Markets are in turmoil which has investors looking for more secure options, but American bonds are a risky option with rising yields (falling prices), which means active international is in a good position. Over the last year, 82% of active bonds have outperformed, and while that doesn’t hold up in the long run the unique conditions put them in a good position. International bonds can offer less interest rate risk, already better yields, and comparable credit profiles. The added advantage of international active funds is investors can make hedges with currency trading which can allow investors to hedge or leverage for more potential gains.

Finsum: The Fed will continue to put pressure on both bonds and equities in the U.S., and investors need a backup plan.

Years of QE and ultra-low interest rates have caused income investors to migrate from fixed-income to dividend stocks, but things are shifting. The rising rates from the Fed have caused retail and institutional investors to really consider taxable fixed income as an income alternative. Investors are really interested in 4.5-5% investment-grade corporate debt with longer maturity. Investors believe we are reaching the bottom of the bond prices and short-term rates could be a little over 3% next year. Other advisors and institutional investors are skeptical that longer-term bonds like the ten-year treasury can prove to be appetizing in the next decade.  

Finsum: Things are precarious in the bond market still but medium-range corporate debt is delivering an attractive yield currently.

Altruist is launching a new direct indexing product at a low $2000 minimum coming at the end of May. Altruist is using fractional shares in order to be at the lower bound of direct indexing minimums. With direct indexing investors own the underlying asset, which comes with tax alpha but usually at a very high minimum footprint. The index will track a cap-weighted 500 stocks similar to the S&P. However, the penalty for this ultra-low minimum is that investors won’t have the ability to customize their final product, which greatly affects the value of the DI offers. They will allow value-based screens later thin the year according to management.

Finsum: Direct indexing without dropping for tax alpha is a bit of a puzzle because it’s hard to see the advantage over ETFs.

Markets are super volatile in response to a variety of macro Factors and a 50-basis point hike from the Fed last Wed. JPMorgan is touting its Equity Premium Income ETF (JEPI) as a solution for investors who tries to target the returns in the S&P 500 with less volatility. The covered call equity strategy is the way the fund tries to mitigate market volatility but those calls aren’t free. The fund is targeting  6%-9% yield scoring to the global head of ETF solutions at JPMorgan. The volatility has actually served the fund well allowing it to outpace its own expectations.

Finsum: Covered calls are by no means a new strategy but they are effective in limiting volatility. 

Model portfolios are a great tool to increase flexibility, growth, and optimization, and Principal is launching almost 40 new products in response to demand. Jill Brown, director of their U.S. Wealth Platform says they will give solutions that are easy to manage and deliver results to clients. These portfolios will leverage the full power of their fintech platform to help advisors hit their goals. The end products will include mutual funds and ETFs and will allow clients to personalize their portfolios with different risk-based suites. Capital appreciation will be the main goal of the three of the core suites, while total returns will be the main goal of the last suite.

Finsum: Third-party model portfolios give tailored solutions, and make customization easier than ever.