In this edition of the Investments Roundup, we speak with our newest Investment Solutions Leader of the Month, Sean Walters, Chief Executive Officer of the Investments & Wealth Institute, who discusses how advisors can enhance their technical skill sets.
Other entries include BlackRock working with Partners Group on private markets access for retail investors, Voya agreeing to acquire OneAmerica Financial’s retirement plan business, Vestwell partnering with TIAA on guaranteed lifetime income, iCapital partnering with Kestra and Advisors Asset Management, VanEck launching a fabless semiconductor ETF, Simplify launching an actively managed muni bond ETF, Tradr ETFs launching weekly and monthly leveraged ETFs, BetaNXT integrating with GlobeTax on cross-border reclamations, Cerulli finding that asset managers are turning to AI for advisor segmentation and alts distribution, HFR launching a multi-manager/pod shop index, and J.P. Morgan integrating with Kyriba on treasury and cash management.
Larry’s Take
The products that we cover this week represent a diverse array of investment strategies, from the conservative (a pension-like retirement income solution for small employers) to the moderate (an actively managed muni bond ETF) to the aggressive (a monthly reset leveraged semiconductor ETF). How are advisors supposed to understand how all these products work?
One approach is to seek out experts at firms with institutional knowhow. For example, advisors with access to AssetMark or Morningstar Wealth often can receive detailed guidance directly from those providers about the investment strategies they make available. In fact, AssetMark recently added Morningstar Wealth as a third-party strategist on its platform.
Of course, no platform supports the entire universe of ETFs, separately managed accounts (SMAs), model portfolios, direct indexing and alternatives strategies. But rigorous due diligence and vetting by a platform can help protect advisors, and their clients, from the products they might want to avoid – or at the very least think long and hard about bringing into client portfolios.
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. IWI CEO Sean Walters Discusses How Advisors Can Boost Their Technical Skills
The Investments & Wealth Institute (IWI) will hold its Strategy Forum 2024 from Sept. 30 to Oct. 2 at the Loews Chicago Hotel. A maximum of 300 participants are allowed, in order to maintain a 10-to-1 audience-to-presenter ratio. Its focus is on adaptive wealth management, with topics including portfolio diversification, risk management, proactive income tax and estate planning, guidance on retirement savings strategies, and communication skills for advisors.
IWI, which describes itself as an association created for advisors and by advisors, also provides professional certifications – the Certified Investment Management Analyst (CIMA), Certified Private Wealth Advisor (CPWA), and Retirement Management Advisor (RMA) certifications.
And now for our Q&A with Sean Walters, Chief Executive Officer of IWI.
WSR: What are some of the major investment strategy and portfolio management themes that financial advisors should be aware of on behalf of clients as we near the final quarter of 2024?
Walters: Investments & Wealth Institute completed a practice analysis of wealth management practitioners earlier this year. Demand for alternative investment options remains strong for advisors who aim to provide greater risk management through diversification. Meanwhile, many wealth management firms are outsourcing investment management expertise to TAMPs, model portfolios and AI-powered allocators.
However, research consistently shows that investment management is the top service that clients value and expect from their advisors. Therefore, advisor competencies in investment implementation approaches, such as traditional and alternative asset allocation methodologies, resolving concentrated positions, and working with the time horizons and desired objectives of unique clients have never been more important.
WSR: How can IWI’s professional certifications help advisors better understand and solve for the unique investment needs of their clients in the prevailing market environment?
Walters: Amid investment management outsourcing trends and alternative investment proliferation – not to mention geopolitical tensions, the growth of AI and the impact of inflation – the Institute’s certifications provide immense value.
The CIMA certification, recently updated and optimized, teaches advanced portfolio construction, alternative investment management and asset allocation strategies. To meet the unique goals of high net worth clients, advisors learn to manage illiquid assets, concentrated positions and diverse time horizons.
The CPWA certification prepares advisors to address longer-term challenges by focusing on wealth protection and tax-efficient strategies. The RMA certification prepares advisors to competently structure retirement income amid shifting interest rates, helping clients balance longevity risks.
WSR: What other resources, such as publications and research, does IWI provide for members, and how can advisors use them to improve their investment management skill sets?
Walters: The Investments & Wealth Institute offers members a suite of impactful resources, including industry-leading publications such as the Investments & Wealth Monitor, featuring research, thought leadership and practical insights.
Advisors can also leverage our award-winning Investments & Wealth Academy, which offers certificate programs, microcourses, webinars and more – including specialized topics like private markets. Our conferences and events, including the Strategy Forum in Chicago and the Focus on Alternatives Series in New York on Oct. 23, connect advisors with industry thought leaders, helping expand their knowledge and networks.
2. BlackRock Works With Partners Group On Private Markets Access For Retail Investors
BlackRock and Partners Group, a global private markets investor, are collaborating on a multi-private markets models solution to expand access to alternative investments for retail wealth investors. In a first for the U.S. wealth market, it will provide access to private equity, private credit and real assets such as infrastructure funds, in one portfolio.
The goal is for advisors to be able to offer clients a diversified alternatives portfolio with efficiency similar to a traditional public markets model. The solution will use a single subscription document instead of requiring subscription documents for each underlying fund, feature model rebalancing, and allow retail wealth investors to choose from three risk profiles when determining allocations to BlackRock and Partners Groups funds.
“We are simplifying how individual investors and advisors access private markets,” said Mark Wiedman, Head of Global Client Business at BlackRock. “In a world where private markets are growing by $1 trillion or more every year, many financial advisors still find it too difficult to help their clients participate. We aim to crack that. With Partners Group, we are creating a single, managed account with unified portfolio construction and management. The result? Simplified, efficient access for financial advisors and their clients.”
3. Voya To Acquire OneAmerica Financial’s Full-Service Retirement Plan Business
Voya Financial agreed to acquire OneAmerica Financial’s full-service retirement plan business, which comprises 401(k), 403(b), 457, non-qualified deferred compensation plans and employee stock ownership plans. The deal brings approximately $47 billion of assets to Voya’s Emerging and Mid-Market segments and adds approximately $15 billion of recordkeeping assets in Voya’s Large Market segment.
Voya’s Wealth Solutions Defined Contribution client assets will reach $580 billion, as total retirement plans grow to 60,000 and participants rise to 7.9 million. Earlier this year, Voya surpassed $100 billion in assets across multiple employer solutions, launched a Capital Preservation Fund for certain defined contribution plan participants, and released a survey that found Gen Z and millennials began retirement savings earlier than Gen X and baby boomers.
“This announcement is an exciting opportunity to add scale and new capabilities to our Wealth Solutions business that will help advance our growth strategy by offering workplace benefits and savings solutions to more individuals,” said Heather Lavallee, CEO of Voya Financial. “Voya is a purpose-driven company focused on supporting improved financial outcomes for our customers. OneAmerica is equally passionate about enabling financial security for their customers, making them a strong fit for Voya.”
4. Vestwell, TIAA Partner On Guaranteed Lifetime Income Solution
Vestwell, a holistic savings platform, is partnering with TIAA on retirement savings and retirement outcomes for smaller employers. The TIAA Secure Income Account (SIA) guaranteed lifetime income solution is scheduled to launch on the Vestwell platform next year. It will be available to 401(k) and 403(b) plans on Vestwell’s platform through target-date structures.
The SIA, which will be supported by TIAA and Vestwell, also will be available to all Vestwell partners. It will offer guaranteed interest as participants save for retirement, as well as a pension-like retirement income. Vestwell has over $30 billion in assets. TIAA had $1.3 trillion in assets under management (AUM) as of June 30. Late last year, TIAA Ventures invested as part of Vestwell’s Series D funding round that raised $125 million.
“Addressing retirees’ financial security is an essential component of evaluating modern solutions to close the savings gap,” said Aaron Schumm, Founder and CEO of Vestwell. “We are proud to work with TIAA, a company that shares our commitment to expanding access to industry-leading saving and retirement solutions, including guaranteed lifetime income, through the workplace.”
5. iCapital Partners With Kestra, AAM On Alternative Investments
iCapital expanded its strategic partnership with Kestra Financial and forged a new one with Advisors Asset Management (AAM). The Kestra deal gives its advisors access to private equity, private credit, real estate, infrastructure and hedge funds; lower minimum investment requirements; real-time updates on alts products; additional due diligence by iCapital; single sign-on functionality with the Advisor Complete portal; and a simplified submission process.
The AAM deal makes the Avenue Sports Opportunities Fund, managed by Avenue Capital Group, available on iCapital Marketplace. The fund strives for attractive, risk-adjusted returns by providing capital solutions to sports teams, owners and leagues mainly in North America and Europe; by providing capital to emerging sports with significant growth potential; and by investing in equity and debt opportunities in women’s sports.
“With enhanced integration of these new capabilities, Kestra’s financial advisors now have access to a comprehensive platform for alternative investments, making it easier to research, market and transact,” said Steve Houston, Managing Director and Co-Head of iCapital Solutions at iCapital. “We are excited to partner with AAM and Avenue Capital Group and provide the technology platform to enable greater access to their sports fund for a larger set of wealth managers and private investors,” said Dan Vene, Co-Founder and Managing Partner of iCapital.
6. VanEck Launches Fabless Semiconductor ETF
VanEck launched the VanEck Fabless Semiconductor ETF (SMHX), which targets semiconductor companies that design and develop chips but outsource their manufacturing. SMHX seeks to track the performance, before fees and expenses, of the MarketVector US Listed Fabless Semiconductor Index (MVSMHX), which in turn tracks the overall performance of companies that generate at least 50% of revenues from fabless semiconductor business lines.
Van Eck’s thematic ETF lineup already includes the VanEck Semiconductor ETF (SMH), a $23 billion fund that seeks exposure to the performance of the largest and most liquid companies in the global semiconductor industry, across firms that operate as either fabless or integrated organizations. As of July 31, VanEck managed approximately $111 billion in assets across mutual funds, ETFs and institutional accounts.
“The global semiconductor space has been going through a transformational period in recent years, as demand has spiked alongside advancements in generative AI and other fast-moving technologies,” said Nicholas Frasse, Associate Product Manager with VanEck. “For investors who are more focused on innovation than vertical integration and on R&D spending as opposed to manufacturing, SMHX could be an important part of a diversified equity portfolio.”
7. Simplify Launches Actively Managed National Muni Bond ETF
Simplify Asset Management launched the actively managed Simplify National Muni Bond ETF (NMB), which is sub-advised by Foundation Credit. NMB pursues tax-free income through municipal bond coupons while generating taxable gains by opportunistically trading undervalued municipal securities.
It also will sell option spreads across equity, fixed income, and commodity indices and ETFs. Simplify’s fixed income solutions lineup includes the $1.2 billion Simplify MBS ETF (MTBA) and the Simplify Short Term Treasury Futures Strategy ETF (TUA). Overall, the Simplify lineup of 30 ETFs is close to $6 billion in AUM.
“Rather than simply allowing muni investors to clip coupons, NMB is built to combine three sources of potential return: the yields from the muni bonds themselves, opportunistic investments in securities overlooked by the traditional passive indices and the income generated by the option-writing strategy,” said David Berns, Co-Founder and Chief Investment Officer of Simplify.
8. Tradr ETFs Launches Weekly And Monthly Leveraged ETFs On The Nasdaq
Tradr ETFs, which provides ETFs designed for sophisticated investors and professional traders, launched eight leveraged ETFs on the Nasdaq as part of its new Calendar Reset Leveraged ETFs series. The products reset their performance target on a calendar week or month, as an alternative to the daily resets offered by other leveraged ETFs.
Tradr 2X Long SPY Weekly ETF (SPYB) and Tradr 2X Long SPY Monthly ETF (SPYM) seek S&P 500 exposure. Tradr 2X Long Triple Q Weekly ETF (QQQW) and Tradr 2X Long Triple Q Monthly ETF (MQQQ) seek exposure to large non-financial companies. Tradr 2X Long SOXX Weekly ETF (SOXW) and Tradr 2X Long SOXX Monthly ETF (SOXM) seek semiconductor industry exposure. And Tradr 1.75X Long NVDA Weekly ETF (NVDW) and Tradr 1.5X Long TSLA Weekly ETF (TSLW) seek exposure to NVIDIA and Tesla stock, respectively.
“Our non-daily ETFs represent a long overdue tool to address the shortcomings of daily performance resets, especially for any fiduciary who needs to be concerned about suitability when selecting products for their clients,” said Matt Markiewicz, Head of Product and Capital Markets at Tradr ETFs. “We expect these new ETFs will help investors achieve the leverage they envision over the timeframe they want.”
9. BetaNXT Integrates With GlobeTax On Cross-Border Tax Reclamation Solutions
BetaNXT, a provider of wealth management infrastructure solutions with real-time data capabilities, integrated the cross-border tax reclamation capabilities of GlobeTax. The partnership aims to enable broker-dealers and financial institutions on the BetaNXT platform to offer their clients comprehensive relief at source, post-payable and quick refund solutions.
As part of the integration, BetaNXT clients can choose to access GlobeTax solutions when either withholding the proper amount on payment date or reclaiming over-withheld funds. A goal is to help investors pursue maximum returns on their dividend and interest income. In addition, BetaNXT aims for participants to receive lower administrative burdens and faster processing.
“By integrating GlobeTax’s market-leading tax recovery services into our platform, we are offering our customers a seamless solution that further de-risks their operations while maximizing return on investment for clients,” said Michael Pass, President of Maxit at BetaNXT. “This is the latest milestone in our ongoing mission to work with best-in-class partners to power the next generation of frictionless, end-to-end wealth management – and make the Connected Wealth experience a reality.”
10. Cerulli: Asset Managers Turning To AI For Advisor Segmentation, Alts Distribution
Cerulli Associates found that more asset managers are using artificial intelligence to enhance segmentation and coverage strategy, as well as data analytics to gain insights into advisor preferences and opportunities. Asset managers also may start using AI to help refine their approaches to alternative investments and making inroads with overlooked client segments.
According to The Cerulli Report—U.S. Intermediary Distribution 2024, 54% of asset managers either use or plan to use AI within the next year on advisor segmentation; and 79% of asset managers made major changes to their coverage strategy in the past five years, with new management and distribution of a new product line such as alternatives as the top reasons.
“Where AI may have its greatest application when determining advisor segmentation and coverage strategy is through the identification of actionable data amid huge amounts of information,” said Andrew Blake, Associate Director, Wealth Management, at Cerulli. “The overwhelming amount of data asset managers have at their disposal is not very helpful unless it can be properly analyzed and implemented into sales processes. Identifying growing advisor practices and efficiently targeting them is a work in progress for most asset managers.”
11. HFR Launches HFRI Multi-Manager/Pod Shop Index Amid Continued Volatility
HFR launched the HFRI Multi-Manager/Pod Shop Index, which rose 1.6% in August. It consists of funds of different strategies that allocate fund capital to multiple independent investment teams, in a discretionary manner under the supervision of a CIO. Although the pods are autonomous, they generally operate within certain portfolio management or risk guidelines.
Separately, the HFRI Fund Weighted Composite increased 0.25% in August as the HFRI Asset Weighted Composite Index fell 1.45%. The HFRI Equity Hedge (Total) Index gained an estimated 0.8% in August, as the HFRI Macro (Total) Index fell 1.1%. The HFR Cryptocurrency Index fell 12.66% in August, but remained positive for 2024.
“With expectations of volatility and the potential for destabilizing dislocations remaining high through year-end, institutions which are interested in specialized, opportunistic access to these powerful trends are likely to allocate to managers which have demonstrated their strategy’s superior performance and robustness in recent months,” said Kenneth Heinz, President of HFR.
Wirehouse / Big Bank Activity
12. JPM Asset Management Integrates With Kyriba For Treasury And Cash Management
J.P. Morgan Asset Management integrated with Kyriba to enhance Morgan Money, a short-term investment management solution for institutional investors that has over $300 billion in AUM. Kyriba manages over 3 billion bank transactions and $15 trillion in payments annually.
The goal is to enhance operational efficiencies across treasury as well as automated and self-directed cash management, payments and investments, by streamlining liquidity management, improving trading and accounting workflows, and providing real-time visibility into cash flow balances.
“It’s important that we provide our customers with the best resources available to conduct trades efficiently while providing exceptional client service,” said Paul Przybylski, Global Head of Product and Morgan Money, J.P. Morgan Asset Management. “By leveraging technology, we are simplifying the trading process for our clients and we look forward to expanding our capabilities with Kyriba.”
Chris Latham, Managing Editor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com.
