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Wednesday, 02 November 2022 18:22

Money Continues to Flow into Contested ESG Funds

While hundreds of mutual funds are expected to lose their ESG designations under new EU rules, money continues to flow into these funds. The fund class is called Article 9, which is Europe’s top environmental, social, and governance disclosure designation. Analysts and industry lawyers say a large number of Article 9 funds don’t currently meet the EU’s strict sustainability requirements, with dozens of funds having already lost their Article 9 tag. Hortense Bioy, Morningstar’s global director of sustainability research, said in an email to Bloomberg, “There could be hundreds of Article 9 downgrades in the next six months.” However, the fund class brought almost €13 billion ($13 billion) in inflows last quarter. This brings the total amount over the first nine months of this year to €29 billion, according to Morningstar data. But industry experts don’t know why. Hugo Gallagher, senior policy adviser at the European Sustainable Investment Forum told Bloomberg, “I am somewhat mystified at the continuing inflows. I can only suspect that it’s due to many end-investors not being entirely cognizant of the ambiguities around Article 9.”

Finsum: Billions continue to flow into sustainable funds that are likely going to lose their EU ESG designation and industry experts don’t know why.

Independent wealth management firm Private Advisor Group recently introduced WealthSuite, its new investment management platform. The multi-custodian platform, which is exclusive to its network of over 750 financial advisors, offers bespoke mutual fund, ETF, and blended mutual fund/ETF model portfolios. The platform also provides custom indexing and tax-optimized solutions delivered through an SMA structure. The portfolios are managed by investment strategists including BlackRock, Fidelity Institutional Wealth Adviser LLC, Orion Advisor Solutions, and WisdomTree. Private Advisor Group partnered with Orion Advisor Solutions to handle the technology powering account opening, management, and servicing of the platform, while Private Advisor Group's internal portfolio administration team will manage the day-to-day. The company has plans to continually evaluate and expand its lineup of available strategists with a focus on providing differentiated solutions for advisors and their clients. Verne Marble, Private Advisor Group's Director of Business Development had this to say about the platform, “On average, investment management accounts for 19% of an advisor's time, and WealthSuite is structured to free up capacity so advisors can focus more of their time with investors.”

Finsum:Private Advisor Group launched its new model portfolio platform WealthSuite to help free up time for its network of financial advisors.

According to a poll of over 355 financial services IT and business leaders, financial services firms feel more confident that they're protected from cyber risk than firms in any other sector. However, they still face significant third-party cyber risks. Cybersecurity firm Trend Micro Incorporated commissioned Sapio Research to perform the survey. The poll found that 75% of financial firms believe they're adequately protected from ransomware. This is far higher than the average of 63% across all sectors. This confidence is attributed to the actions being performed by cybersecurity professionals. According to the survey, 99% say they regularly patch servers, 92% secure remote desktop protocol (RDP) endpoints, and 94% have rules in place to mitigate risks from email attachments. But 72% of respondents also admitted that their organization had been compromised by ransomware in the past, and 79% see their sector as a more attractive target for cyber-attacks. In fact, Trend Micro found that 56% have had suppliers compromised by ransomware, 54% believe their suppliers make them a more attractive target, and 52% say a significant number of their suppliers are Server Message Blocks (SMBs), who may have less resource to spend on security.

Finsum:While financial services firms are more confident in their cybersecurity protection than other sectors, they often face more threats.

Tuesday, 01 November 2022 14:01

New Fiduciary rule put on ice

Anyone say temporarily neutralized bucking bronco? John Elway? Nah. He’s moved on to other career opportunities.

Instead, despite attempts by the DOL to standardize fiduciary practices across financial professionals, they’ll remained sidelined until at least Q1 2023, according to

Stemming partially from two active and related legal cases, the regulation – aimed at creating a universal fiduciary guidance standard – probably will be tabled again. At least that’s the burgeoning consensus among retirement professionals.

Under the Trump presidency, the DOL released PTE 2020-02 in December 2020, according to As a result, investment advice fiduciaries could receive payment linked with rendering fiduciary investment advice, including advice on rolling over the account of a participant in an employment retirement plan to, for example, an IRA.

That was in the aftermath of the Fifth Circuit Court of Appeals decision to overturn the fiduciary rule in 2018 from the Obama administration. The court not only cited it was “unreasonable”, it was said the execution of the rule by the DOL amounted to “an arbitrary and capricious use of regulatory power.”

Within the retirement plan sector, in the aftermath of the 2020 election, many thought the Trump administration’s rule would be deep sixed. Instead, while emphasizing it would review the five part criteria and – if it saw the need – implement changes, the Biden administration allowed it to go into force.

Monday, 31 October 2022 13:34

Capital Group Launches 3 Active Bond ETFs

Following its February launch of five equity ETFs and one fixed-income ETF, Capital Group recently launched three active fixed-income ETFs on the New York Stock Exchange. The three new funds include the Capital Group Short Duration Income ETF (CGSD), the Capital Group Municipal Income ETF (CGMU), and the Capital Group U.S. Multi-Sector Income ETF (CGMS). CGSD is a short-duration income fund that pursues high-quality income with low-interest rate sensitivity. CGMU is a core municipal fund that pursues tax-exempt income consistent with capital preservation while seeking total return, and CGMS is a diversified U.S. multi-sector income fund that pursues a high level of current income and the opportunity for capital appreciation. Mike Gitlin, head of fixed income for Capital Group said the following about the three funds, “We’ve deliberately built our three new active ETFs in categories that have historically been underserved by active ETF managers including multisector bond, municipal national intermediate bond and short-term bond. We believe these will help investors manage short-term cash needs, generate tax-exempt income, and benefit from some of the best starting yields we’ve seen in credit in years.”

Finsum:To meet underserved areas of the fixed-income market, Capital Group launched three actively-managed bond ETFs.


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