In this edition of the Investments Roundup, we speak with our newest Investment Solutions Leader of the Month, Don Bennyhoff, Founder of Bennyhoff & Co., who discusses his new fractional CIO offering.
Other entries include LPL expanding its Model Wealth Portfolios platform, Janus Henderson launching an Emerging Markets Debt Hard Currency ETF, Simplify launching a Latin America-focused bond ETF, Goldman Sachs launching four muni bond ETFs and a preferred stock-hybrid securities ETF, VanEck launching an Ethereum ETF, Octane launching an All-Cap Value Energy ETF, AssetMark expanding its Cash Solutions suite, Conway Investment Solutions partnering with Opto Investments, Cerulli reporting on custom asset allocation model portfolios, HFR reporting on July’s hedge fund gains, and several major bank executives attending the Barclays Global Financial Services Conference.
Larry’s Take
This month’s roundup covers nine ETF launches that each, in their own ways, could potentially help advisors balance investor demands for returns with investor concerns about the outlook for the kinds of domestic stocks that had been in favor until recently.
The featured ETFs play off cryptocurrencies, emerging market currencies and bonds, U.S. municipal bonds, energy stocks, and hybrid securities. But U.S. technology, communications, utilities and financial sector stocks? Not so much.
Although the global stock market rout of early August – sparked by the unwinding of the Japanese yen carry trade – proved short-lived, quite a few wealth management clients remain unsettled by the somewhat alarmist headlines of the moment.
That makes now a good time for advisors to look into liquid products that could serve as diversifiers. Indeed, recent news may prompt some clients to prioritize liquidity over outsize returns, a view that aligns with AssetMark’s CD and money market fund expansion, for instance.
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. Don Bennyhoff Explains The Fractional CIO Model, And His New Consulting Firm
Don Bennyhoff, the former Senior Investment Strategist at Vanguard and Chief Investments Officer at Liberty Wealth Advisors, launched Bennyhoff & Co., a fractional CIO consulting firm for RIAs, endowments, foundations and family offices. He has more than 30 years of industry experience. Here is our Q&A with him.
WSR: What gap does Bennyhoff & Co. fill in the market for RIAs, and what is the value proposition?
Bennyhoff: Bennyhoff & Co. fills a critical gap for many RIAs by offering fractional CIO services that provide comprehensive investment expertise without the need for, or the high expense of, a full-time hire. The value proposition lies in enabling RIAs to focus on client relationships while we handle most of the investment-related responsibilities of a typical CIO.
Unlike other fractional CIOs, our firm’s founder has co-authored and co-created the Vanguard Advisor’s Alpha research and has a deep appreciation for the value that advisors can provide if they have the time and skill to focus on building client relationships, not just portfolios.
WSR: What should advisors tell concerned clients about recent market volatility – other than “stay the course”?
Bennyhoff: Our firm believes that proactive behavioral coaching is essential for promoting better investment outcomes for clients. Market volatility is normal, and as the question above notes, this is merely the most recent bout with market turbulence. Too often, advisors provide “behavioral coaching” reactively rather than proactively.
To be most effective in the moment, behavioral coaching by advisors should be done in advance of events that stress clients. Our firm is uniquely prepared to help our partner firms improve the probability of a positive investor and investment experience for their clients.
WSR: What kinds of investment strategies do you consider worthwhile given prevailing market conditions?
Bennyhoff: In all market environments, we prioritize diversified, evidence-based strategies over tactical approaches and believe that investor success is driven by behavior, not products. What happens within securities markets and the economy is outside of any investor’s control; however, each investor’s reaction to market events – or inaction – is.
Financial advisors can add tremendous value to the client experience by serving as emotional circuit breakers during periods of both market stress and euphoria. After all, the headlines in the news matter less to clients than the headlines of their lives – the goals in their financial plans that explain what they’re investing for in the first place.
2. LPL Expands Model Wealth Portfolios Platform With More ETFs, SMAs And Alts
During its recent Focus 2024 conference at the San Diego Convention Center, LPL Financial announced the expansion of its Model Wealth Portfolios (MWP) platform by introducing new products for advisors and their clients.
LPL announced the launch of research coverage for active ETFs; offering eight of the top ten ETF providers at no transaction charge; 200 new separately managed accounts (SMAs) for the MWP platform, including more than 25 additional fixed income options; as well as the addition of 12 new alternative strategies including hedge fund, drawdown, evergreen and tax deferral strategies. LPL plans to add 50 more alts products by the end of 2025.
“These enhancements are designed to meet the evolving needs of advisors and their clients, offering more sophisticated and diverse financial strategies to serve high net worth clients,” Tom Murphy, Senior Vice President, Advisory Platforms and Consulting at LPL, told WSR. “Critically, these updates provide advisors with greater optionality, enabling them to tailor investment approaches to individual client needs more effectively.”
3. Janus Henderson Launches Emerging Markets Debt Hard Currency ETF
Janus Henderson Group launched the Janus Henderson Emerging Markets Debt Hard Currency ETF, with the ticker JEMB. The fund seeks to provide a return from a combination of long-term income and capital growth.
There are 70 countries in the hard currency sovereign universe, and the asset class currently offers yields similar in magnitude to U.S. high yield corporate debt, according to Janus Henderson. The fund will be overseen by Portfolio Managers Bent Lystbaek, Jacob Ellinge Nielsen, Thomas Haugaard and Sorin Pirau.
“The launch of the Janus Henderson EMD Hard Currency ETF is one more step in our strategic initiative to be a leader in active fixed income ETFs,” said Jim Cielinski, Global Head of Fixed Income at Janus Henderson. “JEMB will now be a part of one of the fastest growing and most successful active ETF platforms in the industry.”
4. Simplify Asset Management Launches Latin America-Focused Bond ETF
Simplify Asset Management launched its first Emerging Markets fixed income ETF, the actively managed Simplify Gamma Emerging Market Bond ETF, with the ticker GAEM. It is designed mainly for exposure to Latin American issuers with strong investment fundamentals.
Gamma Asset Management, the fund’s subadvisor, has approximately $5 billion in assets under management (AUM) in Latin America. GAEM could potentially be useful as a portfolio diversifier across geographies, currencies and issuer type, according to Simplify, which is aiming for yields equal to or higher than those of U.S. high yield bond indexes.
“With GAEM, we’ve constructed an actively managed approach through which advisors and investors can access a range of under-followed securities with attractive yields,” said David Berns, Co-Founder and Chief Investment Officer of Simplify. “GAEM will provide exposure across sovereigns, corporates, U.S. dollar and local currency bonds; and it’s also worth noting that EM bonds from Latin America are issued under New York law, with identical protections as bonds from U.S.-based issuers.”
5. Goldman Sachs Launches 4 Muni Bond ETFs, Preferred Stock-Hybrid Securities ETF
Goldman Sachs Asset Management (GSAM) launched four active municipal bond ETFs: the Goldman Sachs Ultra Short Municipal Income ETF (GUMI), the Goldman Sachs Municipal Income ETF (GMUB), the Goldman Sachs Dynamic California Municipal Income ETF (GCAL) and the Goldman Sachs Dynamic New York Municipal Income ETF (GMNY).
The firm also launched its Goldman Sachs Access U.S. Preferred Stock and Hybrid Securities ETF (GPRF), which seeks to provide investors with high monthly income. Preferred stock has a claim on assets before common stockholders. Hybrid securities can offer higher yields than common stock dividends or corporate bonds. Gary Kessler, a Vice President at GSAM, is the portfolio manager for GPRF.
“With clients anticipating the end of the Fed’s rate hiking cycle, our new suite of active municipal bond ETFs provides access to an asset class that has provided bond portfolio diversification while providing attractive tax-equivalent yields,” said Brendan McCarthy, Global Head of ETF Distribution at GSAM. “Adding GUMI, GMUB, GCAL and GMNY to our active ETF offering allows us to deliver the best of Goldman Sachs’ tenured Muni franchise and address client portfolio needs holistically through an accessible ETF vehicle.”
6. VanEck Launches Ethereum ETF For Spot Exposure To Cryptocurrency
VanEck launched its VanEck Ethereum ETF (ETHV), which provides spot exposure to the ether cryptocurrency and trades on the Cboe BZX Exchange. Sponsor fees of 0.20% will be waived through either July 22, 2025, or the first $1.5 billion in AUM. As of Aug. 15, the price of ether was up 45% year-on-year.
ETHV aims to reflect the performance of the price of ether less the expenses of the Trust’s operations, as a passive investment vehicle that does not seek to generate returns beyond tracking the price of ether. In January, VanEck launched the VanEck Bitcoin Trust (HODL), which offers spot exposure to bitcoin.
“Investing in Ethereum presents an opportunity for pure play exposure to the economics of blockchain software, and we’re pleased to be able to deliver in the U.S.,” said Jan van Eck, CEO of VanEck. “We look forward to engaging with clients about the role ether can play in a diversified portfolio, particularly as an aggressive growth investment.”
7. Octane Investments Launches All-Cap Value Energy ETF
The first investment solution to be launched by Octane Investments, a firm founded last year focused on traditional energy stocks, is the Octane All-Cap Value Energy ETF (OCTA). The actively managed exchange-traded fund is listed on the Nasdaq with a net expense ratio of 0.30%. OCTA focuses on “under the radar” energy stocks with market caps over $1 billion.
Its strategy acknowledges that fossil fuel divestment prompted by the ESG movement, investor struggles during the latter part of the “Shale Era” and COVID-19 pandemic, and huge valuation gaps between large- and small-cap equities, all led to a rise in passive investment approaches. Yet, according to the thesis behind OCTA, this has created dramatically undervalued energy equities compared with their earnings potential.
“The world needs traditional energy, yet the exposure that most investors have to the category is at historically low levels,” said David Allen, Managing Director at Octane Investments. “But the solution is not simply to allocate more to the biggest and broadest energy funds on the market as doing so only means investors will continue to miss out on the potential growth and yield to be found when taking a more robust, systematic approach to allocating to the sector.”
8. AssetMark Expands Cash Solutions Suite With CDs, Money Market Funds
AssetMark expanded its Cash Solutions suite with the addition of FDIC-insured certificates of deposit (CD Plus) and purchased money market funds, with the goal of helping advisors provide clients with liquidity and risk management services.
According to the firm’s website, CD Plus offers certificates of deposit through a network of banks and extended FDIC insurance up to $50 million per tax ID. The money market funds consist of mutual funds that invest in highly liquid, short-term debt issued or guaranteed by the U.S. Treasury, typically providing next-day liquidity and higher yields than a bank deposit.
“Cash is a critical component of any sound financial plan, yet it has often been overlooked,” said David McNatt, EVP, Head of Investment Solutions at AssetMark. “With elevated interest rates for the first time in decades, AssetMark Cash Solutions provides advisors a compelling value proposition to help clients capitalize on this environment and improve their short and long-term financial outcomes.”
9. Conway Investment Solutions Partners With Opto On Private Market Vintage Funds
St. Louis-based Conway Investment Solutions, which provides strategies and resources to financial advisors, partnered with Opto Investments to provide RIAs tools for creating actively managed private markets vintage funds, and access to bespoke investment strategies.
Conway and Opto also launched a private markets vintage fund strategy for the ultra-high net worth, high net worth and family office clients of Andersen Tax. That fund is designed to evolve over time with a curated selection of private market investments. Opto’s technology platform seeks to streamline tasks such as managing capital calls, tax documentation and reporting.
“With decades of experience and deep connections across alternative asset classes, the partnership between Conway and Opto is aiming to not only drive a broader adoption of private markets but introduce a superior client experience,” said Tom Margulis, Co-Founder and Managing Principal at Conway Investment Solutions.
10. Cerulli: Big Opportunity Exists For Custom Asset Allocation Model Portfolios
Cerulli Associates released its latest edition of The Cerulli Edge—U.S. Monthly Product Trends, which analyzes data as of June on mutual funds, ETFs and custom model portfolios. Mutual fund assets increased $267 billion to $19.6 trillion, while ETF assets surpassed $9 trillion on $89 billion of inflows.
According to Cerulli, almost 60% of 2024 model portfolio survey respondents said their firms consider custom asset allocation model portfolios among the three most important initiatives, and 55% of asset managers said a large opportunity exists for custom models. But many broker-dealers, RIA aggregators and turnkey asset management platforms (TAMPs) seek open-architecture customizations, alignment on capital market criteria or manager/fund preferences.
“Model providers considering custom asset allocation model portfolios must be prepared for a longer relative sales cycle, higher-resource spend and input from the distribution partner on model construction,” according to the Cerulli report. “The juice often can be worth the squeeze, as custom model mandates can be very lucrative opportunities that may require fewer resources and commitment to sell to the individual advisor.”
11. HFR: Major Hedge Fund Strategies Gain In July On Volatility, Recession Fears
HFR found that several major hedge fund strategies gained in July amid increased recession fears and volatility. The HFRI Fund Weighted Composite Index (FWC) increased 0.8% in July, the HFRI Equity Hedge (Total) Index rose an estimated 1.35% for the month, with a year-to-date return of 7.6% through July, and the HFRI Event-Driven (Total) Index rose 2.5% in July.
The HFR Cryptocurrency Index jumped an estimated 5.4% for the month, with a YTD return of 32.1%. However the HFRI Macro (Total) Index dropped 1.0% in July, its third consecutive monthly fall, as the HFRI Macro: Systematic Diversified Index and the HFRI Macro: Commodity Index each dropped 2.1%. The fundamental HFRI Macro: Discretionary Thematic Index rose 1.1%, however.
“Hedge funds gained in July as geopolitical uncertainty rapidly accelerated into economic uncertainty, and inflation concerns rapidly shifted to recession fears to begin the month of August, driving a historical volatility spike and dislocations across global equity, fixed income and currency markets,” said Kenneth Heinz, President of HFR. “Event-Driven and Equity Hedge strategies led gains as investors positioned for both political transition, continuation of ongoing military conflict, and falling interest rates across the U.S. and Europe in 2H24.”
Wirehouse / Big Bank Activity
12. Barclays Global Financial Services Conference To Gather Who’s Who Of Banking
The Barclays Global Financial Services Conference, which will be held from Sept. 10 to Sept. 11 at the Sheraton Times Square in New York City, has executives from several major banks scheduled to speak at the event. Participating banks will provide links to live webcasts of their portion of the conference.
Participants include Daniel Pinto, President and Chief Operating Officer of JPMorgan Chase & Co.; Dermot McDonogh, Chief Financial Officer of BNY Mellon; and Dan Simkowitz, Co-President of Morgan Stanley. Other financial companies scheduled to participate include M&T Bank, Associated Banc-Corp and American Express.
Last year, JPMorgan Chase CEO Jamie Dimon, Goldman Sachs CEO and Chairman David Solomon, and Wells Fargo CFO Mike Santomassimo spoke at the conference, along with Barclays Group Chief Executive C.S. Venkatakrishnan.
Chris Latham, Managing Editor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com.
