Crypto ETFs are expected to be integrated into model portfolios by late 2024, according to Samara Cohen, BlackRock’s Chief Investment Officer for ETFs. Cohen emphasized the roles of Bitcoin and Ether as portfolio diversifiers, noting that major wirehouses are currently conducting due diligence on these assets.
BlackRock projects significant growth in model portfolio management, anticipating an increase from $4.2 trillion to $10 trillion over the next five years.
Cohen also mentioned that while Bitcoin and Ether are gaining traction, the introduction of spot ETFs for altcoins like Solana is unlikely in the near term. Despite net outflows from spot Ether ETFs since their launch, Cohen remains optimistic, viewing them as valuable entry points for investors seeking ETH exposure in their portfolios.
Finsum: Integration into standard financial products has been critical to cryptos success in recent years.
Family offices are pivoting from conventional asset allocations towards a heavier focus on alternative investments like private equity, real estate, and venture capital. J.P. Morgan's recent report indicates that nearly half of these portfolios now consist of alternative assets, with larger family offices taking the lead in this shift.
This approach is driven by the desire for higher returns, reduced volatility, and better alignment with long-term wealth preservation and growth goals. These offices are capitalizing on their ability to invest in illiquid assets, which offer the potential for higher returns over time.
By engaging more directly in private companies, family offices are leveraging their entrepreneurial expertise to achieve greater alignment with their wealth preservation objectives. While traditional public markets still hold a portion of these portfolios, the emphasis is clearly shifting towards alternatives that can better meet the complex, multi-generational needs of these families.
Finsum: With macro volatility looming alts could offer more risk cover and should be heavily considered.
The growing focus on private equity among family offices is driven by their longer-term outlook and the flexibility of deal-by-deal investing, offering higher potential returns and greater control. This approach is increasingly appealing amid global economic instability, high interest rates, and lingering pandemic effects, as traditional investments often underperform in such conditions.
Private equity can cushion portfolios against market volatility, consistently outperforming listed equities over the past two decades. Family offices pursuing a deal-by-deal strategy face challenges like high minimum investment requirements and the need for specialized expertise.
Embracing alternative investments enables family offices to seek superior returns, greater diversification, and enhanced risk management while contributing to innovation and economic dynamism.
Finsum: If the hedge is the clear concern, maybe investors should lean into alternatives, but look at historical correlations.
The T. Rowe Price International Equity ETF (TOUS) is an active ETF that has gained attention for its diversification benefits, especially after a recent market sell-off. With a competitive 50 basis point fee, TOUS focuses on high-quality international firms with strong business models and good valuations.
TOUS has an active strategy built around macro factors through an international lens that uniquely positions it for the type of interest rate volatility the US is experiencing.
The fund’s active management allows for flexibility in selecting companies, particularly in non-U.S. markets, which could be advantageous during volatile periods. TOUS has returned 9.8% over the past year, making it an appealing option for diversification away from U.S. mega-caps.
Finsum: We’ve been banging the drum on the need to diversify into active funds during this volatility and this recent flash was an example why.
For those who find the pain of losing money more intense than the pleasure of making a profit, there are defined-outcome or buffered ETFs. These funds, which cap potential gains in exchange for limited losses, have gained popularity since their debut in 2018. Now numbering around 270 with $47 billion in assets, these ETFs surged in interest after poor market returns in 2022.
Buffered ETFs cater to conservative investors, including those nearing retirement, who want to stay invested in the stock market while minimizing risk. Typically offering protection for a set period, usually a year, they limit potential upside in return for a cushion against losses. Major financial firms like Innovator, First Trust, AllianzIM, and Fidelity offer these funds.
Though complex, requiring thorough explanation, these ETFs are mainly used by financial advisors for their clients, presenting a balanced investment strategy by offering various levels of risk and reward to suit different needs.
Finsum: When the probability of volatility is high a buffer ETF can be a great natural hedging solution.
The 2024 Paris Olympics have already produced memorable moments. Team USA's women's gymnastics team, led by Simone Biles, won gold. South Korea's Ye-ji Kim became an internet sensation for her performance in the women's 10-meter air pistol.
Egyptian fencer Nada Hafez revealed she competed while seven months pregnant. The US men's gymnastics team won its first medal in 16 years, thanks to Stephen Nedoroscik's performance. Canadian swimmer Summer McIntosh earned her first gold medal in the 400-meter individual medley.
Former NBA player Chase Budinger won his first Olympic beach volleyball match. France’s Leon Marchand set a new record in the 400-meter individual medley.
Finsum: The streaming era has ushered in a new wave of fandom for typically unwatched events.
Since their launch three decades ago, exchange-traded funds (ETFs) have become a favored investment vehicle. ETFs, which trade like stocks but hold baskets of securities, saw significant growth in 2024, with more money flowing into ETFs than individual stocks.
U.S.-based ETF assets hit a record $9 trillion in May, experiencing net inflows while mutual funds saw outflows. Investors are attracted to ETFs due to their low cost, ease of trading, and tax efficiency. The recent approval of cryptocurrency ETFs has further boosted their popularity, while actively managed ETFs are also on the rise.
The iShares Core S&P 500 ETF (IVV) offers broad exposure to large-cap U.S. stocks at a low expense ratio of 0.03%. The iShares Core S&P Mid-Cap ETF (IJH) provides access to mid-cap companies with no overlap with large-cap holdings. The iShares Core S&P Small-Cap ETF (IJR) focuses on profitable small-cap companies, giving it a high-quality tilt that has outpaced the Russell 2000 in recent years.
Finsum: Cost effective ETFs are also great tools to get market segmentation exposure.
Indian government bonds have been added to the JPMorgan GBI Emerging Market Global Series Index for the first time, reflecting a milestone for Indian markets. The move follows the RBI's 2020 decision to remove foreign investment restrictions on specific rupee debt.
Starting June 28, 27 Indian G-secs are now open to non-resident investors under the Fully Accessible Route, boosting their market presence. These bonds, with the longest duration in the index and a yield of 7%, present a significant opportunity for global investors.
This inclusion is expected to raise foreign ownership of Indian government debt from 2% to 4.4% and may lead to further additions in other global indices.
Finsum: Investors might start flocking to EM as rates fall in the west.
Investing in bonds has gained popularity, facilitated by platforms like Webull and Public. Bonds come in three main types: U.S. Treasury bonds, corporate bonds, and municipal bonds, each with distinct tax implications.
U.S. Treasury bonds are state and local tax-exempt, corporate bonds are fully taxable, and municipal bonds often enjoy federal and state/local tax exemptions. Credit quality is vital, with investment-grade bonds rated BBB- or higher by S&P and Baa3 or higher by Moody’s.
Comparing after-tax and taxable-equivalent yields helps investors decide the best options based on their tax brackets. Additionally, understanding the yield to maturity and coupon rates of bonds, such as those from can aid in making informed investment decisions
Finsum: Alternatively, ETFs and other products can make a wider exposure to bonds a little easier.
Cboe Global Markets has listed five spot Ethereum ETFs set to begin trading in the US on July 23, 2024. Following the SEC's approval of Bitcoin ETFs earlier this year, market participants are eager for the new Ethereum ETFs.
With Ethereum's market cap second only to Bitcoin, issuers such as Fidelity, iShares, Bitwise, VanEck, 21Shares, Invesco Galaxy, Franklin Templeton, and Grayscale have already listed Bitcoin ETFs and are now expanding to Ethereum.
This move marks a significant milestone for institutional and retail crypto investments, reflecting growing global interest in cryptocurrency ETFs.
Finsum: Cryptos will be powered by its ability to enter more mainstream financial products over the coming decade.
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WisdomTree has partnered with Trading 212 to introduce six ETF model portfolios, allowing UK and European retail investors to access pre-built core and thematic portfolios through the Trading 212 app.
The three core portfolios—Conservative, Moderate, and Aggressive—offer diversified exposure to equities, bonds, and commodities. Additionally, investors can choose from Multi-Thematic, Tech, and Environmental thematic portfolios.
This collaboration aims to simplify portfolio building for retail investors by leveraging WisdomTree's institutional expertise to help meet long-term investment goals. Trading 212 manages £4bn in client assets with 3 million funded accounts.
Finsum: Thematic models might be a way to get into technology as it’s poised to rally with interest rates settled or about to be cut.
Bond investors should closely monitor their allocation and management strategies, given the current favorable real Treasury bond yields above 2% and even higher yields on investment-grade bonds.
Bonds are now competitive with other asset classes, a situation not seen in decades due to historically low central bank policy rates. Despite this, many investors continue to neglect their bond allocations, possibly due to poor returns over the past decade. Passive bond index funds and ETFs, like the Vanguard Total Bond Market II Index Fund and iShares Core U.S.
Aggregate Bond ETF, have gained popularity but may not align with all investors' objectives. Active bond management, which can better match investment goals and risk tolerance, often outperforms passive strategies even after fees. Investors should consider a more active approach to bond investing to optimize their portfolio performance and risk management.
Finsum: A rate cut seems more likely given the economic outlook and investors should plan accordingly
Direct indexing allows investors to access the individual stocks in their portfolio, providing opportunities for tax-loss harvesting. Unlike index funds, direct indexing offers the performance and diversification benefits of an index but with the ability to customize holdings.
This strategy enables investors to manage exposure to specific companies or sectors and capitalize on market dips for tax-loss opportunities. While index funds offer simplicity and tax efficiency, direct indexing takes these benefits a step further by allowing more personalized portfolio adjustments.
However, setting up a direct indexing account can be costly and involves higher fees due to its active management. Despite this, the customization and tax benefits can be worthwhile for certain investors, especially those in higher tax brackets or with concentrated stock positions.
Finsum: With fees and minimums getting lower and lower, direct indexing is becoming an option for a wider audience.
Vanguard’s low-cost ETFs are immensely popular, with options like Vanguard Total Stock Market ETF and Vanguard S&P 500 ETF leading the pack. However, there are other notablev ETFs that can enhance your portfolio if you venture beyond these well-known choices:
VBR, a Gold-rated ETF, focuses on small-cap value stocks and charges an exceptionally low 0.07% expense ratio. This ETF has consistently outperformed its category peers, despite small-cap value funds being out of favor for many years.
BNDX, a Silver-rated ETF, offers exposure to the global bond market, complementing a U.S.-heavy bond allocation. It invests in a diverse portfolio of foreign investment-grade bonds, hedging against currency risk, with an equally low expense ratio of 0.07%.
Finally, VT provides exposure to nearly 10,000 stocks worldwide, including U.S., foreign, and emerging markets, making it one of the broadest stock ETFs available. With its diverse mix, it can serve as a comprehensive, standalone stock investment for long-term portfolios.
Finsum: The last one to consider might be a momentum fund as interest rates drop and growth picks up.