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Oddball Funds Gave Investors Fits “By “oddballs,” I mean funds that utilize approaches that aren’t tethered to the broad stock and bond markets. These types of funds boast high diversification potential and thus, in theory, could nicely complement one’s primary stock and bond allocations. But because they’re idiosyncratic, it’s also possible they could push investors’ buttons, nullifying whatever diversification benefits they might confer.” (Morningstar)
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UBS Expands Eligibility for Alts-Friendly Advisory Programs “The wirehouse lowered the minimum asset threshold for accounts in its Consolidated Advisory Program, or UBS CAP, as well as its alternative investments-dedicated CAP Select offering, according to a Form ADV filing with the Securities and Exchange Commission.” (FundFire)
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How Advisors Are Tapping ETFs in Model Portfolio “Whether building models in-house or tapping into the various forms of outsourcing, model portfolios come in many different shapes and sizes. But financial advisors using them typically cite the ability to scale the portfolio management process as a leading benefit.” (The Daily Upside)
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Is the Market Ignoring Balance Sheets to Chase the AI Boom? “Quality fell out of favor with investors in the wild rip of the AI boom in the last several years. Benjamin Lavine, Chief Investment Strategist and Model Manager, Freedom Investment Management, talks about this divergence with ETF.com's Dave Nadig.” (ETF.com)
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Boom in Crypto Treasury Stocks Faces Inevitable Bust “The situation is likely only to worsen, since eased US regulations mean that many more exchange-traded funds (ETFs) specializing in cryptocurrencies will soon be coming to market, creating more low-cost, highly liquid ways for investors to gain crypto exposure.” (The Daily Upside)
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Active ETFs Cut Fees to Boost Odds of Outperformance “More than 1,300 active ETFs have launched since the start of 2024, according to the report. Beyond lower fees, active ETFs offer greater tax efficiency through in-kind creations and redemptions, which helps funds avoid triggering the capital gains distributions that plague mutual funds, according to the report.” (VettaFi)
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Mgmt Fee Waived as BlackRock Private Credit CLO Fails Test “The private loans were funded through collateralized loan obligations which require the portfolio to perform well enough to regularly pass a series of tests. If the portfolio fails the tests, managers can correct the problem by diverting interest income away from riskier tranches and toward safer securities.” (FundFire)
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Clarion Partners Real Estate Income Fund Board OKs Shift to Interval Fund Structure “The board of directors of Clarion Partners Real Estate Income Fund Inc., a publicly registered non-traded real estate investment trust, has formally approved a plan to convert the fund into an interval fund, marking a significant structural shift designed to provide shareholders with periodic liquidity under the Investment Company Act of 1940.” (AltsWire)
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Blue Owl’s Misfire Offers a Lesson in Semiliquid Fund Risks “One lesson is not to fear proration but to appreciate its role. Combined with intermittent redemption windows, proration enables semiliquid fund managers to own less liquid or illiquid assets without worrying about meeting large, unplanned redemption requests.” (Morningstar)
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The IMF Is Raising the Alarm on Insurance Investments in Private Credit “Although most of this private credit is classified as investment grade, which allows for favorable regulatory capital treatment, the IMF also raised concerns about the rapid growth of new private rating agencies, which have become responsible for more of these ratings.” (Institutional Investor)
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Retail fund growth creates new risks for all GPs “GPs must prepare for hidden industry-wide effects of expanding retail funds, from shifting allocations to liquidity stress.” (Private Funds CFO)
