Author: Anu Heda

Best Blogs of the Week #266

Posted by Anu Heda on Apr 03, 2017, in Best Blogs of the Week , tagged with ,

Two posts covering a range of topics, including the recent US equity slumber.

BlackRock – The seesaw relationship of volatility and momentum stocks – The relationship between volatility and momentum has actually strengthened in recent years. Since the end of the financial crisis and the advent of the current period of extraordinary monetary accommodation, the relationship has become much stronger

William Blair – E and S Themes Drive ESG Growth – McKinsey estimates that 1.6 billion people out of 2 billion without bank accounts—more than half of whom are women— could be assimilated into the system via digital finance.

slumber

 

Best Blogs of the Week #265

Posted by Anu Heda on Mar 27, 2017, in Best Blogs of the Week , tagged with ,

Two excellent posts this week that utilize data to support arguments frequently discussed and investigated. Russell does an excellent job simplifying (perhaps too simple?) an advisor’s value to an investor. Personally, I enjoyed the investor behavior component greatly (chart below).

Russell – 2017 Value of a fiduciary advisor: more than 4% – Instead, the technical and emotional guidance that only a trusted, human advisor (as opposed to robo-advisors, for instance) can offer to investors who are attempting to undertake the complex job of coordinating the accumulation, distribution and transfer of their wealth, is invaluable – particularly in an environment that is likely to deliver lower returns and higher volatility than investors have grown accustomed to recently.

SSgA – Look Beyond the Label: The Importance of How a Smart Beta Index is Weighted – As these examples demonstrate, understanding underlying index construction is crucial to achieving desired investment results when choosing a smart beta ETF.

value

Best Blogs of the Week #264

Posted by Anu Heda on Mar 20, 2017, in Best Blogs of the Week

Well two days into the tournament and my high active share bracket is busted (I took the orthogonal to market strategy of going with Seton Hall through two rounds.). Anyhow, two posts this week.

Russell – Multi-asset investing: the importance of seeking to manage the downside – … if a client’s portfolio suffers a -30% drop in value, a 43% rise will be needed to get the portfolio back to its starting point. That’s where a multi-asset approach that also emphasizes managing downside risk is so valuable, even if they don’t protect against all losses or guarantee a profit.

WisdomTree – Reflections on the Global Macro Environment – … thinks the Fed is way behind the curve in hiking interest rates and is likely to do three to four hikes in 2017.

Wildcats

March Madness 2017

Posted by Anu Heda on Mar 13, 2017, in Thoughts

Many of you are thinking about brackets and who to place in the Final Four this year. It’s a big year for Mike (and seemingly 50% of the ESPN television personalities) as his Wildcats are in the Big Dance for the first time. Ever.

(Needless to say, Northwestern getting in was properly celebrated:

– Mike)

So for what it’s worth (i.e., literally zero), here are Final Four picks:

East Midwest South West
Anu  Villanova Oregon UCLA Arizona
Mike  Wisconsin  Michigan Butler  Gonzaga

Plus two thoughts from me:

  • Always take Mike’s picks over mine. In any sport.
  • I’m putting the Shockers and Mustangs through to the Sweet Sixteen.

And Mike:

  • Nobody will remember my picks when it’s said and done so I’m going with selections that will (a) make me happy and (b) not be viewed as too insane.
  • I’ve seen Duke, Kentucky, North Carolina, and a number of other schools win enough already. Let’s all root for underdogs!

(photo courtesy of The Daily Northwestern)

A Quick Look Into FinTech

Posted by Anu Heda on Mar 13, 2017, in Thoughts , tagged with

Last week I visited the offices of a New York FinTech leader. FinTech is attracting copious news mentions and billions of investment dollars (see chart below). We’ve helped a handful of asset managers understand and plan for the emergence of robo-advisors (a subset of FinTech), so gaining a fresh perspective was very exciting to me. As I walked around the offices and spoke with people in different business functions, three thoughts came to mind:

  1. This company understands the long game is just starting. They talk in traditional consumer financial services terms like cost of acquisition and lifetime customer value to predict future profitability with psychographic, life-stage, and attitudinal data. It is a different mindset than intermediary-oriented asset managers. When speaking of financial advisors, I often hear some sort of bracketing of financial advisors (i.e., dabbler, bronze, silver, gold) based on past sales production.
  2. The competition is Google, Facebook, and Amazon. The team sees those companies as the primary competition because they all possess massive, active, and trusting customer bases. Seeing these technology companies as the competition reinforces the emphasis on cost of acquisition as a company like Amazon could immediately begin marketing an end-user FinTech service to a global customer base (similar to marketing Prime to the 260MM+ customers worldwide) and have a cost of acquisition many times lower than a new entrant.
  3. People spoke to me about asset managers as key partners and not competitors. Not one person I spoke with mentioned a desire to start buying/selling individual securities in a commingled vehicle. So FinTech (robo-advisors in particular) becomes a new distribution channel for asset managers. And with any new (and successful) distribution channel, the incumbent channels will lose share.

This was a highly interesting afternoon. I started to mentally sketch a few conclusions lightly. For now, I’ll keep them to myself but would love to hear your thoughts. Send us a quick e-mail with ideas or better yet, a place and time to discuss over beverages.

 FinTech