Equity growth investing has been rewarding in 2024, but concerns about concentration, valuations, and economic uncertainties have arisen. ETFs like QQQ, SPYG, and QGRO offer different approaches to growth, with varying sector allocations and risk management strategies. GARP strategies and moat investing also provide alternative paths to capture growth while managing risk.
U.S. investors grapple with uncertainty over potential interest rate cuts in 2024, altering fixed income strategies. Panelists discuss inflation, predicting only one rate cut and highlighting appealing fixed income areas. T. Rowe Price’s Ultra Short-Term Bond ETF and PIMCO’s Multisector Bond Active ETF offer attractive options in navigating this landscape.
Victor Haghani, author and founder of Elm Wealth, discusses the importance of investment sizing and the Merton Share in his book “The Missing Billionaires.” He emphasizes the need to consider one’s own risk aversion and expected return when making investment decisions, rather than focusing solely on maximizing expected wealth.
The article proposes a trade idea: short junk bonds with put options and a hedging strategy to reduce costs. The trade is based on narrowing high-yield spreads and cheap put options on HYG. The author anticipates spreading widening and suggests potential hedges in Treasury notes, puts, or housing-related stocks. They also highlight the risks and reasons for credit spread widening.
Exchange-traded funds (ETFs) have multiplied, offering a dizzying array of options. Too many choices can lead to decision paralysis, as seen in a jam display experiment. Many new ETFs have uncertain futures. Applying simple screens can help identify long-term investments. Taking steps to eliminate smaller, riskier ETFs leaves just a fraction of the initial choices.
The very rich employ various strategies to minimize taxes and maximize wealth. They invest in assets, avoid traditional income, leverage lower tax rates on long-term assets, and exploit tax-deductible charitable donations. With high-value assets like art, they seek tax breaks through overvaluation, but legality is often questioned, leading to lengthy battles with tax authorities.
In a recent podcast interview, Charles-Henry Monchau, CIO at Syz Group, discussed the potential shift in economic paradigm driven by geopolitical dynamics and inflation risks. He highlighted the emergence of new industry sectors, warned of inflation and currency devaluation risks, and offered insights on potential winners and losers in the coming decade. Monchau also provided practical portfolio allocation advice.
Several global asset-management firms have been restructuring and laying people off in response to outflows, performance challenges, and technological shifts. The move from active to passive strategies has driven fees down and caused traditional managers to fall behind. Notable layoff announcements from firms like Baillie Gifford and Columbia Threadneedle have impacted investment personnel but have not significantly altered Morningstar’s ratings.
BAE Systems plc (OTCPK:BAESY) has seen significant improvement in orders, benefiting from global geopolitical risks. With a strong position in aerospace, defence, and security, the company’s sustained growth is evident through increased sales and order backlogs. The recent acquisition of Ball Aerospace further enhances its potential for growth, making BAESY a strong investment choice.
Morningstar Manager Research’s January 2024 Prospects list adds four new strategies, including Capital Group Core Balanced ETF CGBL, Capital Group Active-Passive Retirement Income Models, iShares LifePath Retirement ETF IRTR, and Victory RS Global RSGGX. These funds offer diverse approaches, from blending active and passive investments to employing a quantitative model for stock selection. Fees vary from 0.08% to 0.11%.
As the third-largest donor-advised fund in the US, the Vanguard Charitable Endowment Program manages $15.2 billion in assets as of June 30, 2022. Despite being behind the Fidelity Charitable Gift Fund and Schwab Charitable Fund, it is considered the best option for investors maintaining large account balances due to its low administrative costs and robust investment lineup. The fund requires a $25,000 minimum for new accounts, encourages long-term commitments, and caters to an elite group of donors.
Donor-advised funds allow investors to donate to charities while retaining some control over the assets and earning immediate tax benefits. Although the contributions are irreversible, the donors can guide how the assets are invested and distributed over time. However, factors like minimum initial donation requirements and high administrative costs can dissuade some investors. It’s advisable for potential donors to compare options, assess tax implications, and consider their philanthropic strategy and capacity before choosing a donor-advised fund.
Retail investors are exhibiting growing interest in climate-conscious strategies, including carbon futures. Exchange Traded Funds (ETFs) like the KraneShares Global Carbon Strategy ETF (KRBN) and KraneShares California Carbon Allowance ETF (KCCA) enable access to such futures investments. Their potential for high returns due to increasing carbon prices, diversification benefits, and role as inflation hedges are attracting both institutional and retail investors.
Climate impact investing, an approach seeking to generate environmental and social benefits alongside financial returns, is gaining traction as a method to combat climate change. This style of investing focuses on directing funds towards sustainable projects, such as renewable energy or clean technology initiatives, that reduce carbon emissions. By channeling private capital towards these endeavours, the aim is to catalyze progression towards a low-carbon economy.
