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What New ETF Would You Like to See?

Financial bloggers debate missing ETFs, portfolios with an active tilt outperformed in 2017 and advisors may no longer be able to deduct client lunches.

Many argue that the exchange traded funds market is saturated, with too many new ones launched every day. But what ETFs, if any, are missing? Blogger Tadas Viskanta of Abnormal Returns recently asked several finance bloggers the question. Many responded saying there are already too many, while others responded with strategies they’d like to see in an ETF wrapper. Some of their ideas include: a crypto-based ETF; a seed stage fintech startups ETF; an ETF that shorted a diversified basket of levered inverse funds and maybe rebalanced once a year; a long-short equity ETF focused on retail names, co-managed by the data science teams at Amazon and Google Trends; a tax-efficient, leverage-efficient, trend/carry managed futures ETF; an ETF that traded pairs; and an Inverse Gartman ETF. See the full list here.

Portfolios Tilted Toward Active Investments Outperformed Passive in 2017

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A new report by Natixis Investment Managers showed that portfolios tilted toward active investments that performed slightly better than those more reliant on passive in 2017. The Natixis Investment Managers’ Portfolio Clarity US Trends Report looked at moderate-risk advisor-managed portfolios, finding that active management returned 15 percent versus 14.4 percent for passive weighted portfolios. Natixis publishes its US Trends Report twice yearly. It found that the average moderate model portfolio returned 14.7 percent in 2017, driven by strong international and U.S. equity performances, beating a 60/40 portfolio (represented by the S&P 500 and the Bloomberg Barclays US Aggregate Bond Index) by 0.5 percent at year-end.

Is the Client Lunch in Jeopardy?

A lot of financial advisors take clients and prospects out to lunch. But will they be able to deduct those expenses in 2018? According to Reuters, the American Institute of CPAs is seeking “immediate guidance” from the Internal Revenue Service on the issue, since deducting business meals and other work-related expenses, such as entertainment and membership dues, are affected by the new tax legislation. The new law states “entertainment expenses” are no longer deductible, but it's not clear what falls into that category. Now that the AICPA is asking, a more direct answer appears to be in the works.

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