Wealth Management
Kestra Investment Management recently announced the launch of its first two model portfolios series. The portfolios, which are exclusively designed for financial professionals associated with Kestra, are structured to maximize opportunities for clients, by providing options based on a client’s risk preference, desire for growth, and tax sensitivity. Both portfolio series have tax-aware versions, are low-cost, and flexible to fit a wide range of client needs. The Strategic Series has a long-term focus with multiple risk profiles. It is designed to be an efficient, streamlined solution with low turnover while still maintaining exposure to potential economic growth. The Dynamic Series is more active and has a higher level of trading activity for investors looking to benefit from changes in economic and market trends. The Kestra Investment Management team will manage the model portfolios. The team will analyze potential investments, use a rigorous due diligence process to select the best-suited funds, monitor portfolio allocations to opportunistically make changes, and regularly rebalance those allocations to keep each portfolio model aligned with its goals.
Finsum: Kestra launched two model portfolio series, one with low turnover and another with a higher level of trading.
The advent of digital advice has not only made investing easier but has also allowed client interactions to become more seamless. With more client interactions moving online, do online content and advice still put a client's best interest first? That’s a question the SEC, industry lawyers, and other regulators are contemplating. While online firms such as Robinhood came under scrutiny for gamifying investor behavior, something as simple as an investment calculator on an advisor website can be construed as a recommendation. Last August, the SEC issued a request for comment about broker-dealers’ and investment advisors’ digital engagement practices. Keith Kessel, a senior principal consultant at ACA Group, told Financial Advisor IQ that the SEC “is trying to ascertain in what set of scenarios would a recommendation or solicitation exist versus what are those engagement practices that are outside of the purview of the scope of the solicitation of the suitability rule and/or Regulation Best Interest regulation duty as such.” He also noted that the SEC’s request for comment “emphasizes the regulator’s concern about the blurring of the lines between engagement and advice.”
Finsum: As more client interactions occur online, the SEC is trying to determine what constitutes advice and what constitutes engagement.
According to a global two-phase survey from Morningstar Indexes and Sustainalytics, asset owners are not, by and large, implementing ESG factors in their portfolios. The Voice of the Asset Owner survey asked 500 global asset owners in 11 countries their thoughts on ESG. Survey findings revealed that only 29% of asset owners reported that they consider ESG factors for at least half their holdings. The reason for the low figure was attributed to concern over the impact on returns, a lack of available products, and the reluctance of both clients and stakeholders. However, the survey also showed that 85% of asset owners believe ESG factors are material to investment policy, while 70% said that ESG factors have become more material over the past five years. Asset owners that participated in the survey included OCIOs, family offices and sovereign wealth funds, pension funds, and insurance providers. Two-thirds of the respondents noted that the quality of ESG data, indexes, ratings, and tools have improved. However, about half stated that data and ratings would stand to benefit from improvements in accuracy, timeliness, and greater objectivity.
Finsum: A recent survey revealed that while many asset owners believe ESG factors are material to investment policy, only 29% consider ESG factors for at least half their holdings.
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Exchange traded funds are packing a considerable wallop in the construction of portfolios, according to a global survey on institutional investors on the fixed income market, reported pioonline.com.
They’re strutting an "expanded role in portfolio construction," as reflected by a recently released by survey sponsor State Street Global Advisors, survey sponsor.
Participating in the survey were 700 global institutional investors who oversee asset allocation decisions at pensions funds, wealth managers, asset managers, endowments, foundations and sovereign wealth funds. Administered by an independent firm unaffiliated with SSGA, the survey took place in the middle of the year.
"Our 2022 survey shows that the role of ETFs in asset allocation is expanding to non-core sectors," said the report, "The Role of ETFs in a New Fixed Income Landscape. We can see the increase in use, as compared to our 2021 fixed income survey."
Meantime, in August, etf.com reported on the apparent hyper popularity of longer duration US Treasuries and investment grade corporate debt ETS among investors in Europe. That has come in the face of lingering doubt over escalating inflation and the reaction by the Fed.
Bloomberg Intelligence data was revealing: it showed fixed income yields attracted more than $4.2bn over the past three months as of the time of reporting.
According to a new survey from advisory and accounting firm EisnerAmper, inflation is the largest business challenge for alternative investment managers. The annual survey was conducted during EisnerAmper’s 7th Annual Alternative Investment Summit. It revealed that almost three-quarters of alternative investment professionals believe the U.S. is already in a recession or will enter one by the end of the year. In addition to inflation, geopolitical concerns and escalating regulatory obligations were also named as top business challenges for alternative investors over the next year. Peter Cogan, Managing Partner of EisnerAmper’s Financial Services Group stated that “2021 has been a rollercoaster for alternative investment managers. The ongoing war in Ukraine, coupled with global records of inflation and poor public market performance have forced investors to be nimble in their investment philosophies. The Federal Reserve has made it clear that they’re steadfast in their mission to lower inflation and the survey shows that alternative investors expect this to be a long-term challenge to navigate.”
Finsum:According to a recent survey of alternative investment professionals, inflation, geopolitical concerns, and escalating regulatory obligations are the top business challenges for alternative firms.
According to a recent article on CNBC, market volatility is a big concern for clients right now. The author spoke to experts from CNBC’s Financial Advisor Council to see what advisors were discussing with their clients. According to the advisors, many clients, including retired investors and those that rely on savings, are especially worried about volatility in the market. The article quoted Carolyn McClanahan of Life Planning Partners in Florida, who stated that “The biggest concern for my clients is all of the uncertainty in the world. They wonder ‘what’s next and how that would affect the market — so it’s along the lines of fear of market volatility.” Investors are also fearful of large-scale job losses triggered by their memories of the Great Recession when unemployment peaked at 10% in October 2009. Home prices are another concern. While there are some signs that the housing market may be cooling down, a combination of rising mortgage rates and high prices are still causing concern for investors.
Finsum: Based on recent discussions with advisors, market volatility, job losses, and high home prices are huge concerns for clients right now.