a full toolkit for high-yield investors looking to implement their specific views on the market, and we anticipate extending this approach to other fixed income asset classes.”

Now, with minds of their own, bless ‘em, younger investors are more inclined to place emphasis on total returns over income potential, according to usnews.com.

Almost on the dime, they reinvest dividends – any dividends, while investors who’ve been around the block oh, say, a time or two, might place greater importance on the possibility of greater income. For a steady income to accommodate living expenses, they could lean on their portfolios.

With advisors increasingly turning to model portfolios, it seems the financial product distribution landscape’s in the crosshairs of transformation, according to broadridge.com.

Particularly significant, they’ve had a big time role in packaged mutual fund advisory programs where an advisor hands off discretionary investment management to an internal investment committee/research team at a distributor.

Of course, one size, as you’ve probably heard, doesn’t fit all advisors, broker/dealers and asset managers throughout the industry. Their lights are lit by different factors to leverage model portfolios, the site continued.

Ah, but at the same time, bear in mind that if you’re a, um, control freak, you might want to think twice about model portfolios. Probably do anyway; think twice that is. Anyway, in going with the portfolios, you surrender some control of your asset management, according to smartasset.com. Then there’s the fact that, as with other investments, if you’re looking for a sure thing in terms of performance, forget about it. 

That’s to say nothing of the additional fees tacked on with model portfolios that would be a non issue if you selected investments on your own. 

Location..location…location?

Well, active management fits the bill in any environment, according to Nuveen.com, according to whom actively managed bond strategies can play a part in managing portfolio risk while abetting returns. Not a bad thing, it pointed out, especially these days, with percolating interest rates.

Mike Gitlin, head of Fixed Income for Capital Group, said: “Now is a good time for financial professionals and investors alike to consider active fixed income ETFs. We’ve deliberately built our three new active ETFs in categories that have historically been underserved by active ETF managers. We believe these will help investors manage short-term cash needs, generate tax-exempt income, and benefit from some of the best starting yields we’ve seen in credit in years.”

You might say today’s market conditions have been less than idyllic for fixed income investors. Might you? Anyway, at the same time, investors in equities are on the hunt for bonds to offset stock prices headed the wrong way, according to thestreet.com. Still, with planning and a grasp of available options, investors can find traction in bond markets that are transitioning.

T. Rowe Price added to its active ETF lineup with the launch of the T. Rowe Price Floating Rate ETF (TFLR). This follows the firm’s launch of the T. Rowe Price High Yield ETF last month. TFLR invests primarily in floating-rate loans and other floating-rate debt securities. The manager, Paul Massaro, will focus on investing in BB and B-rated loans, which he believes are likely to keep volatility at below-market rates over time. He will take a disciplined approach to credit selection, featuring rigorous proprietary research and strict risk control, similar to the mutual fund version of the fund. Massaro had this to say about the launch, "Floating rate bank loans hold a unique position across the broad fixed income landscape given their combination of a floating rate coupon and elevated placement in a company's capital structure – an important risk management attribute. Historically, bank loans have provided a partial hedge against rising rates as well as low return correlations with other asset classes, making them a solid portfolio diversifier.” TFLR trades on the NYSE Arca and has an expense ratio of 0.61%.

Finsum:T. Rowe Price brings its active ETF stable to ten with the recent launch of the T. Rowe Price Floating Rate ETF. 

After listing three new equity sustainability ETFs earlier this month, Dimensional Fund Advisors launched a new bond sustainability fund, the Dimensional Global Sustainability Fixed Income ETF (DFSB). The fund, which trades on the NYSE Arca, invests in a broad portfolio of investment-grade debt securities of U.S. and non-U.S. corporate and government issuers, including mortgage-backed securities. DFSB will also take into account the impact that companies may have on environmental and sustainability considerations to lower carbon footprint exposure. More specifically, the fund will exclude companies that the manager considers to have high greenhouse gas emissions intensity or fossil fuel reserves relative to other issuers. DFSB has an expense ratio of 0.24% and is benchmarked against the Bloomberg Global Aggregate Bond Index. The new fund brings DFA’s ETF lineup to 28 with over $64 billion in assets.

Finsum:DFA adds to its ETF lineup with a bond sustainability fund that aims to lower carbon footprint exposure.

If firms haven’t addressed and mitigated any potential conflicts of interest yet, they better start soon. Both FINRA and the SEC have not only brought their first Regulation Best Interest enforcements this year, but both agencies are promising that they will be ramping up enforcement. Robert Cook, President and CEO of FINRA, warned at the recent ALI-CLE Life Insurance Products Conference in Washington, D.C. that “Anything that would be a violation of the old suitability standard is now going to be a violation under the Reg BI standard.” He also warned firms that there are more Reg BI enforcement cases in the pipeline and said FINRA exams will “continue to evolve in terms of expectations and the depth of what we’re looking for.” Reg BI, which requires that registered reps demonstrate they have put customers’ best interests before their own is an upgrade from the old suitability standard, which only required reps to make sure products and services are appropriate for clients. The SEC has also promised more Reg BI enforcements and is bringing similar cases against investment advisor reps under the fiduciary standard. SEC Chairman Gary Gensler recently stated, “The ‘interplay’ between Reg BI and the fiduciary standard is important and that the agency will publish a staff bulletin on the topic.”

Finsum:After bringing their first Regulation Best Interest enforcements this year, both FINRA and the SEC are ramping up Reg BI enforcement. 

According to Pensions & Investments' annual survey of index managers, worldwide indexes managed in exchange-traded funds and exchange-traded notes have fared much better than index assets in other wrappers. Worldwide index assets managed in ETFs and ETNs totaled $6.51 trillion as of June 30th, down 4.8% from $6.84 trillion last year. Worldwide index assets overall fell 12.7% to $18.23 trillion. Exchange-traded products continued to see strong inflows despite headwinds such as inflation, rate hikes, and stock and bond losses. In fact, the global ETF industry saw its 40th straight month of net inflows during September and is on pace for annual net inflows that will be second to only last year's record of $1.29 trillion according to research and consultancy firm ETFGI LLP. Emily Foote McKinley, Head of Institutional Specialists for ETFs and Indexed Strategies at Invesco Ltd explained why ETFs continue to see strong inflows this year. She told Pensions & Investments, "I think that we've always seen the biggest pickups in institutional usage of ETFs around and after times of severe market volatility. That's because the ETF wrapper is able to prove itself as a provider of liquidity and access and transparency to underlying markets in times of crisis."

Finsum:ETFs continue to see massive inflows this year despite market volatility due to the wrapper’s ability to provide institutional investors with liquidity and transparency. 

Someone say crystal ball?

Well, might not be a bad idea, given that, this year, according to projections from the Global “Real Estate Market" Report, the ballooning of the real estate market’s expected to hit multimillion dollars by 2029, reported marketwatch.com.

Revenue wise, the Real Estate Market will register a “magnificent” spike in CAGR over the next seven years according to the report, a detailed, comprehensive analysis for global Door and Real Estate market. Against the backdrop of a perpetually changing market, the report delves into the competition, supply and demand trends. That’s not to mention key factors abetting its evolving demands across many markets.

Meantime, October saw the lowest volume of sales seen by the Tahoe Sierra MLS predating 2016, according to moonshsinenk.com, based on TLUXP.com.

In September, the number of single family homes dipped while the median price – both month and over month and year over year – scooted north. And this year? Funny you should ask: it represents the highest October median month in the same period the area’s had. Varying peaks and valleys are being felt in each micro region, culminating in a landscape of inconsistency. 

Seems volatility hunkered down with a good book in front of a roaring fireplace and felt well at home this month.

During October, implied volatility was unfailingly hovered well above average. In fact, it hit its highest monthly average since June 2020, according to gia.com. Down to the nitty gritty: half of the days parked beyond the first two weeks of the months experienced swings in the equity market of at least +/- 2%. Joining the party was an Oct. 13 intra-day move exceeding 5%. That unfolded before the gales of an advance in the midst of the months’ second half.

As for next year? Um, don’t ask. According to msn.com, with investors updating their economic outcome probabilities, UBS Global Wealth Management recently said investors should figure on even more volatility in the 2023 S&P.

"Large month-to-month swings could continue well into next year," said UBS.

In all probability, wide monthly S&P 500 swings will stretch in 2023. Why? Investors will watch moves by the Fed and economic data to ascertain the chances of a soft landing or recession in the U.S.

"[Expect] more volatility and large market swings exacerbated by positioning as investors update their economic outcome probabilities in reaction to each new data point and Fed utterance," Jason Draho, head of Asset Allocation Americas at UBS Global Wealth Management, in a note.