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CalPERs Size Restricts its Alternative Asset Exposure
CalPERs $402 billion pension fund (as of 2/7/20) relies more heavily on traditional equity and fixed income than many of its U.S. pension plan peers. Less than 20% of CalPERS portfolio is held in alternative investments. This is not necessarily by choice, as CalPERs staff has indicated that the fund’s extreme size makes it difficult for them to invest at scale in private asset classes such as private equity... -
Five Top Tech Stocks Now Comprise 18% of S&P 500
From the “know what you own” department, the top 5 stocks in the S&P 500 now make up 18% of the index, according to a recent report from Goldman Sachs. Facebook (FB), Amazon (AMZN), Apple (AAPL), Microsoft (MSFT) and Google (GOOG) make up the highest concentration at the top of the index since 2000, when Cisco (CSCO), General Electric (GE), Intel (INTC) and ExxonMobil (XON) comprised 18% of the... -
Invesco Closing 42 ETFs
Invesco recently announced that they will be closing 42 ETFs, representing $1.3 billion in assets. The closures are scheduled to occur in February of 2020.Over the past few years, Invesco has aquired a number of ETF issuers, and as a result, some redundancy has been built into their lineup. You can see the full list of ETFs that are closing, as well as the mutual fund changes on Invesco’s... -
Nasdaq Publishes Proposal for “Intelligent Ticks”
Nasdaq is leading a coalition of market participants recommending to the SEC the adoption of a market-based approach where not tick would be wider than a tick’s average quoted spread. The goal is to reduce costs for investors through tighter and and more stable spreads. As trading characteristics change over time, market forces would determine in which one of six “Intelligent Tick” buckets and equity would trade ($0.005,... -
Exchange-Traded Notes (ETNs): Know What You Own
Clients should always understand what their adviser has placed into their portfolios, why the investments are being used, and what are the particular risks. A recent Bloomberg report highlighted that Ken Fisher Investments has made a significant bet on Exchange-Traded Notes (ETNs) accounting for approximately $6.2 billion of the $22 billion of issued ETNs, and about 5% of the total assets that he manages for clients. Its important to... -
It’s capital gains distribution season -check your ETFs (and mutual funds)
Mutual funds and even some ETFs typically distribute taxable capital gains to shareholders in December of each year. ETFs are commonly more tax efficient and thus less likely than mutual funds to have an annual capital gains payout. However, there are some ETFs that may have capital gains distributions, and you should confirm the distribution status annually to avoid an unexpected tax liability. Some fund groups are better than... -
Custodians Move to $0 Commissions Impacts Advisory Firms
Over the past month, large custodians including Schwab, Fidelity and others have eliminated commissions for both retail clients and RIA custody clients. For some RIAs, especially those that offer services via wrap fees that previously were absorbing these costs, these RIAs need to evaluate whether or not their Form ADV disclosures need to be updated. Since trading costs no longer need to be considered in factoring in investment allocations,... -
Model Expense Disclosure
The Model Weighted Average Net Expense Ratio applies only to the portion of the model that is comprised of mutual funds and/or ETFs. It reflects expense waivers or reimbursements from the fund companies, which may not be permanent. The data used to calculate the Model Weighted Average Net Expense Ratio is obtained from a third-party data provider and is believed to be accurate, but has not been verified by... -
Factors to consider before adding a thematic ETF to your portfolio
In the quest to launch successful products, ETF sponsors have ventured into thematic segments of the financial markets. Think robotics, artificial intelligence, fintech, online retail, cyber security, etc. There has been mixed success among issuers, as some of these products have rapidly grown to $1 billion in AUM such as ETFMG’s Prime Cyber Security ETF (symbol: HACK), while others never gained traction and were closed within a year. Thematic... -
SEC Modernizes Regulations of Exchange Traded Funds–Eases Regulatory Burdens, Reduces Cost, Time to Market for New ETFs
On Thursday, September 26th, the SEC passed a long-awaiting ruling that differentiates ETFs from mutual funds from a regulatory perspective. The new regulations will reduce costs and substantially decrease the time in which new ETFs can be approved. The rule is expected to facilitate greater competition and innovation in the ETF marketplace, leading to more choices for investors. Rule 6c-11 will permit ETFs that satisfy certain conditions to operate...