Displaying items by tag: ETFs

Separately managed accounts (SMAs) are gaining traction among investors, offering personalized portfolios with features like tax optimization and tailored investment preferences. Once reserved for the wealthy, advancements in technology have made SMAs more accessible, with minimum investments as low as $5,000 through platforms like Fidelity. 

While SMAs allow for benefits such as tax-loss harvesting and charitable stock donations, they often come with higher fees compared to ETFs, which can make them less cost-effective for many retail investors. 

Critics argue that customization can lead to active management pitfalls, with most SMAs historically underperforming benchmarks after accounting for fees. 

Finsum: Innovations in AI and portfolio management tools are enabling financial advisors to efficiently manage larger numbers of accounts with greater precision. 

As the Federal Reserve moves toward eventual rate cuts, investors may want to diversify their fixed income strategies, especially if their portfolios are bond-heavy. Options-based strategies offer a compelling alternative, providing income generation without being directly tied to interest rate changes. 

Invesco has introduced three ETFs that combine exposure to key indexes with active option overlays, aiming to deliver income, downside protection, and equity upside potential. These funds include QQA, focusing on the Nasdaq-100, RSPA with its S&P 500 equal-weight approach, and EFAA, which targets international diversification via the MSCI EAFE Index. 

Each fund employs actively managed option strategies, regularly adapting to market conditions to optimize performance and manage volatility. 

Finsum: For investors seeking steady income with professional oversight, these ETFs present an innovative way to supplement fixed income while navigating a dynamic rate environment.

BlackRock is set to achieve a record year in net inflows, driven by the popularity of its active ETFs and their integration into model portfolios, according to CFO Martin Small. The company reported over $360 billion in net flows during the first three quarters, with $220 billion coming in Q3 alone, boosting its total assets under management to $11.5 trillion. 

The iShares Bitcoin Trust also saw unprecedented success, amassing $50.8 billion in assets within six months of its January launch. BlackRock’s strategy of embedding its ETFs into its expansive model portfolio business has significantly enhanced its flows, a tactic that has resonated with model builders seeking active exposure and cost efficiency. 

State Street Global Advisors’ research underscores the growing adoption of model portfolios, with 39% of advisers' assets now allocated to these investment tools, further fueling BlackRock’s momentum.

Finsum: There is certainly a nesting doll affect to these technological innovations, but the swell of popularity of active options can somewhat be attributed to macro signals being easier to read.

Interval funds are gaining traction as a compelling investment option, offering high yields and access to exclusive asset classes like private equity and credit. These funds operate as a hybrid between open- and closed-end funds, allowing investors to purchase shares anytime but limiting redemption opportunities to specific intervals, such as monthly or quarterly. 

While their appeal lies in diversifying portfolios and enhancing fixed-income returns, they come with notable downsides, including high fees that often exceed those of traditional mutual funds or index funds. 

Another concern is the limited track record of many funds, making it harder to evaluate long-term performance or compare strategies effectively. Additionally, the valuation of illiquid assets within these funds can mask underlying risks, as daily net asset values may not reflect real-time market conditions. 

Finsum: Investors, interval funds can be a strategic complement to a portfolio, but careful consideration of liquidity, fees, and transparency is essential.

Post-pandemic, U.S. economic forecasts have consistently underestimated growth, a trend strategists like RBC’s Lori Calvasina believe will continue into 2025. RBC projects 2%–3% GDP growth for the year, while Bank of America estimates 2.4%, surpassing the Bloomberg consensus of 2.1%. 

Strong GDP growth is historically tied to better equity market performance, with stocks gaining 70% of the time when growth ranges between 2.1% and 3%. Value stocks, which perform well in periods of robust growth and higher interest rates, are expected to benefit from continued economic resilience and protectionist policies under the second Trump administration. 

This environment is favorable for ETFs focused on value stocks, such as Invesco S&P 500 Enhanced Value ETF (SPVU) and Vanguard Small-Cap Value ETF (VBR), which have lower P/E ratios compared to broader market ETFs. 

Finsum: These value-focused ETFs may see a strong turnaround in 2025, fueled by higher bond yields and resilient economic conditions.