Following the recent selloff in the bond market which has pushed yields on the 10-year Treasury above 5%, Michael Contopolous of Bernstein Advisors compiled some of the best opportunities that he’s noticing in fixed income. 

The first is Treasury Inflation-Protected Securities (TIPS) which are offering a real yield of 2.5%. This is the highest level since 2007 and in the 25th percentile of real yields since TIPS were introduced in 1997. In contrast to most fixed income securities, TIPS would see an increase in returns if inflation expectations were to rise. 

Currently, the spread between the 10Y and 2Y Treasuries is inverted. If the economy experiences an acceleration or a sharp turn lower, it’s likely that the curve will steepen. Thus, fixed income investors can consider a steeper curve. It can have a bullish or bearish tilt depending on an investors’ economic outlook.

Another area of opportunity is preferred securities which are priced much lower than corporate bonds following the regional bank crisis earlier this year. There's a particular opportunity in the preferred share of banks which could rally if the yield curve steepens, or earnings start to grow again. 

Finsum: Fixed income is seeing renewed interest following the recent selloff. Here are 3 opportunities to consider.

According to Travis Spence, the head of ETF distribution at JPMorgan Asset Management, future growth in the ETF industry will be driven by active strategies that will be the main source of innovation in the space. 

Currently, active funds only account for 5% of the total market but account for 25% of inflows. Some of the reasons that investors are favoring active ETFs is greater transparency, liquidity, and pricing. Thus, he believes that more active strategies will be accessible through ETFs in the coming years. And he sees growth in the US and internationally, although adoption has been slower in the latter. 

In fixed income, he believes that active managers have some advantages due to greater inefficiencies in the market and increased difficulty and constraints of tracking a fixed income benchmark. Additionally, many market cap-based indices are overrepresented with indebted companies. 

He added that, “It is easy to see why an active approach to fixed income makes sense. Even passive ETFs are arguably active due to the availability of bonds. Having an active approach in fixed income, where you do not automatically hold the most indebted issuers, fully integrate ESG and actively manage turnover and transaction costs, can offer an attractive solution for investors.”

Finsum: JPMorgan’s head of ETF distribution, Travis Spence, shares why he’s optimistic about active fixed income, and the trends driving its growth. 

Financial advisors intuitively grasp the importance of planning to help their clients reach their financial goals. As business owners, advisors need to apply the same principles with succession planning to maximize the value of their practice. A succession plan should provide a contingency plan for unforeseen circumstances in addition to detailing how the practice will transition in the future. Here are some common mistakes to avoid.

The first mistake is to not have a proper understanding of the value of your practice. This includes financial as well as other considerations such as the impact on your clients, the organizational structure of your firm, and how the firm will function without you.

Another mistake is to be unclear clear about your needs and wants in order to determine the ideal successor. With this selection, it’s important to find alignment in terms of investment philosophy, location, mission statement, and how they will continue to serve your clients effectively.  

Many advisors also err by not sharing their succession plan with key stakeholders like employees, clients, family members, etc. Rather, the succession plan and any iterations should be shared with everyone to ensure that there is no lack of clarity. It can also help with client retention and recruitment. 

Finsum: Succession planning is quite important for financial advisors for several reasons. Here are some mistakes to avoid. 

Alternative energy is forecast to grow rapidly in the coming years due to government subsidies and continued innovations which continue to drive power-generation costs lower. However, the bottleneck for the growth of the industry is proper infrastructure to store and transmit this power.

It’s also necessary as some types of alternative energy production such as wind, solar, and hydropower are adversely affected by weather. Until this goal is sufficiently solved, the world will continue to remain dependent on fossil fuels. 

Investors have several options when it comes to investing in the growth of the energy storage industry. One is to own stocks of companies in the supply chain whether it means producers of metals like Albemarle, EV and battery producers like Tesla or BYD, or a provider of energy storage software, solutions, and services like Fluence Energy. 

Another option is to invest in ETFs like the Global X Lithium & Battery Tech ETF (LIT), the First Trust Nasdaq Clean Edge Smart GRID Infrastructure ETF (GRID), or the First Trust Nasdaq Clean Edge Green Energy Index Fund (QCLN). These are diversified, lower-cost ETFs that offer exposure to the energy storage theme and offer exposure to the largest companies in the space. 

Finsum: Alternative energy is booming, but it also requires sufficient investments in energy storage to support its growth. 

A well-crafted value proposition details how your services will solve client’s problems and improve their financial situation, what benefits it will deliver, and why your target prospect should choose you over a competitor. Defining this value proposition can help improve your odds of success in recruitment and operating your practice. It can also help you build trust with clients. 

An important step in the process is to determine your ideal client profile. Some characteristics to consider are their financial goals, challenges, and demographics. This will help you decide how to serve these clients, to address their needs and differentiate yourself from competitors.

Value propositions are necessary in an industry where success is based on trust and relationships. Some things to avoid are complicated language, a lack of focus on clients, and not sufficiently identifying what makes your services unique. 

Lastly, value propositions should be updated regularly to reflect changes in the practice, industry, and your clients. It should continue to highlight your value and uniqueness while remaining relevant in terms of addressing your clients’ pain points. 

Finsum: Defining your unique value proposition can help your firm attract clients and refine its purpose. Here’s how to get started.