News Mentions & Press Releases
That’s why Grant Engelbart, portfolio manager at the $7 billion CLS Investments, says he plans to use more alternative funds next year. While he typically allocates as much as 15% of assets to liquid alts, Engelbart stresses the need to scrutinize these funds, since many are highly correlated to the assets people are looking to diversify away from.
That’s borne out by Morningstar research, which will launch a style box for liquid alternatives in 2017. The tool should help investors compare the motley mix of complex funds that fall under the liquid-alternative category, gauge how they fit in with their other investments, and determine if managers have actually delivered on the diversification and smoother ride they promise.
Omaha’s money managers and investing pros expect the Standard & Poor’s 500 to rise about 8 percent this year, boosted in part by tax and regulatory policies expected to be business-friendly.
A World-Herald survey of 10 metro-area portfolio managers and finance experts from academia found an average estimate of 2,425 for the 2017 year-end close of the broad S&P index. That would be about 8 percent higher than the 2016 close of 2,238.83, a year during which the index rose almost 9 percent.
Lower taxes and a lighter regulatory burden were almost universally cited as catalysts for the stock market in 2016; both were major points of emphasis for President-elect Donald Trump. Politics aside — several of the money managers said privately they liked neither Trump nor his opponent, Hillary Clinton — there was widespread agreement that investors will profit from what they described as an increasingly competitive U.S. business climate.
While I don’t have a crystal ball, it’s safe to say the industry will look very different 20 years from now. Below are just a few things to expect:
Asset Classes: Twenty years ago, there were two main asset classes that mattered the most: stocks and bonds. Over the last two decades, there has been an explosion of asset classes, and that will likely continue over the next 20 years. Some will be highly correlated with each other as the markets are sliced into ever-thinner pieces. In addition, new uncorrelated asset classes and factors will emerge because of technology and global trade shifts. Our investment categorization will need to evolve. It is likely that historical patterns of performance will change on a much more rapid scale.
Investment portfolio turnover is an important statistic to consider when analyzing an investment portfolio. This consideration should apply to all investment portfolios, whether they are actively or passively managed.
First, Let’s Talk About Mutual Fund Portfolio Turnover
For years, I conducted due diligence on actively managed mutual funds. In my opinion, portfolio turnover was one of the most important statistics to examine. It got to the heart and soul of a manager’s investment style. Was it high turnover or low turnover? This usually depended on his or her investment philosophy and process, and the data and time frames used to make decisions. Also, was the turnover fairly consistent over the years? If it was erratic, this might be an important clue regarding the discipline, or lack thereof, of the process. Understanding turnover provides considerable insight into how a portfolio is managed and should be expected to behave moving forward.
While I was neutral on the high- or low-turnover style of an active management approach, I recognized that both styles could be successful if they were disciplined. I was also aware turnover tended to correlate with other key portfolio statistics.
OMAHA, Neb., Dec. 6, 2016 /PRNewswire/ — CLS Investments, LLC (“CLS”), a third-party money manager and a leading manager of exchange traded fund (“ETF”) portfolios, announced its latest feature enhancements to CLS Autopilot, an automated asset management tool for advisors that is designed to enhance the client experience. CLS Autopilot allows advisors to digitally open accounts, and provides direct access to Orion Connect, integrating data on one simple dashboard for the advisor.
“The financial industry’s quick pivoting around the DOL regulatory changes coupled with technology changes has taught all of us that the core of our industry is as prone to volatility as the stock market,” said CLS Investments CEO Ryan Beach. “The enhancements to CLS’s Autopilot program provides advisors and their clients with a technology solution and central hub to seamlessly assist with industry changes, whatever they are, whenever they may come.”
We are now in year eight of a U.S. equity bull run. U.S. equities, as defined by the Russell 3000, have returned 15% on average since 2009, making this their second-longest hot streak since a decade-long run in the 1990s. Thanks to the global monetary stimulus policies of the Federal Reserve and other central banks, equity investors have reaped the benefits of double-digit gains in six out of the last seven years.
But is this trend justified? Yes, the U.S. economy continues to hum along right at around 2% annualized growth. Unemployment has ticked down as individuals have reentered the labor market and found work, and corporations have rebounded in terms of sales and earnings growth. We also see consumers going about their business and supporting the economy with additional spending.
OMAHA, Neb., Nov. 14, 2016 /PRNewswire/ — CLS Investments, LLC (“CLS”), a third party money manager and a leading manager of exchange traded funds (“ETF”) portfolios, has partnered with ECHELON Partners (ECHELON), a leading investment bank serving the wealth management industry to release the latest white paper in its Advisor IQ series: Bridging the Internal Succession Gap: Strategies for Managing the Transition Between Selling Owners and Employee Buyers.
CLS and ECHELON each have long track records of producing thought leadership on succession planning via white papers, byline articles and conference presentations. This particular white paper addresses the general lack of education and available information around advisor succession planning that is leading to major challenges for the long-term health and sustainability of the industry. According to ECHELON, 20 percent of advisors industry-wide plan to retire or leave the industry within the next 10 years—with 60 percent of those planning for an internal succession versus a sale to a third party. The problem: 80 percent of all practice owners do not have a succession plan of any kind in place.
Smart beta ETFs are all the rage at the moment and are capturing an increasingly large share of the ETF marketplace.
Yet the growth hasn’t spread as rapidly into the emerging market space. The purpose of this piece is to take a quick look at the emerging market ETF universe, examine some of the reasons why smart beta hasn’t taken off, and list a few ETFs that may be worth a hard look.
State of Emerging Markets ETFs
The chart below shows the largest 20 of the 71 emerging market ETFs in rank order. Vanguard FTSE Emerging Markets (VWO) has a 40% market share, followed by iShares MSCI Emerging Markets (EEM) and iShares Core MSCI Emerging Markets (IEMG). Combined, the big three control more than 80% of the market. The top 10 control 95% of the assets, and the top 20 control 98%.
The U.S. stock market, at least defined by the large companies in the Standard & Poor’s 500 Index, is at an all-time high. It’s been an incredible bull market—extending its streak as one of the longest and strongest in U.S. stock market history.
While U.S. large-caps have had a nice run, and in turn their valuations have gotten stretched, not all markets have participated in the strong gains and became over-valued. Some markets are still well off their all-time highs.
At the end of August, for example, emerging market equities (MSCI Emerging Markets Index) were still 20% below their highest point. Commodities (Bloomberg Commodity Index), meanwhile, were more than 60% below their peak.
Exchange traded funds (ETFs) continue to dominate cash flows into investor portfolios — and for very good reasons. But ETFs have one feature that is dangerous for many investors, so it’s up to investment advisors to ensure these useful investment vehicles are properly managed.
ETFs are grabbing big chunks of market share from mutual funds, and they will continue doing so in the year ahead. Though mutual funds truly rank among the top innovations in the history of finance (they provided the opportunity for all investors to attain diversified, professionally managed portfolios at a reasonable price), ETFs are a better technology. And that’s good for investors.
There are a few reasons ETFs are better.