Displaying items by tag: discretionary

BlackRock has created two actively managed ETFs: the BlackRock Long-Term U.S. Equity ETF (BELT) and the BlackRock High Yield ETF (BRHY), focusing on ‘high-conviction’ stocks and below-investment-grade bonds, respectively. 

This introduction responds to the growing investor interest in active ETFs, which seek to outperform market benchmarks. Managed by the same professionals who handle similar mutual funds at BlackRock, these ETFs add to the firm's expanding lineup of active products.

Despite their higher fees compared to passive index funds, active ETFs like these are gaining traction among investors willing to pay more for potential market-beating returns. BlackRock's active ETF assets in the U.S. have now reached $25 billion, highlighting a significant trend in the asset management industry.

Finsum: Its critical to consider timing when picking between active and passive ETFs and the potential sources of volatility. 

Financial giants are snatching up direct indexing clients as fast as they possibly can, but they need to do more work to solidify their position with investors. Cerulli Associates is predicting direct/custom indexing will grow at a shocking 12% growth in the next five years which will outpace both mutual funds and ETFs for example. Part of what is responsible for that growth is lower exchange costs which make it possible to hold the underlying asset in an index that was previously untenable for anyone outside the ultra-wealthy. In order to fully realize the benefits of a direct indexing fund, directors will have to be like goldilocks of customization but not straying too far from the fundamental index. However, direct indexing is giving managers their best opportunity in years to take back the reins for clients and outperform ETFs and index platforms. Without a doubt tax loss harvesting is the best edge a director will have in customizing a direct index for their clients and it's the necessary part of how to stand out in the crowded space of custom indexing.

FINSUM: Investors should be in an open dialogue as to their clients preferences in diverging from the underlying index when customizing. The ship can steer quickly in the wrong direction.