Schwab Asset Management conducted its annual ETF and Beyond report in which it surveys a sampling of its own clients to gain insight into how investors are thinking. One of the most interesting findings was that Millennial investors are the demographic most interested in personalizing their portfolios and having their investments align with their values.

But, that instinct is shared by other age groups to a lesser degree. Overall, 88% of respondents said that they are looking to personalize their portfolios, while 78% want to align their investments with their personal values. 

65% of ETF investors said that it’s important to have more control over their investments, 61% want a greater ability to customize investments, and 61% are looking to optimize their tax situation. Of course, these factors are why direct indexing has been gaining in popularity in recent years. 

There’s also increased awareness as 87% of ETF investors are now familiar with the strategy in comparison to 80% last year. 69% of ETF investors, not in any direct indexing product, expressed interest in doing so over the next year. 

Not surprisingly, direct indexing is even more popular with Millennials as 53% are interested in learning more about it, in contrast to 34% of Gen X and 22% of Baby Boomers. Overall, all investors want more control of their portfolios and alignment with their values, but this trend is even more pronounced among younger investors. 

Finsum: Investors are looking for more control over their investments, tax savings, and alignment with their values. All 3 are possible with direct indexing. 

JPMorgan issued its 2024 outlook for alternative investments. Overall, it sees continued growth for the asset class especially as economic and financial uncertainty remain elevated due to inflation, tight monetary policy, a decelerating global economy, geopolitical risks, and volatility in financial markets. 

According to Anton Pil, the Global Head of Alternatives for JPMorgan Asset Management, alternatives offer investors a means to diversify traditional portfolios especially as stocks and bonds have been increasingly correlated in recent years. It can also help to reduce volatility, increase income, provide protection against inflation, and boost returns on an absolute and risk-adjusted basis.

It notes some key growth drivers for the asset class in the coming year. One of the consequences of tighter monetary policy has been a slowdown in private market activity which has impacted many alternative assets. This has led to attractive valuations in some areas that could have upside especially in the event that the Fed meaningfully eases policy. 

Another catalyst for alternative investments is simply that access to these investments continues to increase due to technology and more awareness. Finally, traditional portfolios have failed to provide adequate diversification in recent years. In contrast, alternative investments were a source of outperformance and diversification during this period.  

Finsum: JPMorgan is bullish on alternative investments for 2024. It sees major growth drivers as increasing access, the need for diversification, and an improvement in financial conditions.

According to Echelon Insights, 2024 will be another strong year for M&A activity with larger RIAs picking up smaller firms. This follows a strong year for the industry in 2023 despite headwinds such as higher borrowing costs which impacted buyers’ ability to impact financing. Yet, the robustness of M&A in less than ideal conditions reveals strong fundamentals.

In 2023, there were more than 320 deals for RIAs. It was the second-highest year on record other than 2022 which saw 342 deals. Over the last 5 years, the number of deals in the space have grown at a 12.1% annual compounded rate. Average assets per transaction was up 4%, while private equity was the most aggressive acquirer. In total, the sector was involved in 71% of deals and added cumulative assets of $466 billion.

Last year, the largest transactions in terms of asset size were Captrust and Cetera Financial Group. Cetera acquired Avanax for $1.2 billion to bolster its succession planning offerings and tax and wealth management capabilities. Captrust acquired Trutina Financial for $1.1 billion and had a total of 8 deals, adding $14 billion in assets. 

Finsum: Research firm Echelon Insights is forecasting another strong year for RIA M&A activity in 2024. 2023 had the second-most number of deals, despite several macro headwinds.