Markets
When it comes to direct indexing, a little daylight seems to be peeking in.
As investors, young and old, flock to ETFs, you might say direct indexing’s keeping an eye out for its lane, according to blomberg.com.
Two hands on the wheel, of course.
Questions surface about whether investors have an inclination to dive into direct indexing in light of the burgeoning attraction to ETFs, notes new research from Schwab.
If you have an appetite for index funds and ETFs, but greater control over fund holdings and the possibility to outperform, direct indexing just might float your boat, according to schwab.com.
By paring down costs while stepping up access among investors to different segments of the market, index funds and ETFs have put an entirely new face on investing. That said, when it comes to direct investing, contrary to performance historically, make way for the fly in the ointment: when it comes to control over the fund’s individual holdings, control – perhaps of any sort – is nonexistent.
However, times, it seems, have changed. Limited, back in the day, to institutional and high-net-worth investors, today, direct indexing’s available to a wider range of investors. Why? Technological strides, which have coaxed down investment minimums.
Direct indexing, of course, is surging in popularity, according to barrons.com. While Fidelity, Schwab and Vanguard have initiated direct indexing products over the past year or so, direct indexing’s leveraged by only 12% of advisors. Not to pile on – but piling on – a survey showed, when it comes to direct indexing, half of advisors have too clue what it is.
Um, someone say Wikepedia?
It might be a bit brisk north of the border, but at least some fixed income ETFs seem to be hot in Canada, according to moneysense.ca.
In the aftermath of around 20 years of essentially solid returns, as interest rates nudge yields up and drive down prices, bond portfolios are absorbing some body blows. the iShares Core Canadian Universe Bond Index ETF (XBB) – which missed the panel’s picks of best fixed income ETFs for portfolios – still dispenses broad exposure to investment-grade Canadian bonds.
“I’m not committed to bonds at all,” says panellist Yves Rebetez. “People are now seeing the truth in the descriptive ‘return-free risk’ that some have been pointing to for a while. This ‘return-free risk’ is a tongue-in-cheek play on that. Who wants to invest in risk, void of potential returns?”
Opting for cost efficient funds like ETFs in Canada and elsewhere, the variety of them is, well, substantial, according to wealthawesome.com. As last year wound down, there were 1,177 Canadian listed ETFs in Canada.
Canadian ETFS are available in every shape and size. Among that wide range of options, it’s key to buckle down on the best funds.
Most portfolios commonly carry fixed income or bond ETFs – particularly if risk doesn’t float the boast of those investors who are most risk repellant.
Want to talk logic? For a second? A combination of income exchange-traded funds are most, well, logical for a substantial chunk of investors.
Based on research released Monday, Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, believes that small-cap stocks have already priced in a recession and are currently de-risked. Calvasina noted that small-cap performance has been stable since January and is in a narrow trading range in comparison to large-caps. She stated, “While this doesn’t necessarily tell us that a bottom in the broader U.S. equity market is imminent, it does tell us that the equity market is behaving rationally. It has been our view for quite some time that small-caps, which underperformed large-cap dramatically in 2021, have already been de-risked and are baking in a recession.” She also pointed out the sectors that tend to perform best in the period leading up to the final rate increase in a rate-hike cycle. These include defensive sectors such as consumer staples, energy, financials, healthcare, and utilities. Calvasina wrote the sectors “tended to perform the best within the major index in the six-, three- and one-month periods before the final hikes in the past four Fed tightening cycles.”
Finsum: In a recent research note, Head RBC equity strategist Lori Calvasina believes that stable returns of small-cap stocks are due to recessionary factors already priced in.
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Stash…Away we go?
It’s a great way to travel, apparently.
In order to offer a suite of diversified multi asset model portfolios, StashAway, Southeast Asia’s wealth management company, recently joined forces with Blackrock, the largest asset manager in the world, according to crowdfundinsider.com.
The portfolios were forged by Blackrock’s analytics and ETFs. StashAway will be their manager.
General Investing portfolios – through the StashAway app – abets the ability of investors to access diversified, multi asset ETF portfolios. The portfolios are optimized for risk adjusted returns over the long haul. Like a regular smorgasbord, investors have a choice of three different General Investment strategies.
The StashAway supported General Investing portfolios dial in on a dual role: optimizing for long term risk adjusted returns while ensuring the risks are unrelenting. While doing the same, the Responsible Investing portfolio also optimizes for the effect of ESG.
And limited thinking? Ha; not around here. The third General Investing strategy, which is supported by BlackRock, is a new long term investment strategy. Its objective is handing the investor broader diversification.
“We’re excited StashAway’s launching portfolios powered by BlackRock’s analysis,” said Peter Loehnert, BlackRock head of ETFs and Index Investing APAC, according to hubbis.com. The partnership, he continued, will give more investors across Asia access to BlackRock’s insights and investment capabilities via StashAway’s platform. It will offer diversified and liquid ETFs as building blocks for portfolio construction, maximising the value of ETF investing.
Many investors are now adding private credit investments to their portfolios according to a global survey of institutional investors conducted by State Street Global Advisors. The survey report, The Future of Fixed Income, asked institutional investors how they view the fixed income market and how they’re allocating their investments amid the current market volatility. The findings were based on answers from 700 pension funds, endowments, foundations, and sovereign wealth funds, as well as wealth and asset managers. The results also found that investors have become more open to systematic fixed income strategies to help them fight the impact of rising prices and inflation. In addition, 51% of survey respondents stated their interest in increasing allocations to bank loans and 42% want to increase their allocation to inflation-linked bonds over the next 12 months. The findings also showed that investors are embracing index-tracking investments to gain efficient access to attractive sectors due to fee pressure and increased transparency. Over one-third of the respondents said that more than 20% of their fixed income portfolio is allocated to index strategies. The figure rises to 57% for investors with AUM over $10 billion.
Finsum: A survey conducted by SSGA noted that institutional investors are shifting their fixed income allocations amid the current market environment.
With, oh, say, Gilligan’s Island in its crosshairs, it hasn’t exactly been smooth sailing for proponents of investment strategies associated with environmental, social and governance data, according to law.com.
In fact, reems have been put to the old laptop revolving how Russia’s invasion of Ukraine culminated in geopolitical questions related to why Russia received ESG focused funds to begin with. Then what happened? Markets scram south and, in the process, a plethora of large ESG funds got hammered because, stemming from their massive holdings in tech stocks that took a beating, they registered losses worse than those absorbed by benchmarks.
McKinsey & Co. consultants, in a new paper, “Does ESG Really Matter—and Why,” go through a plethora of reasons ESG, of late, drew heavy duty criticism. At the end of day, the current turbulence surrounding its specific components aside. they concluded the underpinnings of ESGs and the adherence of “social licenser to them, way down the road, still will be integral to companies.
Meantime, mark the calendar, because a comeback’s on the docket. The Electronic Sports and Gaming Summit – or ESGs 2022 – recently proclaimed that, in the upcoming event, Riot Games will be a Platinum Exhibitor, according to ungeek.ph.
The event will take place Oct. 28-30 at the SMX Convention Center at the Mall of Asia complex in Pasay City.
Riot Games, of course, is world renowned for delivering gamers the largest, most played esports titles. Eventually, it spawned a gaggle of related media.