Displaying items by tag: income

(New York)

Environmental, social, and governance investing is reaching a new market just about every month these days, but ESG blew past a huge one this week. Socially conscious investing capped a quarter of all new debt sales. Between corporations and countries, the ESG movement pushed out $391 billion in new debt this year. Companies like Enel SpA are leading the way in Italy, being pushed by the strong arm of European governments. The goal is to have Europe be a leader in climate change. However, investors are paying a premium to get ahold of the bonds. What many are calling ‘grenium’ is the excess being commanded by these socially conscious investments as practically everyone in the bond market is tracking ESG ratings.

FINSUM: Europe is a leader in the ESG movement, but its bond market might be a bit saturated. Look to the American or even emerging markets to get a piece of socially conscious bond investing.

(New York)

Model portfolios are seeing great inflows recently, but their popularity has created its own problems. The biggest of those problems—a dizzying proliferation of funds. Today we are going to make an off-the-cuff recommendation. How about a one-stop, no fee “model portfolio” for retirement. The model portfolio? Buy these four ETFs: the Vanguard Total Stock Market ETF (VTI), the Vanguard Total International Stock ETF (VXUS), the iShares Core Total USD Bond Market ETF (IUSB), and the Schwab US REIT ETF (SCHH).

FINSUM: This is in jest of course, but this is a dead simple and well-conceived set of ETFs for retirement.

(New York)

Income investors and many wealthy clients have struggled to find the outlet post-pandemic for relatively safe capital accumulation, but real estate investment trusts are that release valve. Reflation trade, stimulus-driven output in the economy, is driving a boom in commercial and residential properties. Reopening of the parts of the economy is driving REITs like EPR Properties, which hold movie theaters, ski resorts, water parks, indoor skydiving. It’s not limited to just adventure opportunities, data centers, cannabis cultivation, and crypto mining facilities are all burgeoning opportunities in REITs. David Auerbach of World Equity Group says that capital raising is ‘in vogue in the REIT sector because they proxy traditional capital appreciation vehicles. Ground leases in particular are one of the best investments in this sector. Along with additional measures that can be taken for a tax advantage, ground leases offer the upside of equity with maturity risks and capital structure to bonds.

FINSUM: The flight to safe assets is driving a groundswell of opportunities in REITs. With the economy reopening, and stimulus pumping through it, REITs are an opportunity to hit the safe return of bonds with the equity upside. 

(New York)

The annuities market is healthy and doing well. According to Ken Burger, national sales director for annuities at Luma, “When you look at our current market environment of minimal low fixed-income yields, high levels of volatility, and fears of mounting inflation, it’s easy to see the attractiveness of the annuity category”. The issue for advisors though is that annuities have long been a complicated and crowded space that is too complex and time-consuming for advisors. That is where Luma is trying to expand the market, as they have a slick annuities comparison tool that allows advisors to easily compare annuities side-by-side.

FINSUM:Annuities are a great fit for the current market given ultra-low rates and the huge mass of Americans who are retiring. Check out Luma.

(New York)

ESG has grown exponentially over the last couple of years as trillions of dollars have flowed into the sector. However, as the sector has grown, some gaps in its coverage have emerged. One big glaring hole is in income-focused ESG funds. Traditionally, it has always been thought that an investor who cares about income, just wants income and doesn’t care much where it comes from. This helps explain how out of 439 ESG funds aggregated by Morningstar, only 8 had an income focus.

FINSUM: The lack of ESG income funds makes sense as income-focused products often cater to retirees—the current age of whom generally makes them less interested in ESG. But opportunity awaits.