Seems this wasn’t one of those prototypical meetings convened simply to discuss when to gather to conduct the next prototypical meeting. Ya da and Ya da.

Banking industry leaders from Grant Thornton recently gathered to chew over what prompted volatility to flare up and its impact on not only financial institutions, but the economy as well, according to grantthornton.com.

The one two punch of a lack of liquidity and asset liability management that wasn’t cutting the muster was at the root of the ills. The current environment has stirred plenty of uncertainty. Also deal in the Silicon Valley Bank run and the shuttering of Signature Bank, not to mention the wider sell off of stocks that unfolded at other institutions.

Meantime, typically, it might be sunny there, but in Miami-Dade County, employment in financial activities is burgeoning at a slower rate than last year, according to miamitodaynews.com. In fin-tech companies, prompted by the financial sector’s volatility, jobs are headed south.

The load down: in South Florida, jobs in financial activities climbed by 3.3% from March of last year to March of this year.

Return flights.No return policy.

Well, whichever way you look at it, as the first half of the year hits the rearview mirror, you might say  fixed income has a take of its own. according to schwab.com.

The topsy turvy market aside, all signs are up on year to date returns in virtually every sub asset class of the fixed income market, Modest gains were posted by short term investments with low durations. Meantime, a duo of higher starting coupons and yields, which tracked south, boosted intermediate to long term bonds.

All that said, in 18 months, fixed income markets have been feeling their oats. 

That wasn’t the case last year, according to janushenderson.com. After all, that was in light of the central bank’s concerted monetary tightening. With that, yields rose sharply while the prices of bonds retreated. The feeling toward bonds these days? Markedly different.

Global flows into fixed income? Thumb’s up. Year to date, $152 billion entered fixed income funds, reported EPFR Global.

The tickets are going fast.

Must be a rock star in the house. Though not demanding bowls brimming exclusively with red M&Ms, of late, model portfolios have become all that and more, at least as far as some financial professionals are concerned, according to tifin.com

And, hey, they’re onto something. Besides salting away mucho time for investors, giving them all the opportunity to serve more clients with stepped up efficiency, they also play a pivotal role in their ability to ensure investment strategies remain on track throughout the client bases. What’s more, they make sure overexposure to any particular investment or asset class doesn’t burgeon into an issue.

Target risk models are a staple among a plethora of model portfolio types. Among several attributes, they’re designed to align with the goals of investors, who have specific risk tolerances. The range stretches from conservative to aggressive.

So, how popular are they? As of March of last year, assets following model portfolios hardly sat on their hands; they parachuted to $$349 billion, according to Morningstar, reported smartasset.com. That’s an approximately 22% bounce between June 30, 2021, and March 31, 2022.

Even at his advanced age, Warren Buffett continues to make prescient moves. The most recent example includes loading up on energy stocks just prior to the sector’s incredible gains in 2020 and 2021. While prices have receded amid concerns that a recession is near, Buffett is using the weakness to increase his exposure to the sector.

However, his most aggressive bet in the sector is on Occidental Petroleum of which Berkshire owns 222 million shares which is equivalent to nearly 25% of the company’s market cap. While Occidental is an integrated operator, the bulk of its revenues are from drilling which means that it’s sensitive to swings in the price of crude oil.

Based on his public comments, Buffett sees the energy supply chain as being constrained given a lack of capital expenditures over the last decade, Russia’s invasion of Ukraine, and changes wrought by increased electrification. At the same time, global demand for oil continues to increase, leading to a tighter equilibrium between supply and demand. 

In addition to his Occidental investment, Buffett also has a $22 billion stake in Chevron. Additionally, Berkshire Energy contributes $25 billion of revenue to its parent company and is composed of power generation and distribution companies like pipelines, renewables, and utilities.

Finsum: Energy has delivered poor returns in 2023 amid increased supply and growing recession fears. However, Warren Buffett continues to increase his exposure to the sector.

Client turnover and attrition is a reality for every financial advisor. In order to combat this entropy, advisors need to have a marketing plan, generate leads, and build a pipeline of prospects. For many advisors, this is something they don’t enjoy as they get into the business because they enjoy analyzing investments and servicing clients. 

However, this type of discipline is necessary to ensure that your firm keeps growing. In an article for Nasdaq.com, Luke Acree, the President and founder of ReminderMedia, discusses some ways that financial advisors can generate leads which is the first step in growing a practice. 

The simplest step is to ensure that you are providing proper and full attention to existing clients. A good idea before embarking on a growth plan is to ensure that your current clients are satisfied. This also increases the chances of getting a referral which tend to be the highest-quality leads. 

Building on online presence is a strategy that will pay off in the long-term. In the short-term, there is little return for your efforts, but it’s increasingly how younger generations will find you and make decisions. Ensure that your profiles are professional while displaying your personality and unique offering. 

Finsum: High-quality leads are integral for any financial advisor practice to grow. Here are some suggestions on how advisors can ensure a steady stream of leads to help build their pipeline of prospects. 

In an article for MarketWatch, Mark Hulbert discusses the collapse of the volatility index (VIX) over the last couple of months, and why it could be a harbinger of a sustained stock market rally according to historical data. 

According to Hulbert when the VIX reaches a fresh, 3-year low, it’s likely to remain low for a couple more months which implies further gains for equities. However, this view is contrary to the consensus expectations on Wall Street which see further erosion in the economic outlook, causing the economy to stumble into a recession. This perspective sees the low Vix as a sign of complacency rather than a ‘continuation’ signal.

Hulbert points to history. Since 1990, the best performing months from a risk and return perspective, have come with low VIX readings. Based on this data, investors should increase equity allocations as the volatility index declines and reduce it as it rises.

Another benefit of this strategy is that it dampens the impact of volatility on the portfolio which increases the odds that investors will stick to their investment plan and not let the market’s twists and turns shake them out of their holdings. 

Finsum: Many on Wall Street see the plunge in the volatility index as a contrarian signal, implying complacency. Mark Hulbert disagrees and sees it as the start of a sustained rally.

In an article for SeekingAlpha, Armada ETF Advisors make the case for why public real estate is due to outperform vs private real estate given the gap in valuations. Over the last couple of years, the combination of the Fed’s rate hiking campaign and weakness in segments of the real estate market like commercial real estate have led to major drawdowns for publicly traded REITs. 

In contrast, private real estate has fared much better. According to Armada, these types of wide differentials in performance have been reliable indicators of mean reversion, historically. In addition to favorable valuations, the firm also believes that the headwind of higher rates is about to recede given trends in inflation and budding signs that a recession is imminent.

Over the last 2 decades, there have been 8 instances when REITs underperformed by more than 10%. Each instance was followed by a period of strong REIT performance in absolute and relative terms. 

It’s also a rare opportunity for investors to acquire high-quality real estate assets at cheaper prices than what is available in private markets. Typically, the situation is inverted given the greater liquidity of publicly traded REITs. 

Finsum: Private real estate has outperformed public real estate by a significant amount over the past year. But, it could be an indication that a major mean reversion is imminent. 

In an article for Reuters, Ross Kerber reported on Tesla being added back to the S&P 500 ESG index following the EV maker adding environmental disclosures regarding its material sourcing and hiring practices.

Tesla was removed from the index last year following a series of controversies including a racial discrimination lawsuit and reports of crashes due to its autopilot program. At the time, CEO Elon Musk had been dismissive of the movement, labeling it a ‘scam’. S&P attributed the change to the company providing more information about climate risks and information about its supply chain management strategy.

The move is seen as symbolic given that only about $8 billion in assets is linked to the S&P 500 ESG index. However, it could start other ESG funds adding the EV leader to its holdings. 

Currently, the S&P ESG Index is going through this annual rebalancing with 39 companies being added, while 23 were removed. Notably, some of these moves have drawn scrutiny from people on both sides of the aisle given the additions of Chevron and Fox, while Exxon Mobil had previously been a member of the index, while Tesla was excluded. 

Finsum: Tesla has been added back to the S&P ESG Index after providing disclosures about its hiring practices, climate risks, and supply chain strategy.

In an article for ThinkAdvisor, Dinah Wisenberg Brin discussed a recent bullish commentary on various segments of the fixed income market from John Hancock’s co-chief investment strategist Matthew Miskin. 

Miskin sees the current inverted yield curve as due to normalize in the coming months as the Federal Reserve embarks on a cutting cycle given the firm’s view that the economy should continue to decelerate along with cooling inflation. This will create a bond ‘bull steepener’ as short-term rates decline.

It sees a recession materializing over the next couple of quarters which would be a positive tailwind for fixed income. He sees opportunities in intermediate duration bonds which historically have performed the best following yield curve inversions. Further, he sees value in the space given that the average investment-grade, intermediate bond portfolio is trading at 90 cents on the dollar with a 5% yield. 

Miskin is also bullish on municipal bonds given historically attractive yields of 7% on a ta-equivalent basis for the highest earners. In terms of equities, the firm is not a believer in the current stock market rally given weakness in earnings and its expectations of a further softening of the economic picture. 

Finsum: John Hancock’s co-chief investment strategist is bullish on fixed income with a particular focus on intermediate duration and municipal debt.

The alternative investing trend was growing at a rapid clip over the past decade, but its seen an uptick in interest and adoption following the poor performance of stocks and bonds. While both asset classes have delivered strong, long-term results, they have performed poorly in inflationary, higher-rate environments.

In contrast, alternative investing delivered better returns while also reducing portfolio volatility. As access to this category has increased, there is more liquidity and transparency which is, in turn, attracting more interest from institutions.

In an article for Business Kora, Jung Min-Hee covers how the Korea Investment Corporation (KIC) will be increasing its allocation to alternative investments to 25%. Currently, it is the 10th largest sovereign wealth fund in the world and has $170 billion in assets. As of the start of the year, it had 22% allocated to alternatives.

In an interview, KIC President Jin Seung-ho indicated that the fund is particularly interested in private credit as he doesn’t see too much risk in this segment of the market. Concurrently, he doesn’t see the Fed cutting rates until 2024.

Finsum: Many financial advisors are nearing retirement. One option that is growing in popularity is for advisors to sell their practice but remain as an employee for a certain amount of time.