Wealth Management
Renewable energy stocks, once at peak valuations in 2020-21, are struggling with investor pullbacks and face extended uncertainty partly due to U.S. election concerns. Interest in the sector has been eroded by competition from Chinese renewables, strong returns on conventional energy, and issues like supply chain disruptions and grid connection challenges.
Although the Inflation Reduction Act has supported renewable investments in the U.S., analysts warn that the potential return of Donald Trump to office could redirect funds to fossil fuels, while a win for Democrat Kamala Harris might revive confidence in renewables.
Even with lower interest rates, a new boom on the scale of 2020-21 is unlikely, as renewable growth has slowed. The sector has seen 17 consecutive months of net outflows, losing over $11 billion in 2024 alone, with major funds like the iShares Global Clean Energy ETF losing 28% in unit numbers.
Finsum: There could be a serious opportunity to find value in these ETFs at the current price levels.
Pension and Benefits Monitor and Fiera Capital hosted a webinar titled “The Rise of Private Real Estate Credit in Canada’s Evolving Investment Landscape.” Industry leaders, including Michael Le Coche from Fiera Real Estate, discussed the advantages of private real estate credit as an alternative to traditional fixed-income options.
The asset class offers higher yields, enhanced diversification, and stability amid market volatility, making it increasingly appealing. The event highlighted how Basel IV regulations are reshaping lending, with private credit filling gaps left by banks.
Experts also discussed the unique regional dynamics within Canada’s real estate markets, which impact private credit strategies. Additionally, the importance of sustainable practices in real estate credit was emphasized, aligning environmental goals with financial performance.
Finsum: With rates falling again the real estate market could really look to open up given the tight supply constraints.
Investors are pouring funds into bitcoin-tracking ETFs, with recent flows suggesting a surge in interest tied to the upcoming U.S. election and potential pro-crypto policies. The iShares Bitcoin Trust ETF saw an impressive $872 million in a single day, reflecting hopes for a Trump victory, which could foster more favorable cryptocurrency legislation.
Bitcoin gained around 12% in October, with some analysts attributing this rally to rising expectations of a Republican sweep. As election week nears, bitcoin futures data shows investors are bracing for heightened volatility, with possible daily swings near 3.7%.
Open interest on crypto derivatives has also reached a record high, signaling elevated activity ahead of the election. However, market indicators suggest traders anticipate that volatility will taper off after the election, allowing bitcoin’s upward trend to potentially continue.
Finsum: Trump as positioned himself as the pro crypto candidate but even some of Harris’ policies also indicate a favorable landscape for digital currency.
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BlackRock has introduced two new ETFs: the iShares Technology Opportunities Active ETF (TEK) and the iShares A.I. Innovation and Tech Active ETF (BAI). According to Tony Kim, BlackRock’s head of fundamental equities technology, these ETFs aim to capitalize on the rapidly expanding AI and tech landscape.
The TEK fund focuses on global tech leaders and disruptors, incorporating companies across various market caps to balance stability and potential growth. Meanwhile, BAI seeks strong returns by investing in innovative companies within the AI sector, applying rigorous fundamental research.
The fund covers a diverse range of cap sizes globally, emphasizing groundbreaking advancements in AI. BlackRock now manages over $3.1 trillion in U.S.-listed ETFs across 430 funds.
Finsum: Using ETFs to target a clients interests presents an already more balanced approach for portfolios
Preferred stocks with a $25 par value, which trade on the New York Stock Exchange, have gained popularity but yield just 5% to 5.5% for major banks, a modest premium over the 30-year Treasury.
According to Nuveen portfolio manager Douglas Baker, economic resilience and an anticipated soft landing make bank-issued preferreds more appealing, despite limited issuance due to banks’ reduced need for capital. Issuers have redeemed more than they’ve issued this year, tightening supply in the $25-par market, which has seen a 13.1% gain year-to-date.
Baker points out that tax advantages, high yields, and stock-like trading add to preferreds' appeal. However, their perpetual nature and redemption rights limit price gains and increase sensitivity to rising rates.
Finsum: There is strong demand for these types of unusual but tax efficient investments in the wider market.
This week’s muni bond selloff has created a buying opportunity, Wall Street strategists suggest. Following a selloff in U.S. Treasuries, muni yields rose sharply as economic strength tempered hopes for rate cuts.
Despite a Thursday rally, the 10-year benchmark muni yield remains 26 basis points higher than its start-of-week level, marking one of the year’s steepest weekly declines. JPMorgan strategists see value at current levels, particularly with supportive market conditions anticipated in November.
The iShares National Muni Bond ETF drew $362 million in inflows on Thursday, helping bolster the market. Barclays strategist Mikhail Foux expects favorable muni performance later this year, though he advises caution until rates stabilize.
Finsum: We think munis might present one of the best options in the bond market as rates begin their descent