Displaying items by tag: investors

Tuesday, 16 May 2023 08:08

Is ESG Smart Business or Liberal Overreach?

In an article for USA Today, Jessica Guynn summarized the current debate between those who advocate for ESG investing and those who see it as a disguise for ‘woke capitalism’. In contrast, supporters of ESG see these factors as being critical to their investing process. For instance, they see preparations for climate change as part of a managers’ fiduciary duty given its potential impact on asset values. 

These tensions came up at the House Oversight Committee meeting last week as Representative Rankin was critical of anti-ESG attacks which he said were coming at the behest of the fossil fuel industry. In turn, Republicans were equally harsh as they countered that asset managers should only consider financial information and that by considering non-financial factors, they were risking the retirement savings of American workers. 

At the state level, 17 Republican Attorney Generals jointly filed a motion to block Blackrock from advocating for ESG principles for utility companies. 

Many of those opposed to ESG see it as preventing energy companies from making sufficient long-term investments that are necessary to continue fossil fuel production and blame it, in part, for the inflation and oil spike during 2021.

Finsum: ESG investing continues to be a source of political conflict. These tensions came to a head at a contentious House Oversight Committee meeting.

Published in Wealth Management
Tuesday, 16 May 2023 08:07

Growth Strategies for Financial Advisors

In an article for Investopedia, Justin Kuepper shared some strategies for financial advisors to grow their practices. This type of planning is important to ensure that daily activities are aligned with your long-term financial goals as well as your client’s. Without consistently investing in these efforts, it’s likely that your practice will start to erode as clients who leave are not replaced. 

Instead, advisors should focus on carving out a specific niche such as focusing on a particular community, industry, or demographic. This will lend more expertise and credibility and lead to more curiosity and comfort from clients and prospects. You will also have less competition and be able to develop a brand which can be difficult given that financial advisors offer many of the same services. 

The next growth strategy is to provide exceptional service to your clients as it can lead to referrals which is the most effective form of marketing. Some advisors make the mistake of focusing too much on new business and see high rates of attrition when existing clients don’t feel valued. Putting these strategies in place also means that advisors don’t need to compromise on price as they will be offering a premium, differentiated service.

Finsum: Growing a financial advisory business takes planning and strategic thinking. Here are some tips to ensure success.


Published in Wealth Management

In an article for Vettafi’s AdvisorPerspectives, Nestor Hernandez discussed some ways that investing in alternative asset classes can help reduce portfolio volatility. Due to the poor performance of stocks and bonds in 2022, interest in the category has exploded in 2023. Another contributing factor is that technology and regulatory changes have made these investments available to a much wider audience.

Based on research, it’s clear that investing in alternatives leads to lower volatility due to increased diversification. These tend to be private, non-public traded funds in different asset classes such as real estate, private credit, private equity, hedge funds, venture capital, etc. In contrast to public markets, private markets tend to have less liquidity, transparency, and minimums when it comes to investment amounts. 

Until recently, these investments were only available to institutional or high net-worth investors. But, these can play an important role for investors especially given that we are seeing the number of companies shrink on the public markets, while opportunities increase on private markets. Additionally, companies are going public at much later stages, meaning private investors have more opportunities to see their investments appreciate. 

Finsum: CalPERS CEO Marcie Frost is facing competing pressures from liberals and conservatives over ESG investing.


Published in Wealth Management
Sunday, 14 May 2023 16:20

CalPERS CEO Faces ESG Pressures

In an article for Axios, Dan Primack discussed some of the competing pressures faced by CalPERS CEO Marcie Frost. CalPERS is America’s largest public pension system and has more than $440 billion in assets under management. 

Currently, Frost is facing pressure from conservatives and liberals about ESG investing. Conservatives see it as a ‘tax’ to accomplish liberal policy goals, while liberals are pushing legislation in the California state legislature that would bar investing in publicly traded fossil fuel companies.

Frost is against such limitations, however she is a supporter of ESG and sees it as key criteria in evaluating investments. As an example, she cited CalPERS’ significant commercial real estate investments in coastal and urban areas whose value could be impacted by climate events. 

Her priority is to fulfill the pension obligations for Californians which she considers more important than ESG factors. She said she would pursue investments that would generate healthy returns regardless of ESG factors but would use her standing as an institutional shareholder to push the company in a more ESG direction. 

By banning fossil fuels, CalPERS would not be able to play a role in helping fossil fuel companies transition for the future. However, Frost does expect the legislation to pass.

Finsum: CalPERS CEO Marcie Frost is facing competing pressures from liberals and conservatives over ESG investing.

Published in Wealth Management
Monday, 08 May 2023 13:08

Adieu to 2022?

Um, fixed income investors seemingly were more than glad to host the going away party, according to JP Morgan.com.

That’s especially in the aftermath of one of the worse years on records for bonds. The culprit? Yep; the Fed, and its hyper active barrage of rate hikes. And, yes again, the last of it should spell stability this year to the bond market. That said, investor should bear in mind:

How far will the Fed go before concluding its rate hiking campaign?

How might credit perform in a year where both economic and profit growth are set to slow?

How will impaired liquidity impact price action?

Now, on one hand, of course, with volatility comes risk. But it also can be the land of opportunity, according to lazardassetmanagement.com. Consequently, investors shouldn’t duck and dodge fixed income like a bill collector but embrace the possible upside by going eye to eye and confronting volatility.  

“In this unusual environment, we believe investors may want to move out of a passive mindset and consider investments beyond ‘plain vanilla’ bonds. By being creative, being active, and diversifying globally, investors can find fixed income solutions that may set up portfolios for the longer term with attractive return potential.”

Published in Bonds: Total Market
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