Wealth Management
Buffer ETFs have grown rapidly since 2018, now totaling 159 with nearly $38 billion in assets. They attract financial advisors by offering downside protection for the first 10% to 15% of losses while allowing market gains, making them popular during volatile periods like 2022.
Experts point out that these ETFs are easier to rebalance and offer daily liquidity compared to structured notes and annuities. However, buffer ETFs cap potential gains, limiting profits when the market rises, and their performance can be affected by market timing.
They typically have a defined 12-month outcome period, and buying or selling mid-series can negate initial protections and caps. Despite their benefits, buffer ETFs have higher fees and might not pay dividends, making them less suitable for long-term investors compared to direct equity investments.
Finsum: Sometimes it’s worth paying higher fees or sacrificing a little alpha to hedge some volatility
While you’ll find salespeople peddling the pros of annuities littered across the industry and their detractors in equal force, but in reality, index annuities, under specific circumstances, can be a viable option for a steady retirement income. Here are three top providers:
- MassMutual stands out as the top annuity provider with high ratings and a broad range of annuity types, making it a reliable choice for straightforward annuity products.
- Athene, known for its no-charge income and death benefit riders, offers a variety of annuities, including fixed and index-based options, suitable for those seeking guaranteed retirement income.
- Fidelity Investments, partnering with several insurance companies, provides a wide range of annuities and offers the Fidelity Personal Retirement Annuity, notable for its low fees and no surrender charges.
Each of these companies caters to different investor needs, from those desiring straightforward solutions to those looking for comprehensive investment and annuity integration.
Finsum: Index annuities in particular can be a goldilocks solution to income investments during higher volatility.
In wealth management, the portfolio is the product and it’s crucial for achieving clients' long-term goals. Despite the additional services offered, the portfolio's performance is paramount.
One key challenge is adapting portfolio construction to ever-changing market conditions, such as the recent shift to positive bond/stock correlations. Previously, low or negative correlations enhanced diversification benefits, but this advantage has lessened.
As a result, professionals are exploring new ways to diversify, though it's important not to over-rely on these new methods. While increased correlations make reducing volatility more difficult and investors should turn to alts in these types of environments, a measured approach to diversification is essential to maintain long-term returns.
Finsum: Privates and alts are more necessary than ever to hedge the current increased stock-bond correlation.
More...
Financial advisors frequently seek insights into the evolving landscape of advisor transitions and recruitment deals within the wealth management industry. To address this demand, a dedicated annual report analyzes raw data and offers tailored intelligence, unveiling notable surprises that challenge conventional wisdom.
One such revelation was the modest uptick in advisor recruitment despite a thriving equity market, as well as the unexpected success of boutique and regional firms in attracting top talent through balanced approaches and competitive deals.
Even firms perceived as laggards managed to secure notable wins, highlighting the diverse appeal of various business models. The final big finding is that while transition dollars have certainly increased it hasn’t really translated to a substantial increase in movement.
Finsum: Another trend we have noticed is the key piece the tools and tech, that are offered play in advisor recruiting.
Declining inflation rates have ignited a bullish frenzy in the equity markets after a turbulent start to 2024. Financial experts highlight the pivotal role played by waning price pressures in propelling the recent stock market surge.
Fueled by promising inflation trends and the burgeoning artificial intelligence sector, analysts have revised their year-end targets upwards for major stock indices like the S&P 500. Consecutive record highs across key benchmarks reflect investors' optimism, bolstered by lower-than-anticipated inflation readings.
Economists interpret the recent data as a harbinger of potential interest rate cuts, marking significant progress towards the Federal Reserve's 2% inflation target. While the Fed projects a solitary rate reduction in 2024, market sentiment leans towards two cuts.
Finsum: The key will be how many cuts, if rates fall the cap to the market is very high.
Asset managers believe the next two years might be ideal for investing in private real estate, despite recent market challenges. Clients are increasingly interested in risk-adjusted returns, prompting RIAs to explore private real estate opportunities.
Core real estate, with its stable returns and lower leverage, is seen as favorable. Despite last year's focus on falling property valuations, sentiment is shifting as investors seek to time market entry.
Private real estate offers attractive returns but requires patience due to slow cycles and the need for market stability. Potential buyers should be aware that the price gap between buyers and sellers remains a challenge.
Finsum: The old adage of buying the dip could be especially in play for this current moment in real estate.