Wealth Management
Advisors facing heightened U.S. market volatility are increasingly turning to global infrastructure ETFs as a way to diversify portfolios and hedge against policy risks. Structural growth drivers like demographic shifts, and supportive government policies, such as Germany’s recent multi-billion-dollar funding initiatives are supportive.
The sector also has a history of resilience during inflationary periods, as infrastructure companies provide essential services that can pass costs on to consumers. One option is the BNY Mellon Global Infrastructure Income ETF (BKGI), which actively invests in global infrastructure firms with strong cash flows, balance sheets, and growth prospects.
BKGI aims to deliver a forward yield of 6% or higher by focusing on dividend-paying companies, with about one-third of assets in U.S. holdings and the rest diversified across Europe and beyond.
Finsum: Infrastructure exposure offers low correlation with U.S. equities, especially when considering outside options.
The iShares Core US Aggregate Bond ETF (AGG) tracks the Bloomberg US Aggregate Bond Index, giving investors broad exposure to investment-grade U.S. bonds. Its portfolio is heavily tilted toward Treasuries, which now make up about 47%, far higher than the category average, and this emphasis helps reduce credit risk.
Roughly 75% of its assets carry AA or AAA ratings, insulating investors from credit shocks but limiting return potential since the fund cannot hold high-yield bonds. While the ETF’s safety focus mutes drawdowns, its longer duration makes it more sensitive to interest rate swings, which has led to higher volatility in some periods.
Over the past 20 years, its conservative profile and low fees have helped it slightly outperform peers while weathering downturns like the 2020 COVID market shock better than most.
Finsum: With the Fed most likely cutting rates this next cycle, this could help this fund which had suffered in rate hike cycles.
Institutions dominate Wells Fargo’s ownership, holding about 78% of shares, which gives them significant influence over the company’s direction. They were the biggest beneficiaries of the bank’s recent climb to a $263 billion market cap, driving a one-year shareholder return of 44%.
Vanguard is the largest single shareholder with 9.4% ownership, while the top 20 investors collectively control about half the company. Insiders, by contrast, own less than 1% of shares, though their holdings are still valued at over $300 million.
The general public controls around 21%, enough for some sway but not enough to counter institutional power.
Finsum: This mix highlights how institutional investors are thinking about banking in the current volatile market.
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The U.S. stock market was choppy last week, with the S&P 500 and Nasdaq slipping from record highs while the Dow inched up.
In this volatile setting, large-cap value mutual funds like those from Northern Funds, Goldman Sachs, Fidelity, Invesco, and Nuveen appeal to cautious investors. These funds invest in undervalued large-cap stocks that offer stability, dividends, and potential long-term outperformance compared to riskier growth or small-cap holdings.
Investors remain focused on whether the Federal Reserve will cut rates in September, though mixed economic data — including weak wholesale inflation, flat retail sales, and declining industrial production — has fueled uncertainty.
Finsum: Consumer sentiment also fell, reflecting ongoing concerns about inflation, suggesting a further reason to tilt large cap.
Bond funds delivered modest results last year, with the average fund returning 4.8%, though nearly all finished in positive territory. Surprisingly, high-yield and emerging-market bond funds dominated the top performers, buoyed by strong global growth and favorable currency trends despite an inverted yield curve.
Their outperformance suggests a speculative tone in markets, as riskier assets typically lag when investors grow cautious about the economy. However, higher volatility weighed on their ratings, leaving most of the top 20 funds with only “hold” grades, except for Delaware Pooled Trust High-Yield, which earned a B-minus.
In contrast, lagging funds saw declines in principal value, weak dividend payments, and overall “sell” ratings, with inflation-protected funds failing to meet expectations.
Finsum: The divide highlights how chasing yield in riskier segments delivered gains last year, while traditionally safer strategies struggled to keep up.
Small cap growth stocks have rallied sharply since April 8, with the Russell 2000 Growth Index up 34.2%, but large cap growth stocks still outpaced them with a 40.5% gain over the same period. Over the past decade, small growth stocks have significantly lagged large growth, delivering less than half the return.
Research shows that active management has historically outperformed the Russell 2000 Growth Index, though recent rebounds have favored the passive benchmark as high-beta and unprofitable companies surged.
Sector and industry standouts in small growth include materials, industrials, technology, and niche firms such as Credo Technology and Joby Aviation, with many of the highest returns concentrated in the most volatile stocks. Active small cap growth funds typically avoid the riskiest and least profitable names, which hurt short-term performance but aligns with evidence that profitable small caps outperform over time.
Finsum: Active strategies may still offer investors a more resilient path within small growth equities despite the recent rally.