Wealth Management
Cliffwater Corporate Lending Fund (CCLFX), a diversified interval fund specializing in corporate middle market direct lending, has successfully completed its seventh offering of privately placed Senior Secured Notes, raising $1.37 billion.
The Notes, which are secured by the Fund’s assets and have staggered maturities ranging from 3 to 12 years, will help support continued growth as the Fund's net assets increase in line with equity inflows. As of July 31, 2024, CCLFX reported over $21.2 billion in net assets, up from $15.6 billion at the end of 2023, demonstrating its robust expansion.
Operating as an interval fund, CCLFX offers investors exposure to a diversified portfolio of loans, primarily in first lien senior secured positions, and focuses on generating consistent income with low price volatility. This recent transaction highlights the Fund's effective use of debt capital markets to finance its strategy.
Finsum: We have seen a huge uptick in popularity of interval funds and are projected to hit big targets in the coming years.
With persistently high interest rates, investors are increasingly turning to fixed-income separately managed accounts (SMAs) for their potential tax advantages and personalized portfolio options. SMAs give investors direct ownership of underlying securities, offering greater control over capital gains, tax-loss harvesting, and tax-efficient investment selection.
Fixed-income SMAs can minimize tax liabilities through strategies like low portfolio turnover, selective tax-loss harvesting, and investment choices based on location-specific tax exemptions.
While tailoring portfolios for various client types, portfolio managers must balance customization with operational efficiency to meet expectations and maintain consistent performance. The key is to achieve tax efficiency without compromising on investment goals or client-specific outcomes.
Finsum: Investors should think of the tax advantages as additional returns their accounts can optimize for their portfolio.
The domestic broad-market ETF sector is highly competitive, with popular options like Vanguard's and iShares' total market and S&P 500 funds. While these funds offer low costs, blended styles, and broad sector coverage, there are lesser-known alternatives worth considering.
For broad U.S. market exposure, the Schwab U.S. Broad Market ETF (SCHB) and the SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM) provide similar market coverage at lower costs. For those focused on large-cap exposure, the SPDR Portfolio S&P 500 ETF (SPLG) and BNY Mellon US Large Cap Core Equity ETF (BKLC) offer even lower expense ratios.
Using these alternatives can enhance tax-loss harvesting strategies while maintaining market exposure. By diversifying beyond the usual Vanguard and iShares funds, investors may find cost savings and strategic benefits.
Finsum: You can still implement thematic investing with these ETFs, so keep this in mind when making decisions.
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Just this last week Geneva Watch Days took place in Switzerland, a showcase of the latest releases from various watch brands. Among the standout pieces was the Berneron Mirage 34mm with a new caliber and a stunning tiger's eye dial, which features a unique single-piece stone dial.
Another highlight was the Albishorn x Massena Lab Maxigraph, a vintage-inspired regatta timer with intricate design details and a "retrograde" function, priced under $5,000. Additionally, the Oris Divers Sixty-Five LFP Limited Edition caught attention for its playful and thoughtful design, including a handwritten script on the dial.
The fair offered a mix of innovative and classic pieces, catering to diverse tastes in horology. With multiple exciting releases, Geneva Watch Days has once again proven to be a dynamic event for watch enthusiasts.
Finsum: Additionally, we love the new blue dial Tudor Black Bay Chrono, released from Rolex’s sister brand earlier this month.
Small-cap stocks have recently caught the attention of investors, driven by expectations of upcoming interest rate cuts signaled by Federal Reserve Chair Jerome Powell. Following a significant selloff in early August, there has been renewed interest in small-cap ETFs, like the iShares Russell 2000 ETF, which saw a net inflow of over $688 million last week.
However, the erratic nature of these investments has some investors weighing the potential for a rebound against the risks associated with this speculative market segment.
Historically, small-cap stocks have been more sensitive to changes in interest rates and economic conditions, benefiting more directly from lower borrowing costs. The S&P SmallCap 600 Index, for example, has shown gains following initial Fed rate cuts, but with notable downturns in past cycles such as 2007 and 2019.
Finsum: There is going to be a lot of potential growth for interest rate sensitive small caps as rate hikes ramp up.
While stock selection often gets the most attention, the true driver of portfolio performance is typically asset allocation, with around 90% of variability linked to how investments are distributed across asset classes. Different asset classes perform well under different economic conditions—stocks might excel in growth periods, while bonds provide stability during downturns.
Goldman Sachs has analyzed various economic scenarios to suggest optimal asset mixes for maximizing risk-adjusted returns over the next decade. For sluggish growth or stagflation, they recommend a heavier allocation to Treasury bonds and real assets, while minimizing exposure to growth stocks.
In a scenario of strong growth and low inflation, the maximum allocation to stocks should still be capped around 70%. Ultimately, a diversified mix, including US Treasuries, remains crucial regardless of the economic outlook.
Finsum: Keep in mind the relative risk profiles of these asset classes when constructing your portfolio.