Strive Asset Management has launched direct indexing services on Fidelity and Schwab platforms, reaching a broad retail audience. These services emphasize daily tax-loss harvesting and pro-shareholder governance, avoiding ESG or DEI constraints.
Powered by Vestmark’s VAST technology, the initiative aligns with Strive’s anti-ESG philosophy, aiming to deliver superior financial outcomes for clients. CEO Matt Cole highlighted the unique value of Strive’s approach, citing frequent drawdowns in large-cap equities that offer tax-harvesting opportunities.
Founded in 2022 by Vivek Ramaswamy, now a key figure in President-elect Trump’s administration, Strive manages $1.7 billion in assets. Its ETFs focus purely on financial returns, contrasting with ESG-oriented funds by voting against ESG shareholder proposals.
Finsum: ESG and DEI oriented funds will have an uphill battle against the trump administration.
Municipal bonds have taken a significant hit after Donald Trump’s election as president, following a sharp selloff in U.S. Treasuries amid concerns over potential deficit-expanding policies and inflationary effects.
Benchmark municipal yields spiked, echoing the Treasury market’s movements as investors reacted to the likelihood of Trump’s economic plans impacting inflation. Many state and local governments had already rushed to issue bonds before the election, leading to high issuance in October, but new sales were sparse this week.
Despite the volatility, analysts like Lyle Fitterer of Baird predict bond issuance will recover in time, driven by the U.S.'s substantial infrastructure needs. A Republican victory also stirs concerns that tax cuts could reduce demand for tax-exempt municipal bonds, with JPMorgan analysts highlighting the risk to the tax-exemption status itself.
Finsum: It’s also worth noting how inflation is going to potentially affect these assets, because there is strong chance inflation will increase under the new regime.
Commonwealth Financial Network is enhancing its advisor platform with new tax-focused tools to improve efficiency and meet clients' evolving needs. This suite includes advanced planning solutions such as direct indexing, portfolio tax optimization, and unified managed accounts, providing advisors with tailored options for optimizing client portfolios.
In 2025, advisors will also have access to a managed CTO service to streamline technology management, allowing them to focus more on client relations. Additionally, tools like the tax transition feature and automated tax-loss harvesting will support tax-efficient investing for clients.
These upgrades are positioned to enable advisors to scale their businesses and better serve clients, particularly those with sophisticated financial needs.
Finsum: These types of innovations in wealth tech can vastly improve advisors options particularly with tax solutions.
Vanguard's ETFs offer excellent options for investors seeking both passive income and diversification. The Vanguard Value ETF, one of the largest value-oriented funds, holds mainly large-cap stocks with solid dividend payouts, keeping its top 10 holdings at around 21% of the portfolio.
For a more concentrated approach, the Vanguard Mega Cap Value ETF focuses on mega-cap companies, leaning toward value-heavy sectors like healthcare and energy, which tend to fare well in economic downturns. Investors aiming for higher yield might consider the Vanguard High Dividend Yield ETF, which offers broad exposure to 537 holdings and a nearly 3% yield without overemphasizing any single sector.
Although these funds have lagged the tech-driven S&P 500 recently, they have shown significant long-term growth, nearly tripling in value over the last decade.
Finsum: These ETFs suit different needs, whether one prefers a focus on industry giants or broader diversification for consistent passive income.
Switching to a new broker-dealer is often a complicated process, but finding the right partner can significantly improve your business and client service. Legal guidance is essential to avoid potential pitfalls, such as contractual issues or ownership disputes over client relationships.
Developing a comprehensive transition plan will help organize client accounts and ensure the process runs smoothly. Engaging your team early allows for shared responsibility and clear goals throughout the transition.
It’s also a good time to reassess your client base, streamlining relationships and services to align with your current practice. Finally, preparing client data properly and crafting a clear communication plan can help ensure a smooth and positive transition for everyone involved.
Finsum: Data, in particular, can be critical with the advances in information and technology.
Around two-thirds of active bond funds outperformed their average passive peers during the 12-month period ending June 30, according to Morningstar's latest Active/Passive Barometer. The report, which examines the performance of over 8,000 funds across various categories, highlighted that intermediate core bond funds led the way, beating passive funds 72% of the time.
These active bond funds benefitted from narrowing credit spreads and inflation that kept interest rate cuts on hold. However, over a 10- and 15-year horizon, only 45.5% and 15.9% of these funds outperformed, respectively.
Additionally, actively managed real estate funds outperformed their passive counterparts 66% of the time over the same 12 months, with U.S. and global real estate funds seeing strong short-term success.
As the Federal Reserve signals more rate cuts, long-term municipal bonds (munis) are becoming increasingly attractive due to their competitive yields, tax benefits, and potential for price appreciation. Historically, long-term munis tend to outperform when the Fed shifts from a hawkish to a dovish stance, benefiting from falling interest rates.
These bonds also offer superior credit quality and often deliver higher tax-equivalent yields compared to taxable bonds, making them a strong alternative to Treasuries. With their longer durations, munis are particularly sensitive to rate changes, allowing for significant price gains in a falling rate environment.
Moreover, the increased issuance of municipal bonds this year has created a favorable buying opportunity, especially as tax reforms and higher marginal rates could further boost demand for tax-exempt investments.
Finsum: For investors looking to capitalize on rate cuts, long-term munis offer a compelling mix of yield, tax advantages, and credit stability
Advisors today face increasing challenges in helping clients achieve and maintain financial independence. With high U.S. stock valuations predicting lower future returns, and bond yields offering minimal real returns, portfolio strategies need to evolve.
Clients are also grappling with rising living costs, longer life spans, and elevated housing prices, creating greater financial strain. Factor investing offers a solution, selecting securities based on traits like momentum, quality, and low volatility, which have historically outperformed.
These strategies can be implemented cost-effectively through ETFs and optimized for tax efficiency within households. Although no factor guarantees success in every market, a diversified approach to factor investing provides a long-term opportunity for outperformance.
Finsum: Factor investing is robust proven strategy that can bring legitacy to new advisors or those looking to expand client adoption.
Goldman Sachs projects that the stock market could see a 15% rise by year-end if mega-cap tech stocks continue their strong performance. The bank argues that tech stocks are not currently in a bubble, as investors are focused on companies with profitable growth rather than speculative ones.
Goldman’s David Kostin notes that while long-term growth expectations for the S&P 500 are slightly above average, they remain well below levels seen during previous market bubbles. Despite concerns about the high concentration in a few tech giants, Goldman believes this is justified given their rapid growth compared to other S&P 500 companies.
The valuation spread between market-cap-weighted and equal-weighted S&P 500 indexes does not suggest bubble conditions, staying below historical extremes.
Finsum: We would look into more traditional measures like price to earning ratios if we are concerned about a bubble forming, rather than just long run growth.
Apollo Global Management Inc. is exploring the possibility of establishing a trading desk to buy and sell direct loans in the $1.7 trillion private credit market, which is typically illiquid. While the plans are still preliminary and could be abandoned, Apollo’s interest follows similar moves by other firms like Golub Capital and JPMorgan Chase.
These firms are actively trading private loans, although such transactions remain rare due to lenders' preference to hold debt until maturity. Concerns exist that increased trading could undermine the benefits of direct lending, such as privacy, convenience, and price stability.
However, secondary trading could be attractive to investors looking to enhance liquidity or reposition their portfolios. As the private credit market evolves, trading direct loans might become more common, especially for distressed assets.
Finsum: As a key figure in the space its important to keep an eye on the changes Apollo is making in private credit.
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In recent months, the stock market has been extremely volatile, prompting increased interest in low-volatility low-cost ETFs. While the market has seen gains this year due to a growing appetite for riskier investments, uncertainties like the Federal Reserve's future actions, geopolitical tensions, and the upcoming U.S. presidential election still loom large.
Low-volatility ETFs offer investors a way to participate in the market with potentially less risk, although they are not immune to sharp downturns. These funds may underperform compared to more dynamic portfolios, especially during market surges. However, they can be attractive for those prioritizing capital preservation over high returns.
Examples of popular low-volatility ETFs include the Invesco S&P 500 Low Volatility ETF, which focuses on the least volatile stocks in the S&P 500, and the iShares MSCI EAFE Min Vol Factor ETF, which targets lower-risk companies in developed markets outside the U.S.
Finsum: Be mindful of what thematic ETFs you want to integrate into your portfolios, because there will be a chance to capitalize in the coming months.
As the stock market hovers near all-time highs, investors are seeking a balance between optimism and caution, with alternative ETFs gaining traction as a popular choice for risk management and income generation.
The latest data reveals that while U.S. equity and fixed-income ETFs lead in demand, alternatives ETFs are growing rapidly, reflecting a shift toward more diversified and protective strategies. These funds offer exposure beyond traditional stocks and bonds, incorporating elements like commodities, digital assets, and derivatives to manage risk and generate returns.
Notably, products like the Global X Nasdaq 100 Tail Risk ETF and Fidelity's options-based portfolios are attracting attention for their innovative approaches to downside protection and income. The appeal of alternatives ETFs lies in their simplicity and accessibility, allowing even complex strategies to become core components of investor portfolios.
Finsum: Most of the time the downside of alts is the liquidity component, being able to use ETFs is a great way to counteract this.
Investors are increasingly flocking to US government bond ETFs as anticipation grows for a Federal Reserve interest rate cut in September. BlackRock's TLT, the largest ETF for long-dated Treasury bonds, saw nearly $4 billion in inflows from early August through Monday, marking one of its highest monthly inflows since inception.
This surge indicates a resurgence in bond interest following a period of weak returns and significant outflows in 2022. As economic slowdowns push investors towards safer fixed-income options, bond yields have dropped in response to the Fed’s potential rate reductions.
Retail and institutional investors alike are rediscovering bonds, with $12.2 billion flowing into US sovereign bond ETFs in August alone. The overall bond market's revival is evident, with taxable bond funds and ETFs attracting over $280 billion in the first seven months of the year, surpassing the total inflows for 2023.
Finsum: Holding bonds as interest rates fall and their prices rise sems to be one of the classic strategies that we haven’t been able to leverage on this scale in a long time.
This year, major private equity firms like Blackstone, KKR, and Carlyle have significantly slowed their investment activity in China, reflecting growing geopolitical tensions and Beijing’s tighter control over businesses.
Once a thriving market, China's appeal has diminished rapidly, with only five small investments made by the top 10 global buyout firms this year, a stark contrast to the 30 deals made in 2021. The change marks a sharp decline in enthusiasm from international investors who once saw China as a goldmine.
Factors contributing to this downturn include geopolitical challenges, regulatory unpredictability, and a cooling economy. The slowdown in China-specific deals is more pronounced than the global trend, which has also been affected by rising interest rates, making debt-driven private equity models more costly.
Finsum: Taking stock of these geopolitical factors in important for any portfolio.