News Mentions & Press Releases
Investors seeking to diversify a traditional equity portfolio may consider market factors and the effects of combining various factors into a multi-factor strategy.
On the recent webcast (available On Demand for CE Credit), How to Use Single- and Multi-Factor Strategies in Every Portfolio, Mo Haghbin, Head of Product, Beta Solutions at OppenheimerFunds, highlighted the shift in the marketplace, outlining the current increase in volatility driven by a confluence of monetary tightening, a higher inflationary trend, and the introduction of tariffs.
Consequently, investors could look to alternative investment strategies like factor-based investments to help smooth out a bumpy ride. Greg Ellston, Director of Asset Allocation at Confluence Investment Management, also added that the nascent inflationary pressures triggered by more restrictive trade policies could foreshadow greater influence on equity valuations and on factor exposures.
The U.S. midterm elections are just around the corner, and investors remain concerned about how the results could impact the equity markets. The answer is simpler than many may think: The midterm elections have historically been positive for U.S. equities.
It may sound odd not to consider the election outcome, but that’s because it largely doesn’t matter. As famed investment analyst Ken Fisher noted, since 1926 the S&P 500 has generated positive returns 87% of the time in the nine months following the midterm elections, regardless of which party won or whether there was a change in the majority. He calls it the “87% miracle.”
This phenomenon comes down to the known versus the unknown. The market hates unknowns, and the results of the midterm elections provide clarity as to the political landscape for at least the next two years.
SMArtX Advisory Solutions (“SMArtX”), a leading financial technology and Turnkey Asset Management Platform (TAMP), today expanded the number of third party investment manager models offered on its UMA platform. SMArtX added 15 new strategies, and now features 159 firms offering about 450 strategies. The strategies include a full array of traditional long only, long/short equity, global macro, and direct indexes, all offered in an UMA structure.
The new firms and strategies include:
• CLS Investments: Focused ESG, Protected Equities, SMART Risk Budget 100 Aggressive, SMART Risk Budget 30 Conservative, SMART Risk Budget 40 Moderately Conservative, SMART Risk Budget 50 Moderate, SMART Risk Budget 60 Moderate, SMART Risk Budget 75 Moderately Aggressive, SMART Risk Budget 90 Aggressive
ESG (environmental, social, and governance) investing has been a hot topic lately. Asset growth has reflected this, picking up over the last couple of years. But growth has generally been on the institutional side (pensions and endowments), while retail clients and advisors have been slower to adopt. This seems strange given that younger generations are starting to save more for retirement and also have more interest in social issues than past generations. The disconnect may simply be a lack of education on the world of ESG investing. As an introduction, below I bust the three common myths of ESG investing and offer three important truths that should make ESG top of mind when considering investor solutions.
Myth No. 1: ESG limits diversification benefits.
ESG investors favor companies that exhibit positive attitudes and behavior toward the environment, social change, and corporate governance. By contrast, investing based on broad market-cap indices means favoring the most highly valued companies. So, without knowing anything else about ESG, investors already know they are getting something better valued than a broad index. Add in the higher-quality nature of ESG companies, and ESG looks even better. Diversification should be achieved by investing in various uncorrelated asset classes in a portfolio, not by benchmark hugging.
Psychology has infiltrated the field of financial advice and does not appear to be stopping its influence any time soon. This makes sense. With the popularity of outsourcing money management on the rise, many financial advisors are finding that their most valuable offering is the management of client behavior.
Every advisor seems to have his or her own story that underscores this point. The client temptations always vary — reaching into a 401(k) too soon, taking on unnecessary debt, dipping into savings, etc., but the image that advisors create is always the same: taking off their businessperson hat and playing the role of a psychologist.
CLS Investments, LLC (“CLS”), a third-party money manager and leading manager of exchange traded fund (“ETF”) portfolios, announced today that it won the 2018 WealthManagement.com Industry Award for ETF Strategist. Now in its fourth year, the WealthManagement.com Industry Awards is the only awards program to honor outstanding achievements by companies and organizations that support financial advisor success.
CLS was awarded ETF Strategist of the year for its Smart ETF Models, which utilize products from five ETF providers at a zero-percent strategist fee. These first-of-their-kind models focus on active and smart beta ETFs, which have historically demonstrated a bias to outpace the market over time. CLS manages these models with their disciplined and active Risk Budgeting framework, with a continued focus on the global market.
CLS also provides clear and consistent information to advisors and investors to strengthen conversations among the two parties and keep investors on course. CLS offers advisors and investors a variety of tools including innovative video statements, an engaging online portal, weekly multi-media commentary, and more. CLS manages nearly 45,000 investor portfolios through partnerships with over 6,000 financial advisors and 1,500 qualified plan sponsors.
This information is not complete without these disclosures: http://bit.ly/2xgYxMv
Recent surveys have shown that investors consider a variety of criteria when shopping for an ETF. But the most popular consideration—cost—is often overemphasized, while the most important is overshadowed.
When selecting an ETF, or any investment for that matter, the most important criterion should be desired market exposure. Investors should consider what exposure is needed for the portfolio and what is appropriate for the overall allocation. They should also consider the expected risk and return, and how the ETF will mix with other existing holdings.
Desired market exposure, however, is typically far down on many investors’ lists of key selection criteria. At the top, instead, we often find cost as a top consideration.
With the end of the tax year a few months away, it is never too early to plan ahead with exchange traded funds.
On the upcoming webcast, Tax Loss Harvesting: What You Need to Know, Matthew Bartolini, Vice President and Head of SPDR Americas Research at State Street Global Advisors, Joshua Jenkins, Portfolio Manager for CLS Investments, and Blaine Docker, Chief Operating Officer at Main Management, will discuss the current status of the fixed-income environment and consider ways to incorporate ETFs as a means to effectively harvest potential losses.
Fixed-income markets struggled as the Federal Reserve hiked interest rates. The declines, though, might have a silver lining as they present the opportunity for investors to exercise effective tax management and make prudent use of unrealized losses.
Historically, ESG—environmental, social and governance—strategies have focused on excluding shares of firms that don’t meet their standards, such as companies involved in tobacco, firearms or alcohol. Yet, an exclusionary strategy doesn’t always mean portfolios contain the best ESG options. To counter this issue, CLS Investments developed an ESG strategy that prioritizes the selection of strong ESG investments rather than focusing on avoiding non-ESG ones.
“What we’re saying is let’s go and look for the good things—the companies that are environmentally conscious, socially responsible and exhibit sound governance,” says Ryan Beach, CEO of CLS Investments, an investment management company based in Omaha, Neb. “We believe that these high quality companies typically provide increased stability and have the potential to outperform over time.”
The second quarter was great for the U.S. stock market, but not all equity asset classes participated to the same extent. The dispersion was impressive, and going forward, some of these segments offer opportunities for investors.
Growth stocks, for instance, such as those in the technology and consumer discretionary sectors, handily outperformed value, such as financial stocks. Value stocks continued a streak of underperformance essentially dating back to before the financial crisis.
The recent quarter also proved trying for international equities. In fact, it was one of the worst three-month stretches versus the U.S. stock market in some time. Rolling three-month performance over the past few decades shows the recent degree of underperformance measured a whopping two standard deviations—something that has only happened 2% of the time. In other words, one should expect a quarter of such poor relative performance to happen only once every 12.5 years.