PIMCO recently announced the launch of the PIMCO Flexible Real Estate Income Fund (REFLX). The fund is the firm’s first real-estate-focused interval fund that will invest in public and private markets and will seek to harness the expertise and resources of its $190 billion commercial real estate (CRE) platform. REFLX will have the flexibility to invest in four distinct quadrants of the commercial real estate markets: private equity by acquiring stabilized income-oriented CRE, private real estate loans, public debt such as commercial mortgage-backed securities, and public equity such as REITs. Dan Ivascyn, PIMCO Managing Director and Group Investment Officer and head of the team managing the fund stated, “Higher yields and lower valuations in both public and private markets make for an attractive environment for patient investors ready to deploy funds in a flexible vehicle that can allocate investments across commercial real estate.” Similar to a mutual fund, interval funds are continuously offered. Investors can sell their shares back to the fund, but unlike a mutual fund, they may only be able to do so quarterly through the fund’s periodic repurchase offers.

Finsum:PIMCO adds to its stable of interval funds with the launch of the commercial real estate-focused Flexible Real Estate Income Fund.

Based on research by S&P Global Market Intelligence, more than half of U.S. equity REITs reported third-quarter funds from operations (FFO) that exceeded sell-side analyst expectations. S&P analyzed 127 U.S. REITs and found that 71 reported FFO per share higher than third-quarter consensus estimates. Out of the remaining REITs, 24 equaled consensus expectations for the quarter and 32 fell short of FFO expectations. The research covered U.S. equity REITs that trade on the Nasdaq, NYSE, and NYSE American, have market caps over $200 million, and have had three or more FFO-per-share estimates for the three months ending on September 30th. The top industries that outperformed were industrials and self-storage, with 9 out of the 11 industrial REITs surpassing analyst FFO-per-share estimates during the quarter. One notable self-storage REIT was Americold Realty Trust Inc., which reported a core FFO of 25 cents per share, 31.6% above its consensus estimate. Out of all the industries, the largest beat was Safehold Inc., which more than doubled its estimate of 42 cents per share.

Finsum:REITs had a strong quarter with 56% reporting third-quarter funds from operations that outperformed sell-side analyst expectations.

Andrew Hartnett, president of the North American Securities Administrators Association, recently said in an interview that a massive, multi-state sweep of broker-dealers will be completed sometime early next year to gauge the effectiveness of their Reg BI implementation. This should give state regulators “what they hope” will be a clear snapshot of whether firms are putting investors' interests first or not. Last November, similar multi-state exams of 443 firms found pervasive retail advice and sales violations. This was in spite of the fact that Regulation Best Interest had already been in place for more than 15 months at that time. The 2021 sweep found a majority of broker-dealers and reps still putting their interests above their retail clients. The sweep also found that 65% of brokerage firms also failed to discuss lower-cost or lower-risk products with their clients, even when they offered such products. Hartnett stated, “Now we’re out there doing exams again to see where the industry is now, what’s changed and how well firms are implementing the requirements to look at reasonably available alternatives.” NASAA is also ramping up its focus on fees on the registered investment advisor side and expects to release that guidance next year.

Finsum:The time for leniency is over for broker-dealers as the NASAA is planning a multi-state sweep to gauge the effectiveness of their Reg BI enforcement.

ESG seems to be getting battered by all sides. Not only do ESG funds have to deal with regulators bearing down on their messaging and politicians questioning their purpose, but performance has also been an issue, especially this year. According to a new Bloomberg article, the 10 largest ESG funds by assets have all posted double-digit losses, with eight of them underperforming the S&P 500. This includes the iShares ESG Aware MSCI USA ETF (ESGU) which has $20.7 billion in assets and the Vanguard ESG US Stock ETF (ESGV) which currently has $5.9 billion in AUM. The worst performer so far has been the Brown Advisory Sustainable Growth fund (BAFWX) which was down 28.1% year to date as of Dec 5th. Poor performance in BAFWX can be attributed to a chunk of the portfolio being in software, semiconductor, and internet stocks, which have been hit hard this year due to rising interest rates, inflationary concerns, and the possibility of a recession. However, despite the bad performance, money continues to flow into ESG funds. A recent study by Harvard Business School professors found that investors are willing to accept lower returns in exchange for the societal benefits of ESG.

Finsum:Despite underperforming the S&P 500, large ESG funds continue to see inflow as investors are willing to accept lower returns in exchange for the benefits ESG provides society.

StockSnips, a firm that provides easy access to stock market news sentiment analysis, announced that it has introduced a new SPDR Sector ETF-based portfolio model that ranks sectors by leveraging its proprietary sector sentiment signal. This will be the fifth StockSnips model portfolio that aims to deliver alpha after the launch of equity-based portfolios last year. With model portfolios increasingly attracting assets and markets being impacted by social media, investor sentiment, and chatter, StockSnips believes its signal can quantify those investor sentiment trends, resulting in alpha for end investors. While most sentiment analysis uses a survey methodology, StockSnips separates signals from the noise through Micro-sentiment, focused at the individual firm level. Ravi Koka, CEO of StockSnips commented on the model, "We are excited to bring a sector ETF-based portfolio model to investment advisors and asset managers, leveraging our extensive research in transforming unstructured textual information to a valid signal, and a robust proxy for measuring investor sentiment for a sector.” Their ticker-based portfolio models have performed well so far in a volatile 2022, and they believe the back-testing results for their sector model bode well for investors as well.

Finsum:StockSnips introduced its fifth model portfolio that aims to achieve alpha through its proprietary sector sentiment signal.