Smart beta may not simply be a passing fad. Global assets in smart beta ETFs are expected to surge from $282 billion today to $1 trillion by 2020 and $2.4 trillion by 2025, according to a new report by BlackRock. This represents a 19 percent annual growth rate, double that of the overall ETF market. The asset management giant says the growth will be driven primarily by minimum volatility and factor funds, which account for over 60 percent of new smart beta flows through 2025. Instead of weighting companies in underlying indexes by market capitalization (like most ETFs), smart beta products either weight companies using rules-based criteria such as cash flow or targeted volatility levels, or equally weight them. BlackRock’s iShares manages over $67 billion in smart beta ETFs across 96 products. “The rise of smart beta—propelled by advances in technology and data analytics—is helping to democratize factor investing, putting investment solutions once only accessible to large institutions within the reach of all investors,” said Andrew Ang, Head of Factor Investing Strategies at BlackRock.
IMCA Members Manage More, Make More
The Investment Management Consultants Association (IMCA), which administers the CIMA (Certified Investment Management Analyst) exam, released the latest profile of its membership base, and on average, its members manage $202 million in assets, compared to $53 million for the industry average. Seventy-four of IMCA members work for a practice that manages more than $100 million, compared to 55 percent for all advisors. Those who hold the CIMA designation tend to have higher compensation as well, with one-third of CIMA professionals earning more than $380,000 a year, compared to only 6 percent of other advisors. In addition, 84 percent of CIMAs are practice owners or team leaders, higher than the industry average of 57 percent.
Retirement for baby boomers, Gen X and millennials is going to be much different than that of the Greatest Generation, writes Chip Castille, BlackRock's head of Global Retirement Strategy, in a blog post. For one, retirement is about more than money; it's about quality of life. As retirees get older, the issue of long-term care takes precedence, affecting health, finance and technology. Secondly, "retirement" is outdated, he states. Folks should not expect to make their money last another 30 years into retirement or more. The retirement age of 65 no longer makes sense. Instead, shifts should take place throughout one's life, such as time off or part-time work mid-career, more opportunities for education and retraining later in life and "phased retirement." Finally, Castille states that because defined benefit pension plans are gone and Social Security can only help a bit, better savings habits are key. “It’s counterproductive to talk to young workers about 'retirement,' a goal that seems to them impossibly distant,” he says to advisors. “Language around 'savings' works better. Older workers closer to retirement age respond well to messages that speak directly to their concerns about retirement.”
Online auction start-ups Paddle8 (best known for selling the sole copy of the Wu Tang Clan’s final album to Martin Shkreli) and Auctionata announced that they would be merging on Thursday. According to Artnet’s report, the new company will target what it views as an underserved “middle market.” Don’t be misled by that term; they’ll be targeting items valued up to $500,000. You know, lower-end stuff. A recent ranking of online auctioneers compiled by art insurer Hiscox ranked Paddle8 fifth and Auctionata ninth. Financial terms of the deal weren’t disclosed.