Wealth Management
Large-cap growth funds have recently delivered strong returns, with an average gain of 16.77% over the past year and standout performances from Fidelity, Vanguard, and Loomis Sayles offerings.
Fidelity Advisor New Insights and Contrafund, managed by veteran Will Danoff, ranked among the top five funds, with returns exceeding 18% annually over the past five years. Loomis Sayles Growth Fund posted the highest three- and five-year gains, driven by a disciplined process and long-term investment strategy.
Vanguard’s Growth Index and Mega Cap Growth Index funds also performed well, offering low-cost, passive exposure to top-performing large-cap growth stocks. Despite their success, these funds come with risks like high concentration in mega-cap stocks and share class accessibility issues for individual investors.
Finsum: As interest rates remain high that could provide a relative advantage to large caps over small caps.
Private credit managers often tout their locked-up capital as a key strength, insulating them from the kind of liquidity runs that plagued banks like Silicon Valley Bank. However, the rise of evergreen vehicles—funds allowing periodic redemptions—has introduced new vulnerabilities, especially as firms like Blackstone and Apollo have raised nearly $300 billion from retail investors.
While evergreen funds offer some liquidity and mass appeal, especially through wealth advisors, their structure forces managers to continuously invest and meet redemptions, reducing the strategic flexibility that once defined private credit’s advantage.
This could erode returns, particularly if managers are pressured to lend during inopportune times or sell illiquid assets at discounts to meet withdrawals. Though redemptions are capped and many investments naturally mature over time, a crisis could still lead to redemption surges that slow new lending and strain fund performance.
Finsum: As evergreens attract less experienced investors and chase more capital, the sector risks undermining its own resilience unless managers remain disciplined and transparent.
As market volatility rattles investors, many are turning to buffer ETFs—funds that limit downside losses in exchange for capped upside gains. These products, offered by firms like Innovator, BlackRock, and Allianz, use options strategies to provide partial protection during market downturns, making them especially appealing during recent selloffs.
In the first months of the year, buffer ETFs attracted nearly $5 billion in inflows, with a sharp pickup in demand during periods of steep market declines, such as the S&P 500’s worst day in 2024.
While financial advisors increasingly recommend buffer ETFs to nervous clients seeking equity exposure with built-in protection, critics point to their higher fees and reduced potential for gains in strong bull markets. The upside cap investors receive often shrinks in volatile environments, making the cost of protection steeper just when it feels most necessary.
Finsum: For those prioritizing risk management over maximum returns, buffer ETFs offer a middle ground—at a price.
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Bond investors are increasingly turning to separately managed accounts (SMAs), drawn by their tailored structures and greater control over investment exposure. Unlike commingled funds, SMAs allow institutional clients to directly own a customized portfolio of private credit assets while setting specific guidelines around leverage, risk, and liquidity.
These accounts have surged in popularity as allocators seek greater transparency, fee flexibility, and alignment with their long-term liabilities. In credit, SMAs offer large investors more say over deal selection, co-investment rights, and sector targeting, often resulting in better economics and stronger governance.
SMAs—privately negotiated investment vehicles managed by asset managers on behalf of a single client—stand in contrast to pooled funds and are favored by pensions, insurers, and sovereign wealth funds for their bespoke features.
Finsum: SMAs are becoming a central tool for investors seeking to fine-tune their exposure while capitalizing on an asset class’s yield and downside protection.
Wellington Management, Vanguard, and Blackstone have jointly filed to launch the WVB All Markets Fund, a multi-asset interval fund designed to give retail investors broader access to private market investments. Structured as an interval fund, it allows limited quarterly redemptions and will blend public equities, fixed income, and private assets, with Wellington serving as the investment adviser.
The strategy permits up to 60% allocation to public equities and 30% to fixed income—both primarily through Vanguard—while allowing up to 40% in private funds managed by Blackstone. Although management fees weren’t disclosed, the fund requires a $2,500 minimum initial investment across its share classes.
This marks the trio's first product since announcing their partnership in April, as asset managers increasingly look to democratize private markets through vehicles like interval funds.
Finsum: Interval funds can be opaque and illiquid, making education and transparency essential for successful adoption among retail investors and potential clients.
The rise of fee-based annuities is accelerating as insurance firms respond to evolving regulations, especially in light of the Department of Labor’s fiduciary rule. These products, which charge transparent annual fees instead of embedded commissions, are designed to better align with client interests and reduce potential conflicts.
However, while fee-based annuities may suit some investors, others—particularly long-term holders—might benefit more from commission-based options due to lower lifetime costs.
Commissionable annuities, despite carrying higher built-in expenses, can eliminate ongoing advisory fees and may be better suited for clients who need less active management. Choosing between the two depends on several factors, including the annuity's fee structure, potential need for liquidity, and whether features like living benefits are added.
Finsum: Ultimately, advisors and clients must carefully weigh these trade-offs to determine the best fit based on individual goals, timelines, and financial preferences.