Displaying items by tag: fees

Morgan Stanley acquired custom indexing provider Parametric Portfolio associates in March and are benefiting greatly from the acquisition. Parametric has developed their existing client base by allowing them to pitch a new set of custom-built portfolios and increased AUM by 50% year over year. These custom indexing tools allow investors at Morgan Stanley to build tailored portfolios to meet ESG or tax objectives. On top of this, it furthers client relationships by allowing a more connected investment strategy and personal experience. Parametric is leading the industry in direct indexing by asset size.

FINSUM: Direct indexing will be an incredibly important tool in order to mitigate all of the tax changes in the new administration.

Envestnet’s CEO told investors that it oversees $49 billion in direct investing assets and that they see this number going higher in the future. Direct investing is a part of a growth area for the company along with other personalized portfolios, tax overlays, and ESG and impact investing. Direct indexing allows investors to hold the underlying assets and then add or drop stocks for offsetting tax purposes or to hit other financial objectives. Other giants in the financial industry such as Vanguard and Franklin Templeton have acquired direct indexing portfolios and many firms are ramping up competition in this space.

FINSUM: Direct investing makes a lot of sense over traditional hard indexing because of the customization and tailoring to your financial needs, but it does usually come at the cost of higher fees.

(New York)

For many years ESG had been a fairly neglected asset class. Advisors and many retail investors thought that investing capital with moral considerations would hurt returns. Over the years many things have changed, including investors learning that ESG screens have actually led to outperformance in many cases and younger generations showing that they care a great deal more about these issues than their parents. Well, those stimuli have led to huge growth in the ESG space, and are leading to big revenue gains for asset managers. Fund providers are able to charge significantly higher fees for ESG-focused ETFs because of their moral importance to clients, and this has led to good fee revenue in an industry that is otherwise seeing contraction.

FINSUM: The key thing to remember here is that ESG funds don’t cost any more to run, so this is highly profitable for asset managers.

(San Francisco)

It isn’t just Apple that is at risk from coronavirus. A lot of other tech companies are too, and it makes perfect sense. Apple is far from the only major US tech company that sources many of its parts from China and relies on the country for a significant portion of revenue. The other major companies which are highly exposed are Tesla (20% of its supply and demand comes from China), Dell, HP, and Corning (which looks especially vulnerable).

FINSUM: Corning has a major glass factory in Wuhan itself and relies on China for 25% of its revenue.

(New York)

Investors and advisors—don’t get too excited about the zero fee shift among the big brokers, it is not all that it appeared to be. In particular, mutual funds seem to have been entirely left behind in the zero fee shift. Essentially, none of the big brokers has scrapped fees on mutual fund trades. While ETFs are now free to trade, mutual funds in some cases have transaction fees as high as $75.

FINSUM: This is going to wound the mutual fund market further, as not only do mutual funds have higher fees, but trading them will now be commensurately more difficult than ETFs too.