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11 Investment Must Reads for This Week

The push to develop products for the wealth channel has raised concerns about how asset managers are selecting investments for these funds vs. their traditional vehicles, reports Pitchbook. The inclusion of a stock in an ETF can improve its underlying pricing, according to research featured in UCLA Anderson Review. These are among the investment must reads we found this week for wealth advisors.

  1. Amid private wealth push, investors raise concerns about cherry-picking “This places these new LPs at a disadvantage relative to institutional investors, family offices and the ultra high-net-worth channel in ensuring that cherry-picking isn’t affecting them.” (Pitchbook)
  2. ETFs vs. Mutual Funds: The Benefits That Really Matter “Investors can trade ETFs like stocks: They can go long ETF shares, sell them short, buy them on margin, buy and sell options on them, and lend them to others to collect a fee. This versatility can draw in a diverse investor base, which aids ETFs’ robust liquidity ecosystem.” (Morningstar)
  3. Inclusion in an ETF Can Improve the Pricing of Underlying Stocks “They find that companies with higher ETF ownership of their stock are more influenced by a metric called Tobin’s Q, which compares the market value of their firm to their asset replacement costs, when making decisions about capital expenditures. They also report that the type of ETF that holds a company’s stock is an important factor in this influence.” (UCLA Anderson Review)
  4. Non-Listed BDCs Finish 2023 Strong, Still Trail Listed Counterparts “Non-listed business development companies had a combined aggregate net asset value of $60.8 billion, a year-over-year increase of nearly 50%. The Stanger NL BDC Total Return Index – heavily credit-focused – hit an all-time high, growing 2.9% in the fourth quarter of 2023 and 10.8% overall for the year.” (The DI Wire)
  5. Wealth managers weigh up balanced portfolios “Fearing a similar event from a populist administration in the US, Pictet discourages going longer than five years in Treasury durations. The Swiss bank also expects devaluation of dollar-denominated assets if the independence of the US Federal Reserve is once more called into question by an incoming administration.” (PWM)
  6. Hedge fund billionaire Bill Ackman to launch a NYSE-listed fund for regular investors “Unlike traditional hedge funds that typically charge a 2% management fee on the total assets under management plus a performance fee of 20% of the fund’s profits, Ackman’s new fund doesn’t have a performance fee in place. Ackman is waiving the management fee for the first 12 months and after the first year will charge a flat 2% fee.” (CNBC)
  7. Alts industry voices concern as SEC Dealer Rule adopted “Trade bodies representing hedge funds and other alternative asset managers fear the Securities and Exchange Commission’s far-reaching new Dealer Rule will see certain funds and strategies erroneously labeled as securities dealers and hamper their activities.” (Alternatives Watch)
  8. Private wealth clients increasingly turning to outsourced chief investment officers “The demand from private wealth clients for outsourced chief investment officers (OCIOs) has grown in recent years due to market volatility, recruiting challenges and higher inflation.” (Crain Currency)
  9. ETF Provider Global X Suffers Flurry of Executive Departures “The exodus has raised concerns among Global X employees about the growing influence of its South Korean parent company and a clash of two different cultures, according to people familiar with the matter. Global X was acquired by asset-management giant Mirae Asset Global Investments in 2018.” (The Wall Street Journal)
  10. Stocks and bonds diverge as investors worry less about inflation “The shift is likely to come as a relief to the many investors holding forms of the so-called “60/40” portfolio, which allocates 60 per cent to stocks and 40 per cent to bonds and is designed to lower risk and provide diversification during market shocks.” (Financial Times)
  11. Using Private Client Investment Data As Reality Check “Indeed, the central concept behind the design of the ARC suite of private client and charity indices was the notion that investors are interested in outputs rather than inputs. Thus, there are no pre-set asset allocations; no asset class restrictions; no concentration limits; and no index performances used.” (Wealth Briefing)
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