Latest news with #SuzanneMcGee
Yahoo
11 hours ago
- Business
- Yahoo
Vanguard plans to launch its first active stock-picking ETFs
By Suzanne McGee (Reuters) -Passive-investment management leader Vanguard plans to launch its first actively managed U.S. stock exchange-traded funds this year, according to filings with regulators on Monday. The company, which pioneered low-cost, no-frills index-based investment products, intends to roll out ETF versions of three of its existing mutual funds. The funds will be managed by Wellington Management, according to the filings. Invest in Gold American Hartford Gold: #1 Precious Metals Dealer in the Nation Priority Gold: Up to $15k in Free Silver + Zero Account Fees on Qualifying Purchase Thor Metals Group: Best Overall Gold IRA While Vanguard has rolled out a handful of active bond ETFs, the new products mark its first push into stock-picking ETFs. They will target dividend growth, growth stock and value stock investment strategies, Vanguard said. There has been a torrent of new ETFs this year from asset managers trying to capture growing demand for actively managed ETFs that aim to outperform indexes. Actively managed ETFs arose around six years ago. The advent of this strategy in a more tax efficient and lower-cost ETF wrapper has attracted growing investor interest. Morningstar Direct calculates that there have been 630 new exchange-traded products so far this year, compared to 381 for the same period in 2024. Some 86% of those launches were of actively managed strategies, according to a report published this month by JP Morgan Asset Management, which also found that active ETFs now account for some 37% of total U.S. ETF inflows. "Until now, Vanguard had been sitting out this rush," said Jeff DeMaso, editor at the Independent Vanguard Advisor. DeMaso said he expects the new funds will attract a steady if not spectacular flow of assets. "These are proven strategies," he added. The new ETFs are "building blocks that reflect our ... commitment to disciplined product development and investor outcomes," said Ryan Barksdale, head of active equity product at Vanguard, in a statement.
Yahoo
10-08-2025
- Business
- Yahoo
Analysis-Trump's 401(k) order offers retirement savers crypto, private assets, but also higher fees and more risk
By Suzanne McGee and Isla Binnie NEW YORK (Reuters) -The new White House order directing regulators to expand access to alternative investments in 401(k) plans, like crypto or privately owned companies adds a new layer of risk to the retirement portfolios for ordinary investors that they may not fully understand, investment professionals say. "This is brand new; none of it has been stress-tested yet" in a market shock or long-term selloff, said Christopher Bailey, director of retirement, at Cerulli Associates, an asset management research firm. "There are liquidity concerns, issues around fees, among others." While industry advocates and the Trump administration say investments in private equity, crypto or privately held companies like ChatGPT developer OpenAI or Elon Musk's SpaceX hold the promise of greater returns, critics say the investments are inherently riskier, lack the same disclosures and carry higher fees than traditional retirement plans. "I don't think people are talking enough about the potential for higher fees," said Philitsa Hanson, head of product, equity and fund administration, Allvue Systems, a software and solutions provider for private asset managers. The executive order, she said, "raises more questions than answers. Someone will need to be very thoughtful about how these types of assets can be incorporated" into 401(k) plans. Private equity and other alternative asset funds have increasingly been raising capital from wealthy individuals but are traditionally designed for institutional investors and typically include layers of fees. Private equity, for instance, has long had the "2 and 20" structure: managers collect a 2% overall fee, as well as 20% of any gains. In contrast, the mutual funds that today make up the lion's share of 401(k) plan assets offer fees that average a mere 0.26%, according to the Investment Company Institute. Dmitriy Katsnelson, deputy chief investment officer at Wealthspire Advisors, which manages $30 billion for affluent and high net worth individuals and families, notes that if the executive order triggers a rapid and significant change in the menu of investment plans open to investors, that would reverse the trend of the last few decades. "It's been all about cutting fees, doing no harm," Katsnelson said. "It's going to take a while for people to come up with a framework to make this work and think about the risks." Alternative asset managers will likely need to come up with new products with lower fees, greater liquidity and more transparency if they want to tap into the trillions of dollars and 90 million investors in employer-sponsored retirement plans. Jason Kephart, an analyst at Morningstar, said the fees for some alternative investments aren't clearly spelled out, some even have to be deciphered from footnotes. They "might be even underrepresenting the actual cost to the end investor, and I have a hard time seeing how plan sponsors are going to get comfortable with that," he said. "I think there is going to be more light shed on all these fees and exactly where they are and make it transparent." Under the current system, investors can also monitor fluctuations in their portfolio's performance on a daily basis and understand precisely what is contributing to those results, Hanson said. That won't be so easy for investments that aren't traded on open exchanges. "Private equity, private assets are the opposite," said Allvue's Hanson. "You're asking systems designed for daily trades to support illiquid and sometimes manually priced assets. There's a fundamental mismatch there.' That creates an obligation on the part of asset managers and plan sponsors to increase their outreach and education efforts, suggests Cerulli's Bailey. A typical retirement fund investor "is not sitting there thinking about optimizing their portfolio" and considering the impact of adding private assets to the mix on their risk or potential return, he said. Blackstone President and Chief Operating Officer Jon Gray recently told analysts that private assets are more appropriate for younger investors that have a longer investing horizon than for someone nearing retirement. One test case for the legal risks of putting retirement nest eggs in private markets has played out at chipmaker Intel, where employees brought a lawsuit over two retirement plans that included investments in hedge funds, private equity and commodities. An appeals court finally dismissed the complaint after seven years of court battles this year but lawyers at Debevoise & Plimpton said that asset managers and plan sponsors generally don't have the resources to manage multi-year litigation. Regulators will have to give the industry some legal protection from investor lawsuits to make good on Trump's plan, they said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
04-08-2025
- Business
- Yahoo
Ballooning 'buffer' ETF market leads to more complex array of products
By Suzanne McGee NEW YORK, August 4 (Reuters) -Investors are piling into financial products that offer them the chance to forgo some potential gains in exchange for protection against a market selloff, with the number of exchange-traded funds offering variants on this concept doubling in number and size over the last two years. So far this year, some 30 of these so-called buffer funds have made their debut in the U.S. as investors try to protect recent gains from the risk that soaring valuations and ongoing policy tumult will prompt a retreat. That brings the total number to nearly 350, compared to 178 two years ago, according to data from Tidal Financial Group. Each launch provides a new twist on the concept as more asset managers battle to win a piece of a pie worth $70 billion today and one that BlackRock expects to hit $650 billion by the end of the decade. But the rapid growth and growing complexity of the new ETFs are fueling anxiety among some analysts and market participants that the asset management universe may be hitting "peak buffer", a point at which products become too exotic and too focused on a narrow market segment to be useful tools for most investors. That, in turn, creates the prospect of investors putting money into costly or unsuitable products. "There are only so many ways to skin the cat, so every new product becomes more niche," said Dave Nadig, an independent ETF industry consultant. "The likelihood of any new product being brought out now that an investor's portfolio really requires is pretty small." That is not stopping issuers from trying, however. Today, investors can buy risk-protected bitcoin products, buffer their exposure to Chinese Internet stocks, and own next-generation "dual direction" buffer ETFs, designed not just to minimize losses but to give investors capped gains in both rising and falling markets. Plain vanilla buffer ETFs offer investors a way to swap part of their upside for some kind of cushion against losses on a portfolio of stocks, most usually an index like the S&P 500. The structure dates back to the 1980s, when it underpinned structured notes that were then fast becoming part of high-net worth investor portfolios. Those still represent the lion's share of the market, with pioneers First Trust and Innovator Capital Management accounting for about 86% of buffer ETF assets and about 75% of inflows into the space in the first seven months of 2025, according to data provided by issuers and verified by Reuters. But a filing in early July by a surprise new entrant into the buffer field - ARK Investments, the technology asset management firm founded by Cathie Wood - has prompted further debate. ARK is seeking approval from U.S. regulators to launch a suite of new buffer ETFs tied to its flagship ARK Innovation ETF. If they pass regulators' scrutiny, these would be the first ETFs tied to an underlying actively managed fund rather than a broad market index and shield investors from the first 50% of any losses on ARK Innovation. In exchange, investors relinquish the first 6% of any gain. "It's a strange combination, to have a buffer alongside the high-conviction ARK Innovation strategy," said Bryan Armour, ETF analyst at Morningstar. "It's coming from the firm that was a pioneer of risk-taking and stockpicking in the ETF space." That strategy has produced uneven returns, with the ARKK ETF generating a 152.8% return in 2020 but a 67% loss in 2022. So far this year, the ETF is up 32.8%, compared to 6% for the S&P 500 index, but both it and ARK continue to lose assets. ARK executives declined to comment on the details of the filing, citing SEC restrictions during the post-filing "quiet period." ARK could launch the new buffer in early September, at which point it will test investor appetite for more novel structures. "My eyebrows are pretty much raised," said Kevin Warman, a financial advisor with Investment Management Corp, in Mount Pleasant, South Carolina. "But I'm not surprised that more companies are jumping on the bandwagon." Relative newcomers include Goldman Sachs Asset Management - its first buffer ETF began trading in January - and BlackRock, which rolled out its first offerings in mid-2023, more than four years after Innovator and First Trust launched their own offerings. Asset managers insist that the market for buffers is nowhere close to saturated yet, even as analysts and some financial advisors are watching the flood of new offerings with wariness. Still, Warman said he and his colleagues are struggling to keep up with the details of each new product that launches. "We want to make sure whichever of these we buy delivers on a real need," he said. Sign in to access your portfolio
Yahoo
06-06-2025
- Automotive
- Yahoo
Retail traders scooped up Tesla as Trump-Musk spat hit stock
By Suzanne McGee and Saqib Iqbal Ahmed NEW YORK (Reuters) -Retail investors seem to have spotted an opportunity in the sudden feud between U.S. President Donald Trump and his former ally, Tesla CEO Elon Musk, scooping up shares of the electric car maker as they tumbled on the acrimonious standoff. Trump on Thursday threatened to cut off government contracts with Musk's companies, as the once-close ties between the world's richest and most powerful man unraveled publicly on their rival social media platforms in a feud over the president's sweeping tax-cut bill. Tesla's stock plunged 14.3% on Thursday, the 11th worst daily drop since the company went public in June 2010. As retail traders hunted for bargains, the stock rose 5.6% to $299 at mid-afternoon on Friday, though it was unclear how much of a role they played in the rally. Self-directed individual investors scooped up a net $201.3 million of Tesla stock on Thursday after buying and selling $2.6 billion, Vanda Research estimated, making Tesla the day's second most-actively purchased stock by such investors. "Tesla has been a favorite holding for this group for a while, so when they see a drop of 14% or more, they jump in and buy," said Marco Iachini, senior vice president of research at Vanda, noting retail investors' renewed appetite for risk-taking. Such investors also poured money into leveraged exchange-traded funds that offer a chance to place a bullish bet on Tesla shares for amplified returns. The Direxion Daily 2x Bull ETF drew $41.5 million of net buying on Thursday, according to Vanda data. The options market, where Tesla is a favorite with retail traders, showed few signs of panic. "We're not seeing a huge move in volatility," Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, said of Thursday's trading, adding that some traders were taking advantage of the increased volatility to sell put options. Selling puts, which give the buyer the right to sell the underlying shares by a certain time at a set price, signals expectations for the stock price to slow or halt its slide. Tesla's 30-day implied volatility - an options-based measure of how much traders expect the stock to swing in the near term - rose to a six-week high of 77 on Thursday, well below the 106.1 touched in early April during a market-wide selloff, Trade Alert data showed. With Tesla shares up 5% at $299.14 on Friday morning, the implied volatility measure sank further to 68. "I don't think we're at the real warning sign levels at the moment," Interactive Brokers chief strategist Steve Sosnick, said. Iachini said he used models to scan comments about Tesla on social media sites like Reddit and X during Thursday's selloff, and found that users of the sites, which are popular with self-directed investors, overwhelmingly remain bullish on Tesla. "Buy the dip is the overwhelming sentiment," he said. Tesla shares, which surged as much as 90% in the six weeks following Trump's November 5 election, have slipped about 37% since they peaked on December 17. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
06-06-2025
- Automotive
- Yahoo
Retail traders scooped up Tesla as Trump-Musk spat hit stock
By Suzanne McGee and Saqib Iqbal Ahmed NEW YORK (Reuters) -Retail investors seem to have spotted an opportunity in the sudden feud between U.S. President Donald Trump and his former ally, Tesla CEO Elon Musk, scooping up shares of the electric car maker as they tumbled on the acrimonious standoff. Trump on Thursday threatened to cut off government contracts with Musk's companies, as the once-close ties between the world's richest and most powerful man unraveled publicly on their rival social media platforms in a feud over the president's sweeping tax-cut bill. Tesla's stock plunged 14.3% on Thursday, the 11th worst daily drop since the company went public in June 2010. As retail traders hunted for bargains, the stock rose 5.6% to $299 at mid-afternoon on Friday, though it was unclear how much of a role they played in the rally. Self-directed individual investors scooped up a net $201.3 million of Tesla stock on Thursday after buying and selling $2.6 billion, Vanda Research estimated, making Tesla the day's second most-actively purchased stock by such investors. "Tesla has been a favorite holding for this group for a while, so when they see a drop of 14% or more, they jump in and buy," said Marco Iachini, senior vice president of research at Vanda, noting retail investors' renewed appetite for risk-taking. Such investors also poured money into leveraged exchange-traded funds that offer a chance to place a bullish bet on Tesla shares for amplified returns. The Direxion Daily 2x Bull ETF drew $41.5 million of net buying on Thursday, according to Vanda data. The options market, where Tesla is a favorite with retail traders, showed few signs of panic. "We're not seeing a huge move in volatility," Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, said of Thursday's trading, adding that some traders were taking advantage of the increased volatility to sell put options. Selling puts, which give the buyer the right to sell the underlying shares by a certain time at a set price, signals expectations for the stock price to slow or halt its slide. Tesla's 30-day implied volatility - an options-based measure of how much traders expect the stock to swing in the near term - rose to a six-week high of 77 on Thursday, well below the 106.1 touched in early April during a market-wide selloff, Trade Alert data showed. With Tesla shares up 5% at $299.14 on Friday morning, the implied volatility measure sank further to 68. "I don't think we're at the real warning sign levels at the moment," Interactive Brokers chief strategist Steve Sosnick, said. Iachini said he used models to scan comments about Tesla on social media sites like Reddit and X during Thursday's selloff, and found that users of the sites, which are popular with self-directed investors, overwhelmingly remain bullish on Tesla. "Buy the dip is the overwhelming sentiment," he said. Tesla shares, which surged as much as 90% in the six weeks following Trump's November 5 election, have slipped about 37% since they peaked on December 17.
