Investments Roundup: Cerulli, Fidelity, Summit, Merrill And More

Q&A With Daniil Shapiro Of Cerulli – Our Investments Solutions Leader Of The Month – And Product News Featuring Fidelity, Merrill, BlackRock, Morningstar, HFR, Summit, Simplify, Arch And Kingswood.
Daniil Shapiro, Director, Product Development, Cerulli Associates
Daniil Shapiro, Director, Product Development, Cerulli Associates
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, Daniil Shapiro, Director, Product Development, at Cerulli Associates, who discusses investment product trends, and how asset managers can work better with advisors.

Other entries include Morningstar’s annual Target-Date Strategy Landscape Report, Fidelity launching three actively managed liquid alt equity ETFs, BlackRock and Santander partnering on private infrastructure financing, Summit enhancing its private markets offering with access to Opto and Arch, Simplify launching two U.S. equity ETFs based on “intangible capital,” Arch adding tools for private markets investing analysis and reporting, Kingswood U.S. continuing to build out its investment banking group, HFR reporting that macro strategy hedge funds had their best quarter in over 20 years and Merrill offering income-focused portfolios for retirees.

Larry’s Take

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

As this roundup demonstrates, the vast spectrum of financial products available to investors can make it daunting – if not impossible – for the average advisor to gain mastery over them all. Yet many wealth management clients are no longer satisfied with portfolios that contain only stocks, bonds, mutual funds and ETFs.

For advisors with sophisticated clients, it’s also no longer enough to have a basic understanding of private markets and cryptocurrencies. High net worth and ultra-high net worth investors will expect specific and nuanced guidance on such opportunities that align with their unique circumstances.

This is where resources from the likes of Cerulli, Hedge Fund Research (HFR), Morningstar and major asset managers can prove invaluable. RIA and IBD advisors may have the greatest incentive to tap third parties for thought leadership and industry experts. After all, if there is one strength the wirehouses do still have, it is in-house institutional know-how regarding the full arsenal of investment vehicles.

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

1. Cerulli Discusses Active ETFs, Alts And Asset Manager Distribution To Advisors

The latest Cerulli Edge—The Americas Asset and Wealth Management Edition found that although the trend from active to passive management has been strong during the past decade, signs indicate that it is slowing as asset managers seek to use active management in vehicles outside of mutual funds. This creates gray areas about what classifies as active and passive management.

There has been an increase in the blending of active and passive management to reduce overall strategy costs, the report found. Furthermore, according to the research, 81% of financial advisors believe passive investments help to minimize portfolio costs, 82% believe active managers are ideal for certain asset classes, and 74% believe that active and passive investments complement each other.

And now for our Q&A with Daniil Shapiro, Director, Product Development, at Cerulli Associates.

WSR: What are the major investment products trends affecting financial advisors and wealth management firms this year?

Shapiro: Advisors are continuing to increase uptake of ETFs – both via growing allocations (with RIAs planning to allocate almost 40% by 2025) and via greater variety. Increasingly, true active exposures are being made available to them via managers like Capital Group. They are also using ETFs to do more – whether generate income or offer a defined outcome.

Ideally, managers with alternative capabilities would like to see advisors apply the fee savings from use of ETFs to alternative exposures which are increasingly available via semi-liquid structures like interval / tender offer funds, non-traded REITs and non-traded BDCs. Advisor use of alternatives is growing, but it’s an uphill climb given education and platform access hurdles.

WSR: How can asset managers improve their approach to successfully distribute to financial advisors and wealth management firms?

Shapiro: Firms need to be targeted in their distribution process and approach to financial advisors. Platform availability is the first and most important door that needs to be opened, with compensation agreed upon before asset managers can start targeting financial advisors. Strong relationships with B/D home offices are critical to reaching those advisors and understanding the opportunity.

Then, asset managers must dedicate resources to acquiring and utilizing strong data insights to focus distribution efforts on the best advisor opportunities or risk lagging peers in efficiency. Wholesalers should share best practices learned from working across advisors and provide financial assistance for client events alongside high-quality educational materials to be seen as a valued resource.

WSR: Why should financial advisors and wealth management firms look to Cerulli for insights that can boost their business?

Shapiro: Cerulli Associates is an industry leader in providing asset and wealth management industry data and insights based on the longest running, most responded to, and most thoroughly vetted survey of financial advisors.

In concert with surveys of and research calls with asset manager executives, we can guide firms on what it takes to be successful in the asset and wealth management industry from a product and distribution perspective. As a firm wholly owned by Kurt Cerulli, we can be fiercely independent in our recommendations and provide an objective coverage of industry trends.

2. Morningstar: CITs May Surpass Mutual Funds In Target-Date Strategies This Year

Megan Pacholok, Senior Manager Research Analyst, Morningstar
Megan Pacholok, Senior Manager Research Analyst, Morningstar

Morningstar’s annual Target-Date Strategy Landscape Report found that last year target-date strategies had $156 billion in net inflows, 67% of which went into collective investment trusts (CITs). Net flows slightly increased year-over-year, helping push assets to a record high $3.5 trillion.

CITs represent 49% of the market and could overtake mutual funds as the most popular target-date vehicle in 2024. The five asset managers with the largest share of target-date assets collectively hold approximately 80% of the market. Vanguard, T. Rowe Price and BlackRock have most of their assets in CITs. Fidelity and American Funds have more of their assets in mutual funds.

“Investors in target-date strategies largely experienced positive returns in 2023, after the market turmoil of 2022. Low fees and research-driven glide paths continue to make target dates a great tool for hands off investors to save for retirement,” said Megan Pacholok, Senior Manager Research Analyst at Morningstar. “This year, we saw target-date CITs continue their momentum, and we expect them to surpass mutual funds as the most popular target-date vehicle by the end of 2024.”

3. Fidelity Launches 3 Actively Managed Liquid Alt Equity ETFs

Fidelity Investments launched three actively managed liquid alternatives ETFs: Fidelity Dynamic Buffered Equity ETF (FBUF), Fidelity Hedged Equity ETF (FHEQ) and Fidelity Yield Enhanced Equity ETF (FYEE). The options-based ETFs, which are listed on the CBOE, are commission-free for individual investors and financial advisors on Fidelity’s online brokerage platforms.

Bill Irving, Head of Fidelity Asset Management Solutions, Fidelity Investments
Bill Irving, Head of Fidelity Asset Management Solutions, Fidelity Investments

FBUF combines call-writing and put-buying overlays to create a “collar” overlay. FHEQ aims to protect against major market drawdowns, while participating in sharp market rallies, by buying put options at various expiries and strikes. FYEE seeks an attractive distribution yield through option premia from covered call writing. Fidelity’s alts lineup represents approximately $14 billion in assets, and its ETF lineup encompasses 69 products.

“The launch of these ETFs broadens Fidelity’s liquid alts offering at a time when we’re seeing increased client demand for downside protection and enhanced income while invested in equity markets,” said Bill Irving, Head of Fidelity Asset Management Solutions at Fidelity Investments. “The new options-based equity strategies seek to offer risk mitigation, volatility reduction or yield enhancement in a familiar ETF wrapper, backed by Fidelity’s legacy of active management.”

4. BlackRock And Santander Partner On $600 Million Private Infrastructure Financing

Gary Shedlin, Vice Chairman, BlackRock
Gary Shedlin, Vice Chairman, BlackRock

BlackRock and Santander partnered on $600 million in private infrastructure financing. Funds and accounts managed by BlackRock will provide financing to Santander on a diversified portfolio of infrastructure credit across the communications, energy, power and transportation sectors through a structured transaction.

BlackRock has over $50 billion of infrastructure client assets under management (AUM) across equity, debt and solutions. Santander’s Private Debt Mobilization business brings together professionals from its private-side structuring, loan syndication, securitization, structured sales, private placement, repackaging, credit insurance and trade distribution teams.

“Our infrastructure debt franchise aims for win-win financing transactions that solve the needs of financial institutions and corporates, while generating returns for long-term investors,” said Gary Shedlin, Vice Chairman of BlackRock. “We have a longstanding relationship with Santander and look forward to providing flexible capital to support the growth of its global project finance franchise and all sectors of the burgeoning infrastructure economy.”

5. Summit Enhances Private Markets Offering, With Access To Opto And Arch

Stan Gregor, CEO, Summit Financial Holdings
Stan Gregor, CEO, Summit Financial Holdings

Summit Financial Holdings enhanced its private markets offering with the goal of equipping advisors with institutional-quality resources, by integrating access to platforms such as Opto Investments and Arch. The open-architecture platform for private markets provides advisors with access to alternative investments including private equity, private credit, real estate and venture capital.

Summit can offer some deals directly, potentially providing clients with institutional share classes at lower minimums and fees. Investment professionals are available to help advisors design model portfolios according to client risk tolerance and liquidity needs. More experienced Summit advisors also can provide mentorship sessions on strategies for implementing and allocating asset classes.

“Building on our foundation of holistic financial planning and open architecture, we’re proud to announce the launch of our private markets offering,” said Stan Gregor, CEO of Summit Financial Holdings. “This initiative, supported by partnerships with firms such as Opto Investments and Arch, aims to give our advisors the tools they need to construct more dynamic and resilient portfolios.”

6. Simplify Launches 2 U.S. Equity ETFs Based On ‘Intangible Capital’

David Berns, Co-Founder and Chief Investment Officer, Simplify
David Berns, Co-Founder and Chief Investment Officer, Simplify

Simplify Asset Management launched two ETFs designed to provide investors with exposure to the U.S. equity market through “intangible capital” instead of the traditional valuation approaches of only tangible assets. Both ETFs start with a potential universe of the top 2,000 U.S. corporations and arrive at portfolios of 200 stocks.

The Simplify NEXT Intangible Core Index ETF (NXTI) seeks to track the performance of the NEXT Intangible Core Index, which is designed to provide exposure to companies with high intangible capital-to-book asset ratios within their respective sectors. The index underpinning the Simplify NEXT Intangible Value Index (NXTV) uses a ratio of market capitalization to intangible-adjusted book value.

“Tangible assets have been a declining component of equity valuations for decades,” said David Berns, Chief Investment Officer at Simplify. “Patents, software, research and development, and brand value are examples of intangible assets that lack physical form and may not be visible on company balance sheets. However, our belief – confirmed by academic research – is that the most successful corporations have exhibited relatively ‘asset-light’ characteristics, with much higher allocations to intangible capital than their peers.”

7. Arch Adds Tools For Private Markets Investing Analysis And Reporting

Ryan Eisenman, Co-Founder and CEO, Arch
Ryan Eisenman, Co-Founder and CEO, Arch

Arch added several tools that provide advisors, private investment firms, accountants and individual allocators with insights into individual investments and broader portfolios, while striving to reduce time spent on administrative responsibilities associated with private markets investing.

AI Summaries provides summaries of lengthy reporting documentation. Financial Visualization provides trends and historical performance for each holding, with a dedicated financial chart. K-1 EIN Tax Validation digitally verifies that investors receive the correct K-1s, and can identify potential missing documentation from a set of investments within a particular firm. Enhanced Table Navigation & Search provides customizable views on the amount of capital invested or performance across a geography, asset class, manager or client.

“At our core, we are committed to developing the technology required to support the access and expansion of private markets investing,” said Ryan Eisenman, Co-Founder and CEO of Arch. “Taxes are just one of the many critical components to address and we couldn’t be more excited to see the power of these tools in action.”

8. Kingswood U.S. Continues Buildout Of Investment Banking Group

Michael Nessim, CEO, President and Managing Partner, Kingswood U.S.
Michael Nessim, CEO, President and Managing Partner, Kingswood U.S.

Kingswood U.S. announced the expansion of its Investment Banking team by appointing four new members. Braden Ferrari was hired as Head of Institutional Sales; David Braccia and Evan Wynn joined as Vice Presidents, Capital Markets; and Jacob Wilson was named Vice President, Investment Banking. These hires follow the buildout of the firm’s in-house investment banking capabilities over the past few years.

In 2023, Kingswood U.S. hired Edward Tsuker and Ariel Imas as CEO and President of Kingswood Investments, respectively, responsible for building out full investment banking and capital market services, and Kevin Ernst as a Managing Director in its Investment Banking division. Kingswood U.S. is part of the Kingswood Group, representing more than $14 billion in AUM and supporting 400 registered individuals.

“The addition of Braden, David, Jacob and Evan to our team expands our capabilities and strengthens the working relationships we have across the industry, which helps us optimize results for our clients,” said Michael Nessim, CEO, President and Managing Partner of Kingswood U.S.

9. HFR: Macro Strategy Hedge Funds Have Best Quarter In Over 20 Years

HFR reported that hedge funds continued the first quarter surge through March, led by macro strategies, which had their best month since March 2022 and their best quarter in more than 20 years. Trend-following Commodity Trading Advisors (CTAs), Energy, Multi-Strategy, Healthcare and Cryptocurrency exposures drove the gains.

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

This expanded the five-month return for the HFRI Fund Weighted Composite Index (FWC) to 11.1%, the strongest such return since the five-month period ending April 2021. The HFRI FWC increased an estimated 2.5% in March, and the HFRI 500 FWC Index increased 2.8%. Specialized cryptocurrency funds, which are separate from the HFRI Index, also increased in March as the HFR Cryptocurrency Index increased 19.1%.

“In contrast to most of 2023, the macroeconomic environment in 1Q was dominated by expectations for falling inflation and interest rates, and improving expectations for economic growth, despite ongoing, fluid, uncertain and potentially volatile elevated geopolitical risk,” said Kenneth Heinz, President of HFR. “Managers remain keenly focused on this tension between falling macroeconomic risk and rising geopolitical risk in 2024, with potential for sharp reversals, volatility and dislocation driven by either of these powerful trends.”

10. Wirehouse Activity: Merrill Offers Income-Focused Portfolios For Retirees

Matt Gellene, Head of Consumer Investments and Employee Banking & Investments, Bank of America
Matt Gellene, Head of Consumer Investments and Employee Banking & Investments, Bank of America

Merrill is offering new income-focused portfolios designed to deliver predictable income for retirees over a 25-year period, for Merrill Guided Investing and Merrill Guided Investing with Advisor clients. Investors can choose strategies ranging from “stable income” to “income and growth.” The portfolios can provide recurring distributions into a Bank of America checking account, or other bank or investing account, for accounts with at least $50,000 in assets.

The portfolios are designed and managed by the Chief Investment Office, providing asset allocation, portfolio construction, investment selection and risk management for investors. Merrill Guided Investing is an online investment advisory program that combines online investing with a professionally managed portfolio. Merrill Guided Investing with Advisor offers access to the platform and additional one-on-one guidance from a Merrill Financial Solutions Advisor.

“For many, the fear of outliving retirement assets can be overwhelming,” said Matt Gellene, Head of Consumer Investments and Employee Banking & Investments at Bank of America. “Having a predictable monthly income replacement vehicle helps retirees enjoy this phase of life with greater confidence in their long-term financial security.”

Chris Latham, Managing Editor at Wealth Solutions Report, can be reached at

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