Displaying items by tag: outperformance

(New York)

Active ETFs have grown in popularity, doubling in the last two years, and they are starting to reverse the 30-year index trend invented by John Bogle. Mutual fund giants such as Fidelity, T.Rowe Price, Franklin Templeton, and American Century all have opened active funds. Driving this inflow is a series of regulatory changes that protect active fund insights and make them more tax efficient. SEC regulations have allowed semitransparent ETFs to use custom baskets and move around stocks in order to not realize gains. Semitransparent ETFs have better liquidity which allows them to cut the high transactions costs of yesteryear. Some of the fastest-growing funds are Cathie Wood’s ARK Innovation, but JPMorgan’s Ultra-Short Income, PIMCO Enhanced Short Maturity and JPMorgan’s Equity Premium Income. Finally, the current environment is allowing active funds to edge out. Active funds have thematic interests that satisfy investors at lower costs than traditional funds, and pickers outperform when there is high dispersion (as there is now).

FINSUM: Active funds are cutting costs to some of the lowest levels historically and in these tumultuous times that makes them as competitive as ever.

(New York)

If the trend is your friend, then ESG is a bandwagon all investors should be getting on. Coming of a pandemic year where ESG funds outperformed conventional offerings, ESG has been red hot in 2021, gathering up mountains of assets. There appear to be two major reasons for this. The first is that more and more investors care to be socially-conscious in their portfolios, and secondly, because a long-held thesis that ESG funds would outperform is coming true. Over recent periods, ESG has had less volatility and more upside than traditional funds.

FINSUM: One can play with the time frame and other variables to produce the results they want, but logically speaking ESG is making more sense as the risks in the market are increasingly aligned with ESG: politics, natural (and other) disasters, social changes etc.

(New York)

ESG has been growing hand over fist, but it is still getting a lot of flak in the press. Two major reasons why. Firstly, many feel the sector’s performance is in question, largely because older investors believe there is an intrinsic misalignment between social & environmental goals, and returns. Secondly, many are starting to question whether ESG is really making an impact on society and the environment. Well, we cannot answer the second question, but number one has some new evidence. Morningstar recently ran an analysis of ESG funds, and found that: “25 out of 26 ESG equity index trackers beat funds that were conventionally weighted by market capitalisation, when it came to tracking the most common benchmarks last year”.

FINSUM: Proof of ESG outperformance depends highly on the timeframe being observed and the funds in question (which makes sense). For example, the last 18 months has been great for ESG because of some initial responses to the pandemic. Our view is that a lack of relationship to either out- or underperformance are both a good thing, since ESG is still accomplishing a social benefit and thus is a solid choice in the absence of any negatives to the investor.

(New York)

Emerging markets are a key part of a well-diversified growth portfolio, but Covid has hindered how many…see the full story on our partner Magnifi’s site.

(New York)

ETFs have dominated the investment world for the last decade as investors seek to minimize risk while getting particular market exposure, but…see the full story on our partner Magnifi’s site.