Displaying items by tag: portfolio construction

Active ETFs combine professional management with the liquidity and transparency of ETFs, making them powerful tools for portfolio construction. They offer investors access to active security selection and the potential to outperform benchmarks, while still benefiting from intraday trading, tax efficiency, and often lower costs. 

These funds are especially valuable in areas of the market with inefficiencies, where deep research and targeted exposure can improve outcomes. Derivative-income ETFs can enhance portfolio income and stability by generating yield through options, offering an equity-based alternative to fixed income. 

Meanwhile, buffer ETFs help manage downside risk by capping losses (and gains) over set periods, making them useful for preserving capital during volatile markets. 

Finsum: Together, these active ETF strategies provide investors with flexible, diversified, and goal-oriented components for building resilient and adaptive portfolios.

Corporate Insight (CI) has released its latest Asset Management Monitor – Advisor report, analyzing portfolio construction tools from top asset management firms. The report highlights BlackRock and J.P. Morgan as industry leaders, with both earning Excellent ratings for their comprehensive and user-friendly portfolio analysis tools. 

Key features that set these tools apart include flexible input options, advanced data visualizations, and the ability to customize client reports. J.P. Morgan stands out for allowing advisors to integrate investment objectives, a capability the report suggests other firms should adopt. 

Data visualization remains a crucial factor, with 81% of surveyed advisors emphasizing its importance, and firms like Franklin Templeton and Vanguard excelling in this area. Firms can enhance their tools by improving visualization features, integrating investment objectives, and offering more customization for client-facing reports.

Finsum: Visualization is a great way to demonstrate to clients and help them understand the intricacies and information you are presenting. 

The transition away from zero interest rate policy (ZIRP) wasn’t painless, requiring sharp rate hikes and a challenging bear market before monetary conditions began resembling pre-2008 norms. Now, with higher government bond yields, investors have a genuine risk-free income opportunity, prompting a rethinking of portfolio strategies. 

Angelo Kourkafas of Edward Jones suggests that as cash yields dip below bond returns in 2025, bonds are poised to outperform, restoring their historical role in balanced portfolios. 

While trade policy uncertainty could complicate this outlook, he expects Canadian bond yields to stay rangebound, with income rather than price appreciation driving returns. He sees this fixed-income strength complementing a more measured equity rally, with a diversified stock-bond mix offering steadier returns in the year ahead.

Finsum: Oversized cash positions, could become a portfolio drag, especially for conservative investors who could lock in reliable income with bonds.

Retirement is often the most significant financial commitment for American households, with many needing over $1 million to sustain their post-work years. A Prudential survey of 198 financial advisors found that 80% use specialized portfolios for retirees, particularly those well-versed in retirement income planning. 

Around half of retiree clients prefer living off portfolio income, necessitating investment strategies distinct from traditional total return approaches. Advisors showed the strongest interest in long-term bonds, U.S. large-cap equities, and Treasury Inflation-Protected Securities (TIPS) for retiree portfolios. 

Knowledgeable advisors were significantly more inclined to increase allocations to TIPS and long-term bonds compared to those less experienced in retirement planning. Overall, there is considerable interest in income-focused investment strategies and multi-asset portfolio solutions tailored to retirees' needs.

Finsum: Thinking of how strategies and portfolio solutions can be dynamic to suit clients shifting needs is critical to making clients feel supported

Family offices are increasingly pivoting away from traditional investments and embracing alternative assets such as private equity, real estate, and venture capital. According to J.P. Morgan’s Global Family Office Report, nearly half of family office portfolios are now in private markets, reflecting their long-term horizons and ability to capitalize on illiquidity premiums. 

This shift allows for higher potential returns and smoother valuation changes compared to the volatility of public stocks. Many family offices also leverage their entrepreneurial roots for direct investments, contributing expertise and networks to private companies. 

Beyond diversification, these offices adopt goal-based strategies tailored to multigenerational needs, ensuring alignment with unique family objectives. 

Finsum: As they navigate evolving trends like generative AI and private market rebalancing, family offices continue to balance innovation with prudent risk management.