Funds will begin paying out their 2023 distributions this month which could lead to a tax bill for your clients. While capital gains distributions will likely be lower this year than in recent years, interest income is expected to be higher.
It’s possible that a 2024 recession could be avoided, but we see recessions risks as remaining elevated in most developed markets. We believe there is limited upside for equities amid expensive valuations and recession concerns. Government bond valuations, however, look attractive in the U.S., UK, Canada, Germany and Australia.
The global economy is still overwhelmingly powered by fossil fuels, with more than 80% of primary energy sourced from coal, oil, and gas, as of 2021.
Our 2023 Manager ESG Survey shows that transparency around DEI data is increasing among investment managers. The results reveal that equity product managers in particular are more inclined to share DEI data compared to managers in other asset classes.
97% of corporate defined benefit (DB) plans can achieve full funding without a significant draw on corporate cash. This is an increase from the 86% noted in last year’s report.
The main point under contention this year will be the phase-out of fossil fuels and the limited progress achieved so far. As more businesses make net-zero commitments, there is mounting pressure for greater government support through policies and incentives.
There is broad agreement that economic damages will increase with warming, but there is substantial disagreement on the magnitude of these damages.
As I start thinking about Christmas this year, I decided I want to be on the nice list again, so I put together some useful year-end actions and ideas for financial advisors.
While the fall in inflation is welcome, the impact of higher interest rates on mortgage borrowers still has some way to play out. The reduction in inflation will help DB members that are drawing on their pension. Pension trustees should consider their investment strategy and support members with their retirement planning.
Taxes can have a significant and ongoing impact on an investment portfolio. Advisors can help their clients minimize that impact with a tax-smart approach. Advisors can prepare for capital gains season now, and potentially maximize their clients’ after-tax returns.
Portfolios with large allocations to alternatives can have many benefits. However, alternative allocations can deviate meaningfully from policy, particularly during periods of equity-market turbulence.
Fossil fuels, particularly oil, are difficult to replace due to their availability, affordability and energy density. Low-carbon alternatives, like solar energy, need large amounts of space to produce comparable amounts of energy to oil.
We believe that an OCIO provider should have the capability to handle any type of investment assignment. However, most OCIO providers do not have the ability to do this.
Starting in 2024, IBM will replace its 401(k) plan matching contributions with a new benefit earned within its overfunded DB plan, which has been frozen since 2008. This move essentially un-freezes the tech giant's DB plan.
The third quarter was a more favorable environment for active managers in U.S. Large and Small Caps, Japan, Australia, and Canada equities, while being more challenging for Global, Global ex-U.S., Emerging Markets, Europe, UK and Long/Short managers.
Global investing is easily accessible through the financial markets. Many investors prefer to stick to companies and industries they are familiar with.
Investors should be aware of potential real-time market exposure risks when implementing large changes to their portfolios. One market hour of misaligned portfolio exposure can have a significant impact on your portfolio’s performance outcome for the year.
The direction of interest rates was the biggest factor moving markets in the third quarter. Sentiment on technology stocks appeared to shift. Money market assets reach historic high, but returns lag stock market.
In Q3, the strongest performance among factors was seen in developed ex-U.S. large cap and small cap and U.S. small cap, where Value outperformed by 4.9%, 3.3% and 3.3%, respectively. The weakest performance among factors was in U.S. small cap, where the Size factor underperformed by -2.4%.
Our 2023 Manager ESG survey reveals that while more investors are implementing engagement and proxy voting strategies, there is still room for improvement.
A transition away from fossil fuels is likely required to avert a significant warming of the planet. Rising temperatures could lead to crop failures, storm intensification, ocean acidification and deoxygenation, and infrastructure damage, among several other risks.
Investment taxes can have a real impact on a portfolio. Investors should be aware of four key tax realities they currently face. Without a plan to manage these taxes, investors may find their ability to retire comfortably could be compromised.
Meeting or beating a trading benchmark doesn't equate to good portfolio performance. In order to measure the success of a transition, utilizing a T-Standard transition performance measurement methodology is critical.
Direct Indexing empowers RIAs to transform tax losses into valuable assets, helping clients offset capital gains on federal tax returns and minimize annual income tax liabilities.
Credit volumes witnessed some strong highs and lows in the third quarter. Notably, July—a month where trading volumes are generally steady—saw very inconsistent flows over the month. September, meanwhile, followed historical trends with an increase in primary market supply, reflecting higher volumes in the secondary.
The ideal rebalancing range varies by investor and depends on an investor’s risk tolerance and market views, among other factors. In a prolonged equity bull market, wider rebalancing ranges will result in higher returns, but also increase a portfolio’s risk.
Private credit is being sought—with the goals of income and capital preservation—to achieve real capital growth and drive portfolio returns among retail and institutional clients alike.
A transition away from fossil fuels is likely required to avert a significant warming of the planet. The primary risk to markets is the energy transition itself, which would require substantial capital expenditures.
U.S. equities have ruled the roost for the better part of the last decade, but another region may emerge as the leader if the business cycle changes.
Russell Investments’ 2023 Manager ESG Survey, now in its ninth year, continues to offer valuable insights into the evolving landscape of ESG practices within the investment management industry.
The Federal Reserve (the Fed) has made some relatively painless progress thus far in its inflation fight. Some other prominent economists have walked back their forecast for a near-term recession.
Some investors are considering making tactical tilts to their fixed income portfolios to take advantage of the current high-yield environment.
There is a growing movement among investors to align their portfolio to their values or belief systems. Advisors can use Direct Indexing products and Separately Managed Accounts to help their clients pursue faith- or values-based investing.
Most investors are aware of certain taxes on their investments, such as on dividends, interest and capital gains. But those are just the tip of the iceberg.
The U.S. Treasury yield curve is currently inverted, with yields on short-term bonds higher than yields on longer-term bonds. Some expect this to unwind with short-term bond yields falling faster than longer-term yields. Amid these expectations, those investors are wondering if they should consider reallocating to shorter-term bonds.
Thomas Jefferson University (TJU) developed a strategic resource allocation framework to rationalize and simplify the complex legacy portfolio structures it had inherited through mergers and acquisitions.
During Q4, we believe there is an elevated risk of market volatility when monthly U.S. inflation data is released, quarterly earnings season begins, and major central banks meet.
We believe a mild U.S. recession is more likely than not in 2024, although a soft-landing scenario cannot be ruled out. A recession is also likely in the UK and eurozone, but appears less likely in Australia.
Many advisors are finding their clients show little interest these days in how the markets are doing.
Private infrastructure offers unique investment characteristics and potential diversification benefits for portfolio construction.
Today, in a shock decision, the Bank of England (BoE) left its policy rate at 5.25% by the tightest possible majority vote of 5-4. All but one of 65 economists polled by Reuters had predicted that the BoE would raise the rate to 5.5%.
Financial advisors often face the challenge of transitioning a new client into their practice in a tax-efficient way.
Banks have reemerged as a potential pain point for the investment community, as rating agencies recently embarked on a downgrade cycle in the sector.
Given the uncertainty over a recession, there are other incremental steps that investors may want to consider instead. These include making adjustments to a portfolio’s market beta and credit exposure.
Soft consumer confidence and property-market woes are playing a large role in the slowdown of China’s economy.
For some organizations, a partial outsourcing of their investment program is preferable to total outsourcing. Despite this, some OCIO providers will still try very hard to sell companies on a full OCIO solution.
Diversifying a portfolio means spreading the investments across a variety of asset classes, industries and geographies.
Advisors can capitalize on the expected transfer of wealth between generations, the expected wave of retirements among older advisors, and referrals from other professionals.
Many advisors are now providing customized wealth management services to their clients and their families, often across multiple generations.
We are now a few years past the onset of the COVID pandemic, and we've had a chance to think about some of its changes in the wealth management business. Even if we wish certain things hadn't changed, we must acknowledge that they have – and adapt accordingly.