Finsum

Finsum

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Artificial intelligence is becoming crucial in financial advisory operations, automating tasks and enhancing efficiency. This allows advisors to focus more on client interaction and strategic work.

 

 AI leverages big data and advanced analytics to identify patterns, detect market trends, and anticipate client needs with greater precision. Consequently, clients receive more personalized advice and recommendations. 

 

Additionally, integrating various financial technologies enhances client engagement and produces better outcomes. The rise of open architecture ecosystems enables the integration of best-of-breed solutions tailored to a firm’s specific needs.


Finsum: AI tools can be used for simpler tasks like client outreach and personalization but also for more advanced tasks like portfolio construction. 

Retaining top financial advisors is crucial for building a competitive wealth business, and many advisors wonder what they should consider before switching firms while firms consider what it takes to retain key talent. Beyond recruitment, retention significantly impacts the success of wealth management firms by maintaining high-performing advisors and increasing their productivity. 

 

Advisors should emphasize the importance of integrated technology solutions to enhance efficiency and productivity, making it more compelling for an advisor to stay. It’s critical that your firm understands and addresses your needs through improved technology and flexible work options which can help aid you in being more productive with clients. 

 

The role of advanced, seamlessly integrated technology platforms is highlighted as a key factor in retaining advisors by boosting their client service capabilities and overall satisfaction.


Finsum: Advisors should consider the total package before changing firms and technology is one of the most critical ways a firm can assist your productivity. 

Demand for US Treasuries continues to be strong despite high levels of issuance. According to the Treasury Department, foreign holdings of Treasuries saw their fifth monthly increase, reaching new highs.

As of the end of February, foreigners held $7.97 trillion of US Treasuries, nearly 9% higher than February 2023. Japan is the largest holder of Treasuries, outside of the US, at $1.17 trillion, which is the most since August 2022. 

However, some believe that the country may be looking to boost the value of its currency, as it hit a 34-year low against the dollar earlier this week. In 2022, Japan intervened in currency markets by selling dollars and buying the yen when it was at similar levels. As a result, its holdings declined by $131.6 billion due to these transactions. 

Another trend is that China’s holding of Treasuries continues to decline. The country held $775 billion in Treasuries, a decline of $22.7 billion from the previous month. This is the lowest amount since March 2009. 

Europe saw the biggest monthly increase of $27 billion and owns $320 billion in total. Great Britain also saw a $9 billion increase in Treasury holdings to reach $701 billion. 


Finsum: Despite recent volatility in US Treasuries, foreign holdings continue to rise. Japan remains the largest owner of Treasuries, while China continues to reduce its stake.

Emerging market assets often witness significant yet brief fluctuations around Election Day, with their performance linked to the electoral outcome. Historical data suggests that emerging market assets fare better during periods of a unified US government or with a Democratic president. However, this data is limited, spanning only eight presidential election cycles. 

 

To gauge this year's potential impact on emerging markets, it's crucial to analyze key channels of influence, including changes in US macroeconomic variables, trade policy, and geopolitics. The outcome of the US election could significantly affect these factors, influencing emerging market assets. Trump's presidency might lead to faster US economic growth but increase uncertainty in trade and geopolitics, while a Biden presidency could maintain the status quo. 

 

Despite political considerations, long-term portfolio construction should remain impartial, with emerging market assets playing a pivotal role due to their diversification benefits and potential for higher returns. 


Finsum: Don’t let political biases crowd out your investment decisions.

Monday, 04 March 2024 07:35

Where to Find Value in Fixed Income

The rise in bond yields presents an opportunity for fixed income investors to find value according to Penter Bentley, the co-manager of the BNY Mellon Global Credit Fund. He notes that bond yields are close to their highest levels since the financial crisis and that conditions have been improving for investment-grade debt. 

 

Due to these developments, he anticipates healthy returns for global and regional investment-grade credit. A key factor is borrowers have strong balance sheets with lower leverage than before the pandemic. In fact, Bentley believes that certain segments within fixed income could perform better than equities. He identifies ‘fallen angels’, short-duration high yield bonds, and emerging market corporate debt as having the most potential for outperformance this year. 

 

Some uncertainties that could cloud this outlook including the election in November, the Fed’s ability to cut rates, and a tense geopolitical situation with Russia-Ukraine and the Middle East.  Thus, investors should expect volatility to persist all year which means more opportunities for active managers to outperform. 

 

Another place that fixed income investors can find value is with global credit. Historically, global credit has delivered better returns when markets are emerging from a downturn. In terms of global credit, Bentley sees opportunities in European credit markets and emerging market debt.   


Finsum: Peter Bentley, the co-manager of the BNY Global Credit Fund, believes that investors can find value in fixed income. He sees the potential for strong returns in global credit, short-duration high yield debt, and ‘fallen angels’. 

 

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