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Fintech Funding Continues to Fall

Venture capital in fintech companies may have reached its peak, Raymond James now has more advisors than UBS and study finds investors are using ETFs for short-term trading.

Despite the talk about the growing importance of financial technology, outside investments in startups are on the decline. According to a quarterly global report from KPMG International and CB Insights, venture capital funding in fintech companies in the third quarter declined for the second consecutive quarter. U.S. fintech startups saw a total of $800 million in funding, a 50 percent decrease from the second quarter. Blockchain (the ledger technology that underpins digital currencies like bitcoin) and insurance technologies received the most attention, but the overall number of deals (88) recorded reached a five-quarter low. Anthony Rjeily, KPMG’s U.S. financial services digital leader and co-leader of the firm’s fintech practice, said the low could be due to market uncertainties connected with the presidential election and the timing if interest rates increase. “However, there is growing enthusiasm related to M&A, IPOs and liquidity, and expectations are that while Q4 may be relatively lackluster, 2017 should see fintech gaining momentum again."

UBS Workforce Now Smaller Than Raymond James

UBS Group AG's workforce is smaller than rival Raymond James' for the first time since UBS acquired PaineWebber 16 years ago, Reuters reports. The number of advisors at UBS in the third quarter is down to 7,087, compared to Raymond James' 7,146. The reduction is due to an effort from the Swiss bank to boost lagging revenue. According to Tom Naratil, president of UBS Wealth Management Americas, the money saved from recruiting new advisors will go to paying existing advisors bonuses for growing their business. "For six years, we've said it was all about the productivity of advisors and not the number of advisors," he said.

ETFs Aren't Just for Long-Term Investing

Though ETFs are typically thought of as a buy-and-hold product, they are being used opportunistically for short-term strategies by a number of investors. In a survey of experienced investors using E*TRADE, two in five believe ETFs are better suited for short-term trading than long-term investing. Only a quarter believe ETFs should be entirely or mostly used for long-term trading, suggesting many were taking a hybrid approach. U.S. market index ETFs, the most popular ETF sector on E*TRADE and traditionally a passive vehicle, were favored by active investors for their liquidity and efficiency and are among the most frequently traded ETFs. The survey also found that millennials were more likely than boomers to gravitate towards less popular, yet more opportunistic ETFs like foreign currency, derivative and inverse ETFs.

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