Wealth Management
The target date market surged in the first half of 2025, with combined assets across mutual funds, CITs, and custom solutions rising 10% to more than $4.7 trillion. Vanguard extended its dominance, adding $121 billion to reach $1.6 trillion, far ahead of Fidelity’s $623 billion.
A major development is the rapid rise of income-enabled target date funds, whose assets climbed to $103 billion, led by TIAA’s RetirePlus model and BlackRock’s LifePath Paycheck series.
These products reflect growing demand for pension-like security within modern 401(k) structures, blending glide paths with annuity-based income features. Co-manufacturing partnerships between recordkeepers, insurers, and asset managers are fueling much of this innovation, while CIT-based target date funds have overtaken mutual funds, now holding 53% of assets.
Finsum: Target date funds are a great way to start a portfolio for clients and then to build customization around the edges.
Rocky markets with lots of macro uncertainty have investors looking harder for diversification. While private assets are drawing attention, a quieter corner of the alternatives world — managed futures ETFs — has quietly surged in popularity.
Funds like the Simplify Managed Futures Strategy ETF (CTA) and the Invesco Managed Futures Strategy ETF (IMF) have each attracted hundreds of millions of dollars in new inflows this year.
These strategies follow market trends across asset classes, taking long and short positions in commodities, rates, currencies, and sometimes equities. Their key appeal lies in their historically low correlation to both stocks and bonds, making them useful portfolio diversifiers.
Finsum: With investors searching for tools to steady returns in volatile markets, managed futures ETFs are stepping into the spotlight as timely complements to traditional allocations.
Treasury Secretary Scott Bessent said Tuesday he is optimistic that the U.S. and China are closing in on a trade agreement. In an interview with CNBC, he noted that upcoming talks ahead of November’s scheduled reciprocal tariffs have become increasingly productive.
Bessent suggested Beijing now recognizes that a deal is within reach, even after months of back-and-forth since tariffs were first announced in April.
While China initially faced duties as high as 145%, those measures have been suspended through Nov. 10 to allow negotiations to continue. He also highlighted that U.S. allies are frustrated by the surge of Chinese goods into their markets, a dynamic adding urgency to the talks.
Finum: With the U.S. trade deficit with China already narrowing sharply in 2025, there could be a strong incentive to reach a trade deal as soon as possible.
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Recent changes allow 401(k) plans to hold private market and alternative investments, opening the door for managed accounts to expand their offerings. Managed accounts, which provide professionally managed, customizable portfolios, are seeing rapid growth, with assets reaching $13.7 trillion in 2024 and net flows topping $811 billion.
Incorporating private equity, venture capital, private credit, and real estate into these accounts requires robust technology for reporting, valuations, and liquidity management.
Firms like InvestCloud are creating platforms that enable scalable, model-based access to private market investments, allowing advisors to integrate these assets alongside traditional ETFs and mutual funds. Such technology also supports liquidity solutions, like lending against securities, so investors can access cash without disrupting long-term strategies.
Finsum: With regulatory adjustments, including tweaks to the Accredited Investor rules and the 401(k) shift, managed accounts are positioned to broaden access to previously hard-to-reach alternative investments.
Momentum remains the dominant factor in 2025, with the iShares MSCI USA Momentum ETF (MTUM) up 19.6% and the Invesco High Beta ETF (SPHB) close behind at 18.7%, both well ahead of the S&P 500’s 10.7% gain.
Growth ETFs are trailing the leaders, with the iShares S&P 500 Growth ETF (IVW) delivering a solid 14.2% return. Factor leadership has been narrow, with momentum and high beta capturing most of the gains so far this year.
At the same time, investors are showing renewed interest in high-dividend strategies, as the Vanguard High Dividend Yield ETF (VYM) hit a record high. Expectations of Federal Reserve rate cuts are making dividend payouts more attractive relative to bonds.
Finsum: Momentum, high beta, and dividend strategies are setting the tone for factor performance in 2025.
In August 2025, small-cap and value stocks staged strong comebacks, with the Morningstar U.S. Small Cap Index up 4.6% and the Value Index up 5.1%, far outpacing large-cap and growth peers.
Despite this rally, value stocks still trade at a 3% discount to fair value and small caps at a steep 15% discount, making them the most attractive corner of the market. Historically, small caps thrive when the Fed is easing and long-term rates are falling—conditions now taking shape as policymakers prepare to cut rates and Treasury yields trend lower.
The question is whether this marks a lasting rotation or just a temporary head fake, but investors continue overweight exposure given the difficulty of timing inflection points. Beyond style and size, the most undervalued sectors remain communications, real estate, energy, and healthcare, each offering selective opportunities.
Finsum: Investors seeking value and long-term upside should continue looking to small-cap stocks, where discounts remain widest and potential gains greatest.