Bonds: Total Market
With U.S. GDP dipping negative in Q1 and tariffs clouding the policy outlook, concerns are mounting over how resilient the American consumer truly is. Rising credit card delinquencies point to financial strain, especially among lower-income, lower-FICO borrowers, while looser post-pandemic underwriting standards and inflation have only added pressure.
In contrast, higher-income consumers—especially homeowners—have largely weathered the storm, thanks in part to low fixed-rate mortgages and tighter lending practices in recent years.
This divergence is pushing savvy investors to focus on more defensive segments like asset-backed residential credit and small business loans with strong underwriting. While these may offer slightly lower yields, they come with greater resilience and the potential for long-term stability amid an increasingly bifurcated market.
Finsum: As credit performance grows more uneven, navigating this environment requires a sharper eye on borrower quality and a flexible, informed investment approach.
The Invesco QQQ Trust and Invesco NASDAQ 100 ETF continue to serve as efficient vehicles for tapping into the performance of leading large-cap growth stocks through their tracking of the Nasdaq-100 Index. While passively managed, these funds remain highly relevant for active investors, especially as many portfolio managers increase exposure to familiar tech giants.
During the first quarter of 2025, a temporary pullback in mega-cap names prompted several high-performing active managers to increase holdings in companies like Alphabet, Amazon, Microsoft, and Nvidia.
These four names, which collectively represent over a quarter of the QQQ and QQQM portfolios, have shown resilience and strong earnings momentum, particularly in areas like cloud computing and artificial intelligence. Microsoft’s Azure business, for instance, exceeded expectations with robust demand for AI services, while Amazon rebounded following earlier weakness tied to trade concerns.
Finsum: As fundamentals remain intact and investor interest stays elevated, these ETFs continue to offer a compelling entry point into the most influential names in the growth space.
Value investing pays off long term, but only a few funds consistently get it right—seven top performers just made the cut. Standouts like ClearBridge Dividend Strategy (LCBEX) and Dodge & Cox Stock (DODGX) delivered strong one-, three-, and five-year returns, outpacing peers with disciplined, research-driven approaches.
Fidelity Equity-Income (FEKFX) and Fidelity High Dividend ETF (FDVV) combine yield with quality, offering income without overloading on risk.
Oakmark Select (OANLX) and Natixis Oakmark (NOANX) take concentrated bets on undervalued giants, while WisdomTree U.S. LargeCap Dividend (DLN) adds a smart dividend tilt with broad exposure. On average, large-value funds gained 8.58% over the past year, but these funds beat that benchmark while sticking to sound fundamentals.
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In a turbulent macroeconomic environment, fixed income investments are regaining popularity for their ability to provide income, diversification, and potential capital appreciation.
Experts at American Century Investments argue that active fixed income ETFs, like the American Century Multisector Income ETF (MUSI), offer strategic advantages over passive counterparts. Active managers can navigate beyond index constraints, tapping into overlooked sectors and exiting positions when valuations peak, unlike passive ETFs tied to benchmark requirements.
MUSI, in particular, leverages a data-driven approach to invest across diverse bond sectors—ranging from high-yield corporates to emerging market debt—with the goal of optimizing risk and return.
Finsum: Expectations of upcoming interest rate cuts further strengthen the case for bonds, as falling rates could enhance bond yields.
Amid a turbulent market and new U.S. tariff regime, actively managed ETFs like the T. Rowe Price Small-Mid Cap ETF (TMSL) are gaining appeal for their flexibility, research depth, and outperformance potential. TMSL, which has outperformed the Russell 2500 Index by 170 basis points year-to-date, exemplifies how active strategies can navigate uncertainty and respond to evolving risks and opportunities.
The new 10% blanket U.S. tariffs—unseen since 1946—have contributed to earnings downgrades and increased economic unpredictability, making adaptability a critical asset. Active managers can curate portfolios based on bottom-up analysis, selecting strong companies while avoiding those likely to underperform.
TMSL’s focus on small- and midcap firms adds sector diversification to tech-heavy portfolios, with leading exposures in industrials, financials, and healthcare.
Finsum: Its key to consider how fees play a role in active funds but many deliver well above depending on the economic environment.
After years of prioritizing safety, retirement savers are once again embracing market risk, as sales of variable annuities tied to investment fund performance surged in late 2024. According to Wink’s latest data, traditional variable annuity sales climbed 53% year over year to $18 billion, outpacing every other annuity category tracked.
Interest also rose in registered index-linked annuities, which mirror stock index performance, with sales growing 38% to $35 billion, while fixed indexed annuities grew by 22% to $32 billion. In contrast, demand dropped sharply for multi-year guaranteed annuities — down 45% to $29 billion — as fewer consumers sought fixed returns.
This rebound in market-linked products reflects renewed investor optimism but also hints at insurer caution, with some reallocating capital toward products that require less financial backing.
Finsum: Expiring surrender periods on older annuities may be freeing up funds for reinvestment, fueling the uptick in new variable annuity contracts.