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Friday, 28 June 2024 03:20

Is PE Plateauing?

The total value of buyout deals in PE is projected to reach $521 billion by year-end, an 18% increase over 2023, driven by larger transaction sizes. However, divestitures are stagnating, leaving funds with aging assets and prompting investors to seek higher returns. 


The 10 largest buyout funds have raised 64% of the total capital, while one in five smaller funds remain below their fundraising targets. Bain & Company's Private Equity Midyear Report highlights that the sector has raised $422 billion by mid-May 2024, with buyout funds leading at $199 billion. 


Despite a slight decline in fundraising overall, the report notes a historical low in activity volume, with significant dry powder yet to be deployed. Additionally, the report foresees stable growth in divestitures, but 2024 could still be one of the lowest years for exits since 2016.

Finsum: Privates could begin to slide as rates normalize and people look to traditional products, but we are a little far from that happening. 

Friday, 28 June 2024 03:19

New DOL Impacts Retirement

The DOL's new Retirement Security Rule mandates that advisors handling retirement savings follow a fiduciary standard, prioritizing clients' best interests. Effective September 23, 2024, with a 365-day transition period, this rule could help clients save up to $5 billion annually by ensuring unbiased advice. 


The rule addresses issues with rollovers and commissions, aiming to close previous regulatory loopholes. While some industry groups plan to challenge the rule in court, many investment advisors already operating under fiduciary standards support it.


The CFP Board applauds the rule, noting that 92% of Americans expect fiduciary-level retirement advice. This rule intensifies the debate between fee-only advisors and commission-based professionals regarding conflicts of interest.

Finsum: We don’t expect this rule to have a huge impact on advisors, but future regulation will drastically be impacted by November 2024. 

Wednesday, 26 June 2024 13:05

FTC Makes Crucial Change to Recruiting

Non-compete agreements are rare among wirehouse advisors but more common in the employee RIA space. However, non-solicitation pacts are more prevalent and are different in nature, allowing advisors to move to competitors but restricting direct client solicitation. The FTC's recent rule banning most non-compete agreements has stirred discussions in the financial services industry, particularly regarding its potential impact on advisor movement.


Despite concerns, many advisors already operate without non-competes, and the rule's long-term impact remains uncertain due to expected legal challenges. The financial advisory industry is currently experiencing high levels of recruiting and acquisition activity, driven by advisors seeking better fits for their practices and firms enhancing services to retain talent. 


Non-solicitation agreements allow advisors to announce their moves indirectly, hoping clients will follow, but moving firms still entails significant effort. 

Finsum: These legislative changes are something to keep in mind in recruiting and changing firms, but also when it comes to selecting a new firm. 

Wednesday, 26 June 2024 13:04

Best National Park Lodges This Summer

National Park lodges like the Old Faithful Inn in Yellowstone captivate visitors with their historical charm and breathtaking views, often making reservations hard to come by. However, several alternatives outside park boundaries offer similar scenic beauty and unique experiences.


  • At Blackberry Mountain in Tennessee, guests can enjoy luxurious treehouses with panoramic views of the Great Smoky Mountains, complemented by gourmet dining and wellness activities. 


  • Flathead Lake Lodge in Montana provides a ranch experience with horseback riding and access to the largest freshwater lake west of the Mississippi, offering an exciting alternative to Glacier National Park’s Many Glacier Hotel.

  • In Hawaii, the serene Volcano Village Estates features charming bungalows and cottages surrounded by a Japanese garden, offering a peaceful retreat near Hawaii Volcanoes National Park. These accommodations provide unique ways to experience the natural splendor and adventure of national parks without the crowds.

Finsum: We’ve already previewed some summer parks but these destinations could up the luxury of the experience. 

Over the past twenty years, alternative investment strategies like hedge funds, private equity, and real estate have grown in popularity among investors seeking diversification and steady returns. This trend was initially driven by the low-yield environment post-2009 financial crisis, making alternatives attractive due to their higher yields and low correlation with public markets. 


However, the landscape shifted post-2021 with rising inflation and interest rates, as well as increased geopolitical tensions, challenging traditional investment approaches. Hedge funds have gained renewed relevance, offering uncorrelated returns amid market volatility. 


Similarly, private credit has thrived, benefiting from the retreat of large banks from direct lending and providing attractive yields and diversification. Despite rising interest rates, alternatives with lock-up periods continue to outperform public markets, supporting a balanced, blended investment strategy for consistent returns.

Finsum: Remember the real advantage to alts is their uncorrelated returns and more specifically uncorrelated volatility to traditional markets.

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