Wealth Management
BlackRock has introduced two new ETFs: the iShares Technology Opportunities Active ETF (TEK) and the iShares A.I. Innovation and Tech Active ETF (BAI). According to Tony Kim, BlackRock’s head of fundamental equities technology, these ETFs aim to capitalize on the rapidly expanding AI and tech landscape.
The TEK fund focuses on global tech leaders and disruptors, incorporating companies across various market caps to balance stability and potential growth. Meanwhile, BAI seeks strong returns by investing in innovative companies within the AI sector, applying rigorous fundamental research.
The fund covers a diverse range of cap sizes globally, emphasizing groundbreaking advancements in AI. BlackRock now manages over $3.1 trillion in U.S.-listed ETFs across 430 funds.
Finsum: Using ETFs to target a clients interests presents an already more balanced approach for portfolios
Preferred stocks with a $25 par value, which trade on the New York Stock Exchange, have gained popularity but yield just 5% to 5.5% for major banks, a modest premium over the 30-year Treasury.
According to Nuveen portfolio manager Douglas Baker, economic resilience and an anticipated soft landing make bank-issued preferreds more appealing, despite limited issuance due to banks’ reduced need for capital. Issuers have redeemed more than they’ve issued this year, tightening supply in the $25-par market, which has seen a 13.1% gain year-to-date.
Baker points out that tax advantages, high yields, and stock-like trading add to preferreds' appeal. However, their perpetual nature and redemption rights limit price gains and increase sensitivity to rising rates.
Finsum: There is strong demand for these types of unusual but tax efficient investments in the wider market.
This week’s muni bond selloff has created a buying opportunity, Wall Street strategists suggest. Following a selloff in U.S. Treasuries, muni yields rose sharply as economic strength tempered hopes for rate cuts.
Despite a Thursday rally, the 10-year benchmark muni yield remains 26 basis points higher than its start-of-week level, marking one of the year’s steepest weekly declines. JPMorgan strategists see value at current levels, particularly with supportive market conditions anticipated in November.
The iShares National Muni Bond ETF drew $362 million in inflows on Thursday, helping bolster the market. Barclays strategist Mikhail Foux expects favorable muni performance later this year, though he advises caution until rates stabilize.
Finsum: We think munis might present one of the best options in the bond market as rates begin their descent
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Bitcoin exchange-traded funds (ETFs) are seeing exceptional demand, outpacing most new ETFs launched this year. According to recent Bloomberg data, 14 out of the top 30 ETFs launched in 2024 focus on Bitcoin or Ethereum, with Bitcoin ETFs holding the top positions.
BlackRock’s iShares Bitcoin Trust, in particular, has attracted record inflows, becoming one of the most popular ETFs in recent years. These ETFs give investors a secure way to track Bitcoin's price directly on the stock market, something that was previously difficult to achieve.
After a decade of rejections, the SEC approved several Bitcoin ETFs in January, fueling rapid market inflows that hit $20 billion in just ten months—a pace much faster than gold ETFs, which took five years to reach that milestone.
Finsum: There is the possibility that demand for Ethereum ETFs may rise as investor interest grows.
ETFs remain a favorite for investors due to their diversification and tax efficiency, making them easy additions to retirement portfolios. However, direct indexing is an increasingly attractive strategy, allowing investors to hold individual stocks that mirror an index and personalize holdings.
This approach enables adjustments for specific preferences, such as excluding certain sectors, while also offering tax advantages through targeted loss harvesting.
Direct indexing can lower tax liability by selling underperforming stocks to offset gains, a flexibility that ETFs don’t provide. Costs have decreased, making direct indexing more accessible and competitive with ETFs.
Finsum: A combination of direct indexing and ETFs could form a well-rounded balance for customization and tax needs
Private equity's growing control of rental housing has sparked concern as rents continue to rise, prompting calls for scrutiny from lawmakers. Senator Elizabeth Warren, joined by three colleagues, recently questioned KKR on how its recent $2.1 billion investment in rental units across eight states will impact long-term tenants and rental rates.
KKR asserts its investments provide high-quality housing, but critics argue these acquisitions contribute to rising costs and fewer homeownership opportunities for regular buyers.
A Harvard report shows that rents have surged far faster than household incomes, putting financial strain on tenants who are forced to limit spending on essentials. Vice President Kamala Harris and other leaders have also highlighted private equity’s role in pricing out individual buyers and impacting housing affordability.
Finsum: This type of regulation will obviously depend on the election results but there is little doubt that the Harris administration will make large changes to housing.