Bonds: Total Market
In today’s market, financial advisors can show real value by building actively managed, customized portfolios using low-cost passive ETFs instead of pricier active funds. A core-and-satellite approach — with an S&P 500 ETF at the center and defensive sectors, bonds, and gold ETFs as satellites — has proven particularly effective in 2025, outperforming the broader market.
Strategic rebalancing between the outperforming satellites and a weakening core has been key to managing risk and enhancing returns. Defensive ETFs like XLP, XLU, and XLV, along with bond funds like AGG and SGOV and the gold-focused GLDM, have offered strong, risk-adjusted performance this year.
This flexible framework allows advisors to adjust portfolios to market conditions, client goals, or macroeconomic shifts while keeping costs low and transparency high.
Finsum: Ultimately, it strengthens the advisor’s role as an active, thoughtful manager of client wealth without relying on expensive fund managers.
Cerulli Research highlights how the growing wealth of retail investors is pushing advisors to prioritize tax efficiency, with ETFs becoming an increasingly attractive structure. ETFs offer significant tax advantages, such as low turnover and minimized capital gains distributions, making them particularly appealing in today’s uncertain economic climate.
As a result, Cerulli expects more separately managed account (SMA) assets to shift into ETFs, driven by both tax benefits and operational efficiencies. High net worth advisors are also focusing more heavily on tax planning, with the percentage offering tax guidance rising sharply in recent years.
Despite the $2.7 trillion currently held in SMAs, advisors are steadily increasing their ETF allocations, especially at larger practices. However, barriers like the high cost of launching ETFs mean wealth management firms will need scale — and may increasingly turn to white-label providers for help — to fully capitalize on this shift.
Finsum: Separately managed accounts could definitely see a spike in popularity in the coming years given technological ease.
The rapid growth of open-end funds investing in illiquid assets—like real estate, private equity, and credit—has introduced both opportunity and fragility, particularly due to stale pricing risks that can lead to wealth transfers between investors.
Research shows that these funds often experience artificially smooth and lagged returns, which can mislead investors about actual performance and risk, enabling NAV-timing strategies that exploit predictable price movements. Spencer Couts and colleagues developed a more advanced return unsmoothing method to correct for spurious autocorrelation and better measure fund risk and performance, especially in highly illiquid private credit funds.
However, interval and tender-offer funds help manage these risks by limiting capital flows and allowing managers to avoid forced sales or purchases of illiquid assets.
Finsum: Pooling capital through regulated open-end structures with controlled liquidity offers a more stable way to invest in illiquid markets.
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Blackstone beat first-quarter profit expectations, with distributable earnings rising 11% to $1.41 billion, or $1.09 per share, fueled by strong private equity and credit business performance. Despite the earnings beat, CEO Stephen Schwarzman cautioned that rising market volatility—driven largely by tariff uncertainty—may slow down asset sales in the near term.
The firm brought in $61.64 billion in inflows, with nearly half directed toward its credit and insurance segment, pushing assets under management to $1.17 trillion. While the private equity division posted a 13% increase in earnings thanks to $6.5 billion in asset sales, the real estate unit remained a drag with a 6% decline in AUM.
Schwarzman emphasized that a swift resolution to tariff disputes is vital to sustaining economic growth, echoing broader recession concerns from the business community. Despite turbulent markets, Blackstone sees potential in deploying its $177 billion in dry powder amid growing investor caution.
Finsum: Some alts will prove more fruitful in the face of tariffs but fund composition will matter greatly in the P/E space.
State Street Global Advisors has launched a new series of target date funds—called the Target Retirement IndexPlus Strategy—that includes a 10% allocation to private markets managed by Apollo.
These funds, structured as collective investment trusts (CITs), pair State Street’s index strategies for public markets with Apollo’s evergreen fund providing exposure to private credit, equity, and real assets. Brendan Curran of State Street likens this evolution to shifting into a new gear in retirement investing, acknowledging the growing significance of private assets in diversified portfolios.
The collaboration follows earlier efforts between State Street and Apollo, including the launch of a private credit ETF. Apollo views this as part of its broader push to tap into the wealth management space and expand access to private investments, aiming to grow its assets in this segment to $150 billion by 2029.
Finsum: The launch reflects a broader trend of asset managers integrating private markets into retirement solutions to meet demand for diversification and improved outcomes.
Closed-end funds (CEFs) can be valuable additions to a diversified portfolio, offering the potential for capital growth and income through both investment performance and regular distributions.
Unlike open-end mutual funds, CEFs typically provide higher distribution rates, often paid monthly or quarterly, and allow reinvestment that may enhance long-term returns. Their fixed-share structure after IPOs means managers aren’t forced to hold cash for redemptions, allowing for more efficient and fully invested portfolios.
CEFs also give investors exposure to the illiquidity premium by enabling access to less liquid, potentially higher-yielding investments that open-end funds often avoid.
Finsum: Many CEFs may use leverage to try to boost returns, though this adds risk and volatility.