(San Francisco)

Many investors are worried that the huge growth in ESG assets might be causing a bubble in the most common stocks in ESG funds. However, the reality is that they are not. According to Bridgewater Associates: “The shift to ESG appears to be still in its early innings. Investor positioning in sustainable equities is not yet overextended … The US ESG index looks very similar to the aggregate market, and much less frothy than stocks that have been most popular with retail investors where we think valuations are most stretched”.

FINSUM: In other words, despite all the hype about ESG asset growth, overall valuations are in line with the broader market so there is no specific risk to ESG funds.

(Washington)

Most advisor attention as it regards Biden’s tax plan has been about increased capital gains taxes and the unwinding of the “step-up basis” in the inheritance of assets. However, there is another major risk and complication on the horizon. That has to do with state level inheritance laws and how they interact with Biden’s plan. The federal government has no formal inheritance tax, but rather an estate tax. States, by contrast, often have inheritance taxes. The big difference between the two is that the estate tax is levied on the estate itself, whereas inheritance taxes are levied on the beneficiaries. That means that each individual is subject to a different level of taxes based on their income.

FINSUM: To be clear, the implications of this are quite large for HNW individuals, as they could face much higher federal estate taxes in addition to high state level inheritance taxes.

(Washington)

China has been a no-brainer for any diverse portfolio and quite frankly continues to be one…see the full story on our partner Magnifi’s site.

(New York)

The summer bond market has a pretty predictable summer pattern. Normally…see the full story on our partner Magnifi’s site.

(New York)

Federal workers will now have the option to invest their retirement and savings accounts directly into…see the full story on our partner Magnifi’s site.

(New York)

Whether investors—or Jerome Powell—like it or not, inflation is rising, and is as high as it has been in a generation. Sure, it could prove temporary, but in the near and medium term, investors are worried about it, which means it will be dictating returns. How to hedge inflation is a question that investors haven’t had to worry about in some time, so it is worth noting that REITs have traditionally performed very well in inflationary periods. Since many leases are tied to inflation, rents tend to rise directly in line with inflation, providing an excellent hedge.

FINSUM: REITs are not as well appreciated as an inflation hedge as some others asset classes, but that is exactly why they might be a great buy right now.

(New York)

Earnings are beginning to roll in for Q2 for many US companies. The expectations…see the full story on our partner Magnifi’s site.

(Brussels)

In the US, the Fed has only started kicking the tires on climate change talks at its regional branches. However…see the full story on our partner Magnifi’s site.

(New York)

Treasury yields sank last week, before rebounding strongly late in the week…see the full story on our partner Magnifi’s site.

(New York)

There has been rising anxiety of late that the growing assets in ESG stocks have created a valuation bubble in the most popular shares in the category. The idea is that rush into ESG has funneled a ton of capital into a relatively small group of shares, “artificially” inflating valuation. However, the Financial Times argues that there is definitively no bubble in these stocks. In fact, they are not valued any more richly than any average basket of shares. Overall, the average PE ratio of a global basket of ESG stocks is the same for an average basket of all stocks: 14x.

FINSUM: This is actually quite a relieving study, as there have been some very lofty AUM growth figures thrown around lately for ESG. And in case you are nervous, the same metrics/comparison listed above also hold for US/domestic ESG stocks.