Technology-driven real estate investment manager Cadre recently announced the launch of an individual retirement account (IRA) solution, allowing investors to allocate their IRA funds into commercial real estate (CRE) through the Cadre platform. The firm expects the new investment option to continue to expand access to CRE, which is a tax-advantaged asset class with longer investment periods and attractive risk-adjusted returns relative to equities. The new product provides a solution for IRA investors who just experienced a challenging year in the market. CRE typically features more stability and longer holding periods than traditional IRA investments like equities. For instance, during recent market drawdowns like the Great Financial Crisis and Dot-Com recession, equities lost an average of 36% in value, while private real estate averaged a 31.86% gain over the same periods. According to the firm, this makes it a fit for investors hoping to harvest returns for retirement. Ryan Williams, Founder and Executive Chairman of Cadre stated, “I founded Cadre to provide more individuals with a tax-efficient tool that institutions and ultra-high-net-worth investors have traditionally used to build wealth.” By equipping investors with the ability to invest their IRA dollars, we aim to expand access to diversified, robust retirement portfolios – and by extension, generational wealth.”

Finsum:With investors experiencing deep drawdowns in their equity funds during market downturns, real estate investment manager Cadre has launched an IRA option for investors to access commercial real estate, which typically features more stability.

Orion Advisor Solutions recently unveiled significant enhancements to its technology during the opening session of the firm’s flagship Ascent conference. Founder and CEO Eric Clarke addressed an audience of 1,600 advisors and revealed the firm’s new Story Paths advisor-facing technology for its Orion Custom Indexing solution. The new technology will allow advisors to easily select from one of several user paths which allows the advisor to customize portfolios or tax transition legacy assets within a handful of steps and minutes. The announcement comes as consumer demand for more personalized services has increased with assets in direct indexed SMAs ballooning to $362 billion. Orion’s Custom Indexing solution, which was launched in 2018, allows registered investment advisors to differentiate their offering with personalized, professionally managed, low-cost portfolios. Clarke stated, “While other direct indexing solutions cater almost exclusively to wirehouse advisors, we set out to build a solution with a heavy emphasis on customization that meets the needs of the independent advisor.” The new Story Paths workflow enables advisors to create truly custom portfolios at scale, whether they’re aiming to track a traditional index, replicate a factor-tilted exposure, or overlay to an existing internal or third-party separately managed account. In addition, the new technology will streamline the portfolio customization and tax transition process to a matter of minutes compared to the industry normal of multiple days.

Finsum:Orion recently unveiled new enhancements to its direct indexing technology that will allow independent advisors to create truly custom portfolios at scale within minutes.

Investors have continued to pile into ESG funds amid a strong political backlash and new regulations, but what impact does ESG have on expected returns? In their book, Your Essential Guide to Sustainable Investing, Larry Swedroe, and Sam Adams presented the answer to that question from research that included studies from 2017, 2018, 2019, 2020, and 2021. They found that in both U.S. and international markets, ESG strategies’ returns were well explained by their exposures to the Fama-French factors of market, size, profitability, investment, momentum, and value; and multifactor alphas were not significantly different from zero. This indicates that any benefit from incorporating ESG strategies into a portfolio is already captured by other well-defined and known equity factors, meaning investors could not improve their Sharpe ratios by using ESG strategies. They also found that return and risk differences of ESG funds could be significant and were mainly driven by fund-specific criteria rather than by a homogeneous ESG factor. In addition, across four fund categories including index, active, exclusion-based, and non-exclusion based, the majority of observations displayed higher volatility than the broader market. Swedroe and Adams also noted that environmental and social scores did not contribute to performance. However, if investors want to have their cake and eat it too, then they should tilt their portfolios to sustainable firms with exposure to the Fama-French factors of size, investment, profitability, value, and momentum.

Finsum:In their book, Your Essential Guide to Sustainable Investing, Larry Swedroe, and Sam Adams presented evidence that ESG strategies don’t provide any return benefit unless they’re tilted to Fama-French factors of market, size, profitability, investment, and momentum.

Following the bouncing…fixed income ETFs? On the heels of last year, during which fixed income funds took a licking, they’re rediscovering their mojo. That stems at least partially from  an inverted yield curve, according to cnbc.com.

In January in alone? Well, bond exchange-traded funds accumulated $20 billion. By contrast, all of last year, the total came to around $200 billion in bonds.

“There’s now income within the fixed income ETFs that are available,” Todd Rosenbluth, head of research at VettaFi, told Mike Santoli on CNBC’s “ETF Edge.” “We’ve seen higher-quality investment-grade corporate bond ETFs. We’ve seen high-yield fixed income ETFs see inflows this year, as well as some of the safer products.”

A rebound, seems to be in -- of all places -- the air, for bonds this year, in bonds, according to schwab.com. The returns in the fixed income markets, according to schawb.com. 

Despite a host of challenges – including a tumultuous global economy and an unstable U.S political climate, also a factor abroad – this year, there are opportunities for the bond market that translate into handsome yields for investors at lower risk than has been the case for years.

Volatility? For at least the immediate future, when it comes to the market, it seems to about the only stable thing going.

Volatility’s on pace to remain on the high side – with the volatility index averaging about 25, according to jpmorgan.com. As the Fed over squeezes into weaker fundamentals, the S&P’s expected to again test last year’s lows.

“In the first half of 2023, we expect the S&P 500 to re-test the lows of 2022 as the Fed overtightens into weaker fundamentals. This sell-off combined with disinflation, rising unemployment and declining corporate sentiment should be enough for the Fed to start signaling a pivot, subsequently driving an asset recovery and pushing the S&P 500 to 4,200 by year-end 2023,” said Dubravko Lakos-Bujas, global head of Equity Macro Research at J.P. Morgan.

“We all know it’s been a tough year for investors. We’ve been through monetary tightening and persistent inflation across global economies,” said Ryan Murray, CFP, with Vanguard. “We’ve seen an unprecedented period of volatility in the bond market, where such fluctuations are highly unusual.”

Give the inherently unpredictability of markets, in the face of extreme volatility, shucking aside your long term plan will certainly cross the minds of investors, he noted. “But it’s important not to let emotions get the better of you or push you to make a reactive decision that could put your hard-earned savings at risk.