Tuesday, 29 June 2021 11:46

In the face of record inflation, the Virtus Real Assets Income ETF (VRAI) has done extraordinarily well, up 19% year-to-date, and significantly beating the S&P 500, which is up 14%. On top of this, the ETF generates compelling income of 3%, well above the 10 Year US Treasuries at 1.5%.


Investing in real assets is a winning strategy in an inflationary environment because tangible assets such as real estate, natural resources and infrastructure have intrinsic value. VRAI is the first ETF focused on real assets. Additionally, because of VRAI’s focus on income-generating real assets, VRAI also generates attractive income.


In terms of ETF construction, VRAI is designed to be one-stop solution for real asset exposure. VRAI consists of 90 US-traded companies, equally divided between real assets, natural resources, and infrastructure. Companies are filtered based upon market capitalization and selected based upon dividend yield. All stocks are equally weighted to ensure portfolio diversification.


Finally, in terms of costs, VRAI is very competitively priced at 55 bps (0.55%). This stands stark contrast to most energy and real estate ETFs and mutual funds, which typically cost over 100 bps (or 1%).

For more information on the investment case, check out this research piece produced by Virtus

n.b. This is sponsored content and not FINSUM editorial

Morgan Stanley Warns Inflation is Rising

Why This Selloff May Change Everything

The Fed Might Take a Very Hawkish Turn

Friday, 15 March 2024 04:13

2024 has seen the stock market make 17 closing, all-time highs. Despite this strength, many are noting some reasons to be cautious about equities due to some concerning developments under the surface.

 

In essence, the strong performance of the indexes and mega-cap technology stocks is masking hidden weakness. This is reflected in the Dow Jones Transportation Average failing to confirm the new highs of the Dow Jones Industrial Average which is a ‘non-conformation’ according to Dow Theory. Dow Theory warns that a new high by the Industrials but not by transportation stocks is prone to failure. Similarly, riskier parts of the market like high-yield bonds and high-beta stocks are also underperforming Treasuries and low volatility stocks, respectively. 

 

The leader of this bull market has been technology due to excitement around AI and strong earnings growth from leading tech companies. However, there are signs of exhaustion as the relative ratio of the S&P 500 tech sector has failed to confirm the breakout in the S&P 500. According to David Rosenberg, the founder and President of Rosenberg Research, “These were the most important stocks for the market, and no longer look to be in control.” He believes that the longer these measures fail to confirm the new highs in the S&P 500, the larger the risk of a reversal. 


Finsum: 2024 has been a strong year for the stock market with the S&P 500 making new highs. Yet, there are some signs that the rally may be nearing exhaustion. 

 

Category: Eq: Total Market 

Keywords: #S&P 500; #bull market; #tech; #equities; #risk; 

Stock Market at New, All-Time Highs Following Strong Q4 Earnings, Market Breadth

Interest Rate Volatility Among Risks Fed Needs to Consider

‘Say Yes to Bonds’: Morningstar

Tuesday, 02 January 2024 15:56

Single-stock ETFs were introduced in Europe in 2018 and last year in the US. Now, there are nearly 50 single-stock ETFs with the majority of them tracking mega cap tech stocks like Microsoft, Nvidia, Amazon, and Tesla. Collectively, they have $3.3 billion in assets. Providers include Direxion, AXS, GraniteShares, and YieldMax and strategies fall under option income, bull, or bear.

 

The largest one is the Direxion Daily TSLA Bull 1.5x Shares which has over $1 billion in assets and tracks the underlying stock with leverage by using swaps and other derivatives. The second-largest at $841 million in assets is the YieldMax TSLA Option Income Strategy ETF. This category of single-stock ETFs will sell call options on the underlying stock to generate monthly income. 

 

The recent success of these ETFs isn’t surprising given the strong performance of tech stocks this year with many hitting all-time highs. According to Rich Lee, the head of ETF trading at Robert W. Baird & Co., more single-stock ETFs will be hitting the market due to strong demand for these products, and he expects more innovation as well.

 

The current crop of single-stock ETFs are more suited for short-term speculation rather than long-term investing given higher costs. In August, the SEC issued a warning about these products, “Because leveraged single-stock ETFs in particular amplify the effect of price movements of the underlying individual stocks, investors holding these funds will experience even greater volatility and risk than investors who hold the underlying stock itself,” which encapsulates the risks. 


Finsum: Single-stock ETFs are a small but fast-growing category. While they’ve performed well due to the bull market in tech, they remain unsuitable for long-term investors. 

 

Tech Stocks In Major Trouble

Musk Fires Off at Tesla Shorters

ESG: The Next Wave in Annuities

Monday, 08 November 2021 17:07

Congress continues to look for ways to fund the $1.85 trillion bill that aims to spend on social and climate policy. While they have already considered objectives that would align the U.S. with the G20’s global minimum tax rate, the current bill will also affect wealthier individuals’ retirement vehicles. Congress will put limits on large accounts for individuals or couples with $10 million dollar retirement balances. The newest Build Back Better bill also eliminates the ‘backdoor’ Roth IRA by minimizing rollovers and conversions. The date for the former rule change isn’t until Dec. 31, 2028 but the backdoor loophole is set to close Dec. 31st of this year in the current bill.


FINSUM: Substantial changes to savings and retirement could be coming in the upcoming legislation, and investors should be aware of how these changes could affect their retirement vehicles.

If Republicans Sweep the Election These Stocks Win

Trump is Weakening in a Key Battleground State

Twitter Starts Undermining Trump

Saturday, 16 October 2021 10:19

The European Stockxx 600 was up .5% on Friday driven by earning releases in the banking sector. That trend followed around the globe as Asia-Pacific’s Taiex index boosted 2% and Wallstreet’s S&P was up 2%. It was strong financial earnings in U.S., and semiconductors in the East pushing the Taiex. All of this happens as inflations concerns continue in the U.S. as consumer prices rose 5.4% on the year, but the Euro areas are seeing the opposite results as monthly inflation was negative in France. The common price thread is definitely in energy prices as Brent crude hit $84.40 a barrel.


FINSUM: The trickling earning reports have generally exceeded expectations. That trend looks to continue, and global portfolios are not only diverse but are outperforming.

European Central Bank Takes on Climate Change

JP Morgan Says to Bet on International Stocks

Why it is a Great Time for International Stocks

Friday, 19 August 2022 22:13

The U.S. had two consecutive quarters of negative growth meeting the technical requirements of a recession, and for the first time in over 40 years that coincided with very high inflation. Tasked with generating high returns in a stagflation environment investors are turning to an odd place, emerging markets. While some EM has suffered as a result of a stronger dollar and Fed tightening, pockets are promising to bring big returns in higher growth environments abroad. Countries relying on exports will have a difficult time, but countries like India, Malaysia, and Indonesia all have fairly robust domestic consumer demand and are quick-growing economies. The last country is an oddball but China has continued to deliver stimulus throughout the pandemic and may put itself in a good position to capture investor attention.


Finsum: Equities abroad are ultra-low, finding the right countries with domestic consumer support could be very profitable.

Big Boost Coming for Emerging Markets

Emerging Markets Looking Bleak

You are Overlooking a Great Value Play

Thursday, 18 July 2024 03:11

WisdomTree has partnered with Trading 212 to introduce six ETF model portfolios, allowing UK and European retail investors to access pre-built core and thematic portfolios through the Trading 212 app. 

 

The three core portfolios—Conservative, Moderate, and Aggressive—offer diversified exposure to equities, bonds, and commodities. Additionally, investors can choose from Multi-Thematic, Tech, and Environmental thematic portfolios. 

 

This collaboration aims to simplify portfolio building for retail investors by leveraging WisdomTree's institutional expertise to help meet long-term investment goals. Trading 212 manages £4bn in client assets with 3 million funded accounts.


Finsum: Thematic models might be a way to get into technology as it’s poised to rally with interest rates settled or about to be cut. 

Don’t Be Passive Through this Next Rate Cycle

How Indexing Gives a Tax Advantage

Hidden ETF Gems: Vanguard’s Top Picks for Your Portfolio

Wednesday, 04 October 2023 05:25

The power of – expansion.

That’s what Dimensional Fund Advisors is doing, expanding its exchange traded fund offerings with seven new ETFs, according to thinkadvisor.com.

They come onboard with the US Core Equity 1 ETF and upcoming launches of three global fixed income ETFs and a U.S. Large Cap Vector ETF, which were launched not long ago.

“We continue to evolve our investment offering to meet demand from financial professionals and add value,” Co-CEO and Chief Investment Officer Gerard O’Reilly said in a release. “These ETFs are another set of tools in Dimensional’s growing lineup, which we expect will meet diverse investor needs across asset classes and geographies.”

To build your own ETF portfolio – or discover a one ticket option – you might consider the MoneySense ETF finder tool, according to moneysense.ca.

For jacking up growth, investors can build a core portfolio and delve into other investing options. You can, say, pluck an investment in ETFs with themes. They might range from electric vehicles to artificial intelligence.

Succession planning: no cakewalk

Quote unquote

Rule of law

Friday, 19 July 2024 03:09

In 2023, registered investment advisors (RIAs) experienced a notable rebound, with assets under management rising nearly 18% to a median of $542 million, according to Schwab’s RIA Benchmarking Study. 

 

The median organic growth rate hit 5%, excluding market performance. RIA revenue increased by 6.3%, and the number of clients grew by 4.3%. Top-performing firms saw even higher growth rates of 12%. 

 

Key strategies for success included having a documented client persona, a solid value proposition, and a structured marketing plan. Client retention has remained steady at 97% over the past decade. Additionally, growing firms are focusing on talent acquisition and developing staff skills to drive future growth.


Finsum: Firms will simultaneously be doubling down efforts on retention and recruiting in 2024.

Growth Oriented Models to Attract Millennials

Moody’s Concerned Over Private Credit Transparency

Latest Watch Trends for 2024

Friday, 06 January 2023 04:02

Last year was a terrible year for the markets, even for many hedge funds. According to investment data firm Preqin, hedge fund returns were down 6.5% in 2022, the largest drop since the 13% decline in 2008 during the financial crisis. That’s why global hedge fund managers are preparing for persistent inflation by seeking exposure to commodities and bonds that perform well in inflationary environments. A majority of 10 global asset and hedge fund managers that were surveyed by Reuters said commodities are undervalued and should thrive as global inflation stays elevated this year. In addition, they are also seeking inflation-linked bonds to shield against price rises, and exposure to certain corporate credit, as higher rates restore differentiation in company bond spreads. For instance, London-based hedge fund manager, Crispin Odey is betting inflation will remain high. He told Reuters that "Commodities will start to rise again. They've sold off very heavily and are below operating costs in many instances." Danielle Pizzo, chief strategy officer at Schonfeld Strategic Advisors, told Reuters that her firm “Aims to focus more on investment grade and high-yield bonds this year as well as commodities.”


Finsum:Hedge funds, which saw the largest drop in performance last year since the financial crisis, are concerned about persistent inflation and are seeking exposure to commodities and select bonds.

Gold Bulls See Second Stimulus Package as Tipping Point for Another Run

Gold May Be Ready to Head Higher

Time to Load Up on Gold

Friday, 19 July 2024 03:10

Bitcoin miners are pivoting to AI due to decreasing profitability in crypto mining. Houston-based Lancium and Denver-based Crusoe Energy Systems announced a multibillion-dollar deal to build a 200-megawatt data center near Abilene, Texas, to cater to AI companies. 

 

This project is the first phase of a 1.2-gigawatt build-out. At full capacity, it will be one of the largest AI data centers globally. The facility aims to utilize renewable energy and Crusoe’s technology to optimize energy usage. 

 

The Abilene center is expected to be operational by 2025, marking a significant shift in energy use and data center strategies.


Finsum: We are really going to see the stresses of energy on alternatives like crypto this year.

Millennials Are Diving Into Alts

Using IRAs For Alts

Post Covid Trends in Alternative Investments

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