Sixteen years ago, alternative investments barely featured in most portfolios, aside from a modest allocation to commodities. Options for retail investors were limited, with most alternatives either prohibitively expensive or inaccessible. 

Today, portfolios tell a completely different story, with many being dedicated to alternatives like private equity, private credit, and reinsurance, reflecting how the landscape has evolved. 

Advances such as interval funds and lower fee structures have opened doors for individual investors to tap into the benefits of these assets, including the sought-after illiquidity premium. Unlike the past, where high fees often negated returns, competitive pricing and improved liquidity have made alternatives a more viable choice. 

Finsum: These innovations now allow for greater diversification and the potential to cushion traditional portfolios against market volatility.

Defined contribution retirement plan advisors are increasingly prioritizing income solutions to help participants navigate the complexities of their post-work years. The latest research from Escalent’s Retirement Plan Advisor Trends™ highlights a sharp rise in advisors recommending these options, growing from 21% in 2022 to 30% in 2024, with more expected to follow. 

Despite this uptick, no single approach has emerged as the standard, underscoring the need for continued innovation. Popular strategies include income-generating bond funds, target-date funds with guaranteed income components, and systematic withdrawal programs, although high fees and portability concerns remain significant barriers. 

A separate Escalent study reveals that only 17% of plan participants feel confident in converting savings into sustainable income, particularly among Gen Xers. 

Finsum: This presents a clear opportunity for financial firms to educate advisors and develop innovative solutions that address these anxieties while tapping into a growing market.

Technology stocks are making a strong comeback, with the Nasdaq Composite and S&P 500 approaching record highs after their recent pullback. For those exploring artificial intelligence opportunities, stocks with reasonable valuations and solid growth potential remain attractive. 

Evercore strategist Julian Emanuel identifies promising options like Visa and Micron Technology, which leverage AI to enhance performance and competitiveness. Visa's adoption of AI-driven fraud prevention tools is expected to drive earnings growth of over 12% annually for the next two years. 

Similarly, Micron’s AI-related components, crucial for powering Nvidia’s chips, position the company for a 25% annual sales increase through 2026. 

Finsum: These examples highlight how AI can fuel profitability and create sustained momentum in select technology stocks.

President-elect Trump has announced his intention to block new wind energy projects during his upcoming term, arguing that the industry relies heavily on subsidies to function. Known for his support of fossil fuels, Trump has appointed fracking executive Chris Wright as his Energy Secretary and emphasized policies favoring traditional energy sources. 

His opposition to wind power, which he has called unsightly and harmful to marine life, extends to plans for an immediate executive order to halt offshore wind production. Although renewable energy advocates predict that existing projects will continue despite the political shift, companies like RWE acknowledge potential delays in offshore wind timelines. 

Critics, including Sen. Ron Wyden, have warned that abandoning wind energy will raise electricity costs for families and reduce domestic energy output. Clean energy leaders stress the importance of a diversified energy strategy to meet the nation’s rising energy demands.

Finsum: These policy shifts are clearly going to affect market fundmentals over the next term, will there still be enough industry support to prop up ESG? To be determined.

Emerging markets have faced a challenging year, but they remain essential for achieving greater portfolio diversification. According to insights from the Natixis 2025 Institutional Outlook Survey, many institutional investors anticipate robust growth in these markets next year, with monetary policy shifts expected to play a significant role in driving expansion. 

However, China’s economic struggles, including a weak real estate market and reduced consumer spending, have tempered enthusiasm, leading investors to focus on other opportunities. India is gaining traction as a standout emerging market, with many predicting it will surpass China as a top investment destination, while regions like Asia ex-China and Latin America are also drawing attention. 

Though uncertainties persist, adopting a long-term approach to investing in emerging markets can yield strong growth potential as global economic conditions evolve. This strategy allows investors to tap into the transformative opportunities these markets continue to offer.

Finsum: With high risk and growth opportunities, its important to caution clients on the risks and that term is baked into the picture. 

The IPO market may see a resurgence in 2025, with Wall Street banks gearing up for increased activity as private equity firms look to the equities market to divest high-profile assets. Companies like Medline and Genesys, backed by private equity, have already filed for IPOs, signaling the potential for a busy year ahead. 

Analysts anticipate a surge in IPO announcements during the year’s first half, driven by a robust stock market, anticipated regulatory rollbacks, and tax cuts under the Trump administration. In 2024, IPO performance was promising, with most major listings ending the year above their debut prices. 

Experts, including Eddie Molloy of Morgan Stanley, expect significant activity in private equity-backed IPOs, particularly in tech, where demand for investment opportunities is strong. 

Finsum: Companies such as Chime and Klarna in the FinTech space are also poised to capitalize on this revived market environment.

Point72 Asset Management has tapped Todd Hirsch, a former senior managing director at Blackstone, to lead a new initiative centered on private credit opportunities. Steve Cohen, the firm’s founder, emphasized that the supply-demand imbalance in private credit creates a favorable environment for growth in this area. 

The global private credit market, valued at over $3 trillion, includes prominent firms like KKR, Carlyle, and Ares Management. Hirsch’s role will involve building and managing a portfolio that spans sectors such as technology, healthcare IT, insurance, and payments. 

Initially integrated into Point72’s broader hedge fund strategy, the private credit initiative may evolve into a standalone fund or business, though no definitive plans have been set. Point72, which manages $35.2 billion in assets, is positioning itself to capitalize on this rapidly growing market.

Finsum: We think private credit has shown resilience and is in a good place to begin 2025. 

The Vanguard S&P 500 ETF stands out as a cost-effective way to gain exposure to U.S. large-cap stocks, balancing growth and value for diversified returns. Its portfolio leans heavily on the technology sector, with Apple, Microsoft, and Nvidia driving much of its success. 

Despite challenges like weaker iPhone demand and shifting market dynamics, Apple remains a critical asset, while Nvidia’s AI-driven growth has been a standout. Microsoft’s dominance in office software and cloud services further solidifies the ETF’s strong tech foundation. 

In 2024, the fund’s nearly 25% growth outpaced the S&P 500, reflecting its focus on high-performing sectors. For investors seeking stability paired with strategic growth potential, Vanguard S&P 500 remains a compelling choice.

Finsum: There is little doubt that the large caps that drive low cost ETFs today seem more volatile than historically, but have captured huge gains. 

First Trust Direct Indexing L.P. increased its stake in Microsoft Co. by 4.2% during the third quarter, per its latest SEC filing. The firm acquired an additional 8,827 shares, bringing its total holdings to 216,816 shares valued at $93.3 million, making Microsoft its third-largest position at 5% of its portfolio. 

Other institutional investors, including British Columbia Investment Management  Corp and Evernest Financial Advisors LLC, also boosted their stakes, reflecting broad confidence in the software giant. 

Over the past quarter, Microsoft insiders sold 41,200 shares worth $17.38 million, with the largest transaction by EVP Christopher David Young reducing his position by 6.51%. Microsoft's share price recently traded at $424.83, slightly down, with strong metrics like a $3.16 trillion market cap and a 35.05 PE ratio. 

Finsum: Watching the underlying holdings of direct indexing is key to understanding these strategies in the long term. 

Model portfolios serve as pre-designed recipes for building portfolios, offering advisors a time-saving way to manage investments while focusing on financial planning and client relationships. They are often composed of mutual funds and ETFs, with a growing preference for active ETFs due to their cost-efficiency and flexibility. 

Popular providers include BlackRock, Vanguard, and American Funds, offering core allocations like 60/40, income-focused, and all-equity models. These portfolios appeal to advisors for their scalability and customization options, such as incorporating funds from multiple asset managers to diversify perspectives. 

While they are typically low-cost and tax-optimized, a drawback is their relative lack of transparency compared to mutual funds or ETFs. Investors should ask their advisors about the track record, due diligence, and success metrics of any model portfolio being recommended.

Finsum: We love the use of model portfolios to create customized and thematic strategies for tailored solutions to clients problems.