Displaying items by tag: ETFs

Tuesday, 07 October 2025 11:13

Strategies Beyond ETFs for Short Term Needs

While standard ETFs are built for long-term investors, more complex products like leveraged, inverse, and synthetic ETFs are designed for short-term or specialized strategies and carry higher risks. Leveraged ETFs amplify daily index returns, but compounding effects mean they often underperform over longer periods, making them unsuitable for buy-and-hold investors. 

 

Inverse ETFs, by contrast, rise when their benchmark falls and are typically used as temporary hedges against downturns rather than core holdings.

 

Synthetic ETFs take a different approach by using swap agreements with banks to replicate index performance instead of directly owning the securities, which reduces tracking error but introduces counterparty risk. These advanced products can be useful in the right hands, yet they require a clear understanding of their mechanics and limitations. 


Finsum: These tools can be tactical moves, not long-term wealth building, but serve short term client desires.

Published in Wealth Management
Tuesday, 07 October 2025 11:12

Large Cap Growth Outperform Other Factors

The U.S. stock market set new highs in Q3 2025, and while index funds largely outperformed, active funds were more mixed. Among the 10 largest active funds, only the JPMorgan Large Cap Growth Fund stood out, returning 9.3% and ranking in the top third of its category, while the Dodge & Cox Stock Fund lagged with just 3.2%. 

 

Index funds fared better, with the Vanguard Total Stock Market Index Fund delivering 8.2% and ranking highest among its peers, though the Vanguard Mid Cap Index Fund landed near the middle of its category.

 

Over the past three years, seven of the 10 largest active funds have outperformed their categories, led by two Capital Group funds that landed in the top decile of large-cap blend. Index funds also showed consistent strength, with S&P 500 trackers like Vanguard, Fidelity, and iShares ranking in the top quartile over that period. 


Finsum: Investors looking to capitalize on falling interest rates should look to large cap growth as they tend to be more interest rate sensitive.

Published in Wealth Management
Wednesday, 01 October 2025 09:27

Faith Based Investing has Taken Off This Year

Faith-based ETFs remain niche but are expanding, with six launching this year and total assets now around $10 billion. These funds aim to align investments with religious values, though many end up resembling S&P 500 trackers with higher fees. 

Currently, there are 46 such ETFs in the U.S., 38 Christian, seven Muslim, and one Jewish, which have attracted about $832 million in inflows year-to-date. Some apply strict screens, like the Inspire 100 ETF (BIBL), which excludes firms tied to abortion, LGBT activism, or gambling, while others, like SPUS, filter out half the S&P 500 for Sharia compliance. 

By contrast, funds such as the JLens 500 Jewish Advocacy US ETF (TOV) and the Global X Catholic Values ETF (CATH) closely resemble mainstream products like Vanguard’s VOO, differing mostly in expense ratios. 


Finsum: Advisors must weigh whether these products are genuinely value-aligned investments or simply pricier versions of broad index funds.

Published in Wealth Management
Wednesday, 01 October 2025 03:06

Chasing Yields? Try Derivative ETFs

Derivative income ETFs, built around covered call strategies, have surged in popularity as investors seek higher yields. These funds generate income by selling call options on stocks or indexes, with the trade-off being limited upside potential during strong market rallies. 

 

Yields can vary widely depending on how aggressively options are written, with higher payouts often signaling greater risk. The largest products in this space track benchmarks like the S&P 500 and Nasdaq, though smaller providers have introduced sector and single-stock versions. 

 

While income potential is attractive, investors should weigh opportunity cost, since these strategies often trail the broader market over time. 


Finsum: With interest rates likely to fall, option premiums, and thus fund income, may decline, but yields remain compelling compared to traditional dividend ETFs.

Published in Wealth Management
Monday, 29 September 2025 09:19

How to Manage Fed Uncertainty

After the Federal Reserve’s first rate cut of the year, investors wonder how they can better position portfolios in a changing bond market. Thornburg’s Christian Hoffmann and VettaFi’s Todd Rosenbluth noted that while the bond market initially reacted positively, much of the impact was already priced in, and expectations for further cuts are stronger than anticipated. 

 

Hoffmann emphasized that the market is at an inflection point driven by both economic data and potential changes in the Fed’s composition under political pressure. He argued investors should remain overweight duration and prepare for the possibility of a more dovish Fed with tools such as yield curve control. 

 

Against this backdrop, Hoffmann highlighted the role of active management, pointing to Thornburg’s Core Plus Bond ETF (TPLS) for flexible core exposure and its Multi-Sector Bond ETF (TMB) for income diversification. 


Finsum: Active funds could provide solutions in an uncertain rate environment, echoing the adage: “Don’t fight the Fed.”

Published in Bonds: Total Market
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