Investments Roundup: MRB Partners, Morningstar, Vanguard, Cerulli And More

Our newest Investment Solutions Leader of the Month, Phillip Colmar, Partner, Global Strategy & Fixed Income, at MRB Partners.
Our newest Investment Solutions Leader of the Month, Phillip Colmar, Partner, Global Strategy & Fixed Income, at MRB Partners.
Chris Latham, Managing Editor, Wealth Solutions Report
Chris Latham, Managing Editor, Wealth Solutions Report

In this edition of the Investments Roundup, we speak with our newest Investment Solutions Leader of the Month, Phillip Colmar, Partner, Global Strategy & Fixed Income, at MRB Partners.

Other entries this month include Orion adding AllianceBernstein’s municipal fixed income separately managed accounts (SMAs), Morningstar’s Advisor Workstation adding iCapital’s alternative analytics, Savvy Wealth launching an investment management platform for its advisors, Vanguard launching two new municipal bond ETFs, StratiFi forming a strategic partnership with AdvizorStack, Oppenheimer continuing the expansion of its Public Finance team’s leadership, Venn By Two Sigma partnering with SimCorp, Sound Income Strategies’ fixed income ETF topping Morningstar’s list for 2023, Cerulli’s latest product trends report, HFR reporting that hedge funds extended gains in January and ClearingBid partnering with Virtu Financial.

Larry’s Take

Larry Roth, CEO, Wealth Solutions Report
Larry Roth, CEO, Wealth Solutions Report

The insightful macro view from our Investments Solutions Leader of the Month has me wondering. Is this the year when financial markets finally get back to normal? An equally valid question is, when exactly were financial markets last truly normal?

Historically rapid Federal Reserve interest rate hikes to combat rampant inflation followed the global COVID-19 pandemic, which followed the decadelong aftermath of the 2008 Great Financial Crisis, which followed an era of lax mortgage standards for U.S. home buyers at the same time as lax national lending standards for countries in the euro area, which followed the fall of the Soviet Union, and so on.

You get the picture. “Normal” financial markets might just be an illusion, or at best short-lived occurrences. This kind of perspective can help financial advisors in their discussions with clients, and the perennial quest to keep them invested over the long-term.

If you would like to discuss this Larry’s Take further, including how these trends might impact your business, please contact me at larry.roth@rlrstrategicpartners.com.

1. MRB Partners Shares 2024 Market View And Wealth Management Impact

Phillip Colmar, Partner, Global Strategy & Fixed Income, MRB Partners
Phillip Colmar, Partner, Global Strategy & Fixed Income, MRB Partners

MRB Partners finds themes that address how asset prices are driven by trends in economic growth, inflation, policy and liquidity/financial conditions. Its research is designed to identify how macro forces will drive performance of individual asset classes over the course of the cycle. The firm’s recommendations emphasize an integrated risk/reward analysis. The team has offices in New York, Montreal and London.

And now for our Q&A with Phillip Colmar, Partner, Global Strategy & Fixed Income.

WSR: How does MRB Partners interact with the wealth management space?

Colmar: MRB Partners is an independent top-down research provider that covers global multi-asset strategy. Our competitive edge is in utilizing framework analysis to extract key macro and investment themes. We hold ourselves accountable, so even though we don’t run assets directly, beating the market with non-consensus views is crucial.

We began serving the institutional investor space, tilting multi-billion-dollar portfolios from an asset allocation perspective, for the top 200 asset managers. A couple of years ago, we entered the wealth management space, and it is now one of our fastest growing segments, particularly RIAs. Our research provides wealth managers with a clear macro roadmap and investment recommendations, as well as arms them with themes and ideas to share with their own clients.

WSR: How do you see markets shaping up in 2024?

Colmar: Last year was a lot easier, because everyone was calling for a recession, and we were not. Everyone came into this year thinking that because the Federal Reserve is pivoting, the economy was coming in for a soft landing. That would mean below-trend growth to create enough slack and disinflation to allow the Fed to provide deep rate cuts. Our view is that the economy already had a soft landing underway before the Fed pivoted.

Monetary conditions have now eased substantially through lower bond yields and interest rate expectations, which is more likely to result in a “no-landing.” Data from the Dallas Fed’s Weekly Economic Index, the Redbook Retail Sales Index, Consumer Confidence, Homebuilders’ confidence, ISM Indexes, the latest jobs report, and so on, all support the “no landing” view.

WSR: What might this mean for wealth management firms and client portfolios?

Colmar: Although the Fed could cut target rates by 50-75 basis points, the bond market is looking for the Fed to cut rates by more than 125 basis points, which is misplaced. Inflation will not come down as much as a lot of people think and its underlying run-rate is much higher than generally perceived, which limits the amount the Fed can ease.

This should prompt wealth managers to rethink their strategies. Higher-for-longer bond yields set the stage for how to approach investing across all sectors. You don’t want to be chasing long-duration growth assets that have elevated earnings expectations and limited valuation support. So, we recommend broadening out equity portfolios, by reducing technology and adding exposure to financials, energy and health care.

2. Orion Adds AllianceBernstein Municipal Fixed Income SMAs

Ryan Beach, President, Orion Wealth Management
Ryan Beach, President, Orion Wealth Management

Orion Advisor Solutions added AllianceBernstein’s Municipal Fixed Income SMAs to the Orion Portfolio Solutions (OPS) platform. The SMAs, which actively manage over $41 billion as of Jan. 3, include the AB Tax Aware SMA, AB Municipal Income SMA, AB Municipal Impact SMA, AB High Quality Municipal SMA and AB Municipal Ladders SMA.

The global investment management firm AllianceBernstein provides research and diversified investment services to institutional investors, individuals and private wealth clients. As of Dec. 31, it had $725 billion in assets under management (AUM). As of Sept. 30, Orion serviced $3.7 trillion in assets under administration and $63.1 billion of wealth management platform assets.

“AllianceBernstein’s diverse portfolio options are designed to help advisors provide a bespoke experience to their clients, a crucial advantage in the high net worth investment sector,” said Ryan Beach, President of Orion Wealth Management. “This is one more way Orion is delivering on our promise of providing advisors with a broad investment lineup to build well-diversified portfolios that are customized to investors’ unique needs.”

3. Morningstar’s Advisor Workstation Adds iCapital’s Alternative Analytics

Lawrence Calcano, Chairman and CEO, iCapital
Lawrence Calcano, Chairman and CEO, iCapital

Morningstar and iCapital partnered to provide Advisor Workstation’s more than 170,000 users with access to alternative investments and analytics to evaluate private assets side by side with traditional investments, as a complement to the existing investment proposal and report capabilities in Advisor Workstation.

iCapital Marketplace provides a broad selection of alternative investment funds, due diligence and education resources, fund subscription processing and third-party reporting services. iCapital Architect is a portfolio construction and analysis tool for financial advisors to build personalized client portfolios that includes alternatives.

“We are enormously excited to forge this relationship with Morningstar and support expanded access to alternative investing opportunities and insights,” said Lawrence Calcano, Chairman and CEO of iCapital. “Our simple, intuitive technology interface ensures that Advisor Workstation users have access to both the right products for their clients and an extensive library of educational resources to make informed decisions relating to portfolio allocations and diversification strategies.”

4. Savvy Wealth Launches Investment Management Platform For Its Advisors

Ritik Malhotra, Co-Founder and CEO, Savvy Wealth
Ritik Malhotra, Co-Founder and CEO, Savvy Wealth

Savvy Wealth, a digital-first platform for financial advisors and the parent company of Savvy Advisors, an RIA, launched Savvy Wealth Investment Management (SWIM). The new in-house investment management solution features diversified and low-cost investment strategies, and enables the creation and management of personalized investment portfolios for to the firm’s high net worth client base.

SWIM’s capabilities include portfolio management by an investment team who oversees active asset allocation, rebalancing, tax-loss harvesting and cash management; access to proprietary models, developed by Savvy’s Investment Committee, that include factor tilts and tax-efficient customizations; as well as portfolio solutions for advisors to diversify portfolios around illiquid securities, private investments, custom indexes, SMAs and held away retirement accounts.

“Our firm was founded on the vision of strengthening human advice, giving advisors more time to spend working with clients and scaling their business,” said Ritik Malhotra, Co-Founder and CEO of Savvy Wealth. “Introducing Savvy Wealth Investment Management equips advisors with sophisticated investment tools to help maximize client outcomes, complemented by internal portfolio management support and solutions to help enrich the client experience.”

5. Vanguard Launches 2 New Municipal Bond ETFs

Sara Devereux, Global Head of Fixed Income, Vanguard
Sara Devereux, Global Head of Fixed Income, Vanguard

Vanguard launched the Vanguard Intermediate-Term Tax-Exempt Bond ETF (VTEI) and Vanguard California Tax-Exempt Bond ETF (VTEC). Vanguard’s $242 billion municipal bond lineup includes the Vanguard Tax-Exempt Bond ETF (VTEB) and Vanguard Short-Term Tax-Exempt Bond ETF (VTES), as well as active mutual funds and money market funds.

The Vanguard Intermediate-Term Tax-Exempt Bond ETF is designed for tax-sensitive investors with an intermediate-term time horizon who prefer passive management. The Vanguard California Tax-Exempt Bond ETF is for tax-sensitive investors residing in California. The new index municipal bond ETFs, which are managed by Vanguard Fixed Income Group, both have expense ratios of 0.08%.

The new ETFs are different products from the similarly named Vanguard Intermediate-Term Tax-Exempt Fund and Vanguard California Intermediate-Term Tax-Exempt Fund. They have differences in scale and certain investment processes, and Vanguard expects their underlying holdings to produce different investment returns.

6. StratiFi Forms Strategic Partnership With AdvizorStack

Akhil Lodha, Co-Founder and CEO, StratiFi
Akhil Lodha, Co-Founder and CEO, StratiFi

StratiFi and AdvizorStack formed a strategic partnership to integrate their platforms and collaborate on future enhancements, specifically on risk analytics, compliance oversight and operational efficiencies.

StratiFi provides risk profiling, IPS generation, portfolio building and compliance oversight for financial advisors, investment managers and compliance officers at RIAs, independent broker-dealers, family offices and other institutions. AdvizorStack strives to help RIAs scale their operations and grow their firm AUM.

“This strategic partnership signifies a mutual commitment to excellence, innovation and the collective advancement of the wealth management landscape,” said StratiFi CEO Akhil Lodha. “As StratiFi and AdvizorStack join forces, we pave the way for a future where technology and financial expertise converge seamlessly to enable advisors and their firms to plan and execute growth while remaining compliant.”

7. Oppenheimer Continues Expansion Of Public Finance Team Leadership

Kristin Stephens, Managing Director & Head of the Northeast Region, Oppenheimer & Co.
Kristin Stephens, Managing Director & Head of the Northeast Region, Oppenheimer & Co.

Oppenheimer Holdings investment banking and wealth manager subsidiary Oppenheimer & Co. (Oppenheimer) continued the expansion of its public finance team with the hires of Kristin Stephens and David Moffett as Managing Directors. Stephens will serve as Head of the Northeast Region, based in New York, and Moffett will be Head of the Southeast Region, based in Atlanta.

David Moffett, Managing Director & Head of the Southeast Region, Oppenheimer & Co.
David Moffett, Managing Director & Head of the Southeast Region, Oppenheimer & Co.

Both will report to Elizabeth Coolidge, who was appointed last month as Head of Public Finance, based in Chicago. Coolidge brought Liberty Ziegahn and Madison Maher onto the Oppenheimer team. Stephens, Moffett, Coolidge, Ziegahn and Maher formerly worked at UBS, which is pulling back in the space. Citi also exited from public finance in December, in contrast to Oppenheimer’s expansion.

“I am eager to lead the Northeast Region, to execute novel debt solutions for our clients, and to work again with my former colleagues Beth, Liberty, Madison and David, as well as the entire Oppenheimer Public Finance team,” Stephens said. “I am excited to join such a forward-thinking team and to help enhance Oppenheimer’s Public Finance capabilities in the Southeast Region,” Moffett said.

8. Venn By Two Sigma Partners With SimCorp On Axioma Equity Factor Models

Marco Della Torre, CEO, Venn by Two Sigma
Marco Della Torre, CEO, Venn by Two Sigma

Venn by Two Sigma (Venn), an investment analytics solution for professional investors, partnered with SimCorp, a provider of investment management solutions, to combine SimCorp’s Axioma equity factor models with Venn’s factor analytics to help manage multi-asset portfolios without additional operational complexity. Venn’s clients include asset owners, consultants, wealth managers and advisors.

Its multi-factor risk analysis platform aims to enhance workflows including portfolio analysis, manager due diligence, scenario analysis, proposal generation and performance reporting. The partnership provides Venn’s clients with equity risk factors derived from the latest version of the Axioma US Equity Factor Risk Models, alongside the Worldwide Equity Factor Risk Models, within Venn’s 18-Factor Lens.

“This partnership represents an exciting milestone in our journey as we strive to identify cutting-edge innovations in the market that can further empower Venn clients with exceptional multi-asset portfolio technology, while maintaining operational simplicity,” said Marco Della Torre, CEO of Venn by Two Sigma.

9. Sound Income Strategies’ Fixed Income ETF Tops Morningstar List For 2023

David Scranton, Founder and CEO, Sound Income Strategies
David Scranton, Founder and CEO, Sound Income Strategies

Fort Lauderdale, Florida-based Sound Income Strategies announced that Morningstar ranked its Sound Enhanced Fixed Income ETF (FXED) as first out of 157 peer funds as of Dec. 31. The ETF – which uses Business Development Companies (BDCs), Specialty Bond ETFs and REITs – is positioned for investors who are preparing for retirement or already in retirement, with an allocation equally weighted between investment grade and high-yield debt securities.

Sound Income Strategies, a fee-based RIA providing support and solutions to independent income specialists and third-party asset manager services to advisors and wealth management firms, is a subsidiary of Sound Income Group, which had $2.68 billion in AUM in 2023. Its sister subsidiaries include Advisors’ Academy, an insurance FMO, and the Retirement Income Source, a nationwide franchise model to advisors providing retirement planning services.

“We are pleased that FXED has maintained its place in Morningstar’s top spot at No. 1 among its peers, which was not an easy feat in what was a challenging year for the bond market,” said David Scranton, Founder and CEO of Sound Income Strategies. “As we begin this new year, our focus remains the same: consistently outperforming the broader bond market, with an emphasis on capital preservation.”

10. Cerulli Finds Passive Fund Strategies Overtake Active In December

Kurt Cerulli, CEO, Cerulli Associates
Kurt Cerulli, CEO, Cerulli Associates

Cerulli Associates released its latest edition of The Cerulli Edge—U.S. Monthly Product Trends, which analyzes data as of December for mutual funds and ETFs. The report found that passive strategies overtook active strategies for both mutual funds and ETFs.

Mutual funds lost $70.6 billion from outflows in December, although assets still increased overall by $670 billion on strong market performance. Total ETF assets increased 24.5% in 2023, with a 10.6% increase in 2H 2023. ETF assets increased by $439 billion in December, $128 billion of which came from net inflows. Active exposures in ETFs remain at an early stage, Cerulli found.

“With fixed-income exposures increasingly able to carry out their income objective and offer downside protection, alternative investment managers are finding a tougher sales environment,” according to the report. “Cerulli recommends they focus on the practice management benefits of using alternative investments when speaking with clients. With money market funds holding a record $6 trillion and continuing to gather assets, Cerulli believes the exposures will be attractive to advisors as long as higher rates exist.”

11. HFR: Fixed Income-Based Relative Value Arbitrage Lead Hedge Fund Strategy Gains

Kenneth Heinz, President, HFR
Kenneth Heinz, President, HFR

HFR reported that hedge funds extended gains in part due to fixed income-based strategies, as geopolitical risks continued to rise amid the conflicts in Ukraine and Israel. Gains occurred across strategies and sub-strategies.

The HFRI Fund Weighted Composite Index (FWC) increased an estimated 0.28% in January, the HFRI Relative Value FI-Corporate Index increased an estimated 1.14%, the HFRI Equity Hedge (Total) Index increased an estimated 0.21%, the HFRI Macro: Multi-Strategy Index increased an estimated 1.25% and the HFRI Event-Driven Credit Arbitrage Index increased an estimated 2.37%.

“Given the evolving and fluid geopolitical and macroeconomic environment, managers are actively and dynamically managing portfolio exposures and risk with a more intense focus on positive optionality, convexity and the increased potential for destabilizing dislocations,” said HFR President Kenneth Heinz. “With an increased sensitivity toward these risks, it is likely that institutions will be increasing commitments to funds opportunistically positioned to preserve capital while also monetizing exposures created by instability and volatility.”

12. ClearingBid Partners With Virtu Financial To Expand Primary Share IPO Investing

Matt Venturi, Founder and CEO, ClearingBid
Matt Venturi, Founder and CEO, ClearingBid

ClearingBid, an IPO investing network, partnered with Virtu Financial’s Virtu ITG Solutions Network, which will serve as ClearingBid’s primary broker community network provider and ClearingBid’s IPO network will leverage Virtu ITGNet’s scaled connectivity platform.

ClearingBid aims for anyone to use the platform to invest in IPOs. The first such IPO is scheduled to occur later this year. Orders will be placed by professional advisors or brokers through CB/Virtu. Individual investors must go through their advisor or broker to invest. ClearingBid anticipates that RIAs and brokers will be essential to operations.

“Virtu is one of the industry’s largest trading providers with premier processing and fulfillment capabilities,” said Matt Venturi, Founder and CEO of ClearingBid. “By providing investors with seamless order entry and accessibility, and having Virtu ITGNet serve as our preferred exchange network service provider, ClearingBid moves one step closer in our mission to enhance an often inefficient and opaque IPO process.”

Chris Latham, Managing Editor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com

Total
0
Shares
Related Posts

Sign Up for Our Newsletters

Sign Up for Our Newsletters