The predominant sentiment in financial markets is that active funds have an edge during volatile periods because picks are more apparent and therefore easier to execute. However, according to the Euro Securities and Market Authority, active funds didn’t outperform passive funds during the critical stressed market conditions from February 19th to June 30th, 2020. This full cycle in financial markets didn’t give active funds an advantage and actually underperformed by 6.6% annualized in that period. This research backs up previous reports by morningstar that active funds didn’t outperform during high volatility Covid-19.

Finsum: Covid-19’s cycle was the K-shaped recovery Economists dream of, so this isn’t the nail in the coffin for active management.

HSA’s crossed the $100 billion mark in January and Americans are heavily investing in these triple tax break accounts. There was also a spike in the total number of HSAs in 2021 as an annual increase of 8% opened accounts, and assets are also flowing in up almost 20% from the prior year. Investors use HSAs in combination with high deductible plans and were legally formed in 2003. The biggest reason for the spike in HSA growth is the tax advantages where there are no taxes on contributions, growth, and withdrawals if used on medical expenses. Investors can also pay out of pocket for expenses and reimburse themselves afterward, but almost 93% of HSAs aren’t invested in mutual funds or investments

Finsum: Investors should take advantage of the capabilities of mutual funds or ETFs in their HSA to maximize their ability. 

Elon Musk doesn’t hesitate to tell the world how he feels (usually via Twitter), most recently he let loose on ESG. Musk called corporate ESG ‘the Devil Incarnate’. Musk’s comments are a tiny bit surprising as his companies are often found in ESG indices. He is far from the only ESG, Professor at NYU Aswath Damodaran has been a harsh critic. He files the future of ESG into two camps ‘useful idiots’, believing to do good, and ‘feckless naves’ who are virtual signaling an empty void. ESG has faced harsh criticism for greenwashing companies to make them appear more environmentally friendly than they actually are.

Finsum: Regulators might have to step in if ESG is going to save its reputation.

Fidelity is launching a series of options that will mimic alternative hedge-fund-rescue strategies. Alternatives have surged in recent months with interest rate risk permeating the economy and volatility creeping higher. Led by Vadim Zlotniov, president of ‘Fidelity Diversifying Solutions’, the subbrand will hope to deliver funds investors are demanding in liquid alts. This is part of a wider push into alternatives where Fidelity has already dipped their toes into distressed debt, real estate, P/E, and crypto. 

Finsum: Alts are worth considering because of how uncorrelated they are with stocks and bonds right now.

The Secure act 1.0 has made it a feature of your retirement 401(k) to show exactly what the value of your portfolio converted to an annuity upon retirement at 67. The secure act is one factor that is spurring interest in annuities. The other driving factor is extremely volatile markets which have more investors concerned about a guaranteed plan. Still, drawbacks include inflation, which can eat away at a fixed pie and that risk is at an all-time high, as well as complexity where investors feel burdened. The bottom line is an investor will need $100k for a $440 monthly check, $400k for a $1,760 monthly check, and a million dollars for $4,400 monthly. 

Finsum: Consider different annuity products like variable annuities that better match the concerns that are biggest for you as an investor.