(New York)

While the idea is more important for retail investors, we thought Bloomberg’s article today warning about buying ETFs might also be relevant for advisors. Bloomberg argues that the name “ETF” has become so vague as to be almost meaningless, and that investors need to be very disciplined in understanding the fund before buying it. The catch-all term “ETF” now encompasses everything from ultra-low cost index tracking funds to hugely leveraged volatility funds, all traded under often simple names and tickers.

FINSUM: The name of the game here is to read the fund prospectus and deeply understand the product being bought. But advisors already know that!

(Washington)

There have been relatively few updates on the Trump probe in recent weeks. Ever since the debate over whether Trump should let Mueller interview him calmed down, there has been little news. Now, reports are coming out that a group of investors in the Kushner family business—the family of Trump’s son-in-law—have been subpoenaed by the IRS and the Department of Justice. However, at this point, reports say the subpoenas are unrelated to the more broad probe into the White House’s connection to Russia.

FINSUM: Hard to see what is really going on here, but suffice it to say that the overall probe is deepening.

(San Francisco)

Many investors may have noticed that despite the big selloffs of the last two weeks, tech stocks have actually held up quite well. The sector is up 2.8% on the year versus an S&P 500 gain of just 0.2%. However, beware, as that number is largely an illusion. The reason why is that the vast majority of that performance comes down to Microsoft and Nvidia, which are up 5% and 20% this year.

FINSUM: The performance of tech during the recent downturn is largely an illusion, so investors need to be careful taking refuge in the sector.

(New York)

It has been many years since we had significant and sustained volatility. Both 2011 and 2013 had significant moves, but it had been almost five years since the kind of eruption we saw over the last couple of weeks. It was an amazing 404 trading days that the market had gone without a 5% drop. Barron’s says investors need to get used to the recent discord, as the volatility is here to stay. The paper borrows its argument from equity research analysts who contend that market stability is impossible, and any semblance of it an illusion, as the very forces that try to promote stability, such as the Fed, ultimate drive volatility.

FINSUM: This is quite an esoteric argument, but the reality is that with the economy changing gears into a new paradigm, we are likely going to continue to have some bumps.

(Washington)

The SEC says that a lack of fee disclosures related to conflicts of interest may be rife across the wealth management industry. Now the SEC is giving a free pass to those that have failed to disclose. So long as investors come clean and give money back to investors, they won’t be punished. The biggest abuses seem to be in the lack of disclosure of mutual fund fees, which goes against the rules laid out in the Investment Advisers Act of 1940. Those who come forward will not face civil monetary penalties, but that special treatment will only be for those who come forward voluntarily.

FINSUM: Hard to say how big of a problem this is. But it does sound like this might be a good way to clean up the issue quickly.