Tag Archives: RIA

Eaton Vance ETMFs Get Boost By RIA Titan Envestnet

MarketsMuse blog update is courtesy of BrokerDealer.com and initial reporting by InvestmentNews.com and profiles the deal between RIA titan Envestnet and mutual fund king Eaton Vance, which is now approved to promote its novel, actively-managed ETF product “NextShares.” NextShares are exchange-traded funds that are both actively managed and unlike any other ETF product, does not disclose the underlying components of the respective ETFs. These products now go by the acronym “ETMFs.”

Since its approval, Eaton Vance has had to work hard to convince competitive money managers to license its patent and persuade broker-dealers that it is in their interest to make NextShares available to advisers even though the funds don’t offer the same underlying fees to encourage distributors. Eaton Vance’s NextShares-promoting subsidiary, Navigate Fund Solutions, has had to make that case before it even has a product on the market or a distribution partner.

BrokerDealer.com provides a global directory of regulated securities industry professionals operating in 30 major countries across the free world.

The deal is a big win for Eaton Vance, an actively managed mutual fund company that’s hoping to replace those products with a potentially more tax-efficient vehicle that could lower costs and improve performance for investors. Envestnet is a major gatekeeper in the fast-growing market of independent financial advisers, providing services for over $700 billion in client assets.

In a statement, an Envestnet executive, Jim Patrick, described NextShares as a “groundbreaking fund structure” and said the company sees offering the funds as part of its mission to help advisers deliver “wealth management services in the most cost- and tax-efficient way possible.”


NextShares was the first and remains the only structure approved by the Securities and Exchange Commission that allows an actively managed open-end fund to trade on exchanges without regularly disclosing its holdings. Portfolio managers resist showing the securities they buy and sell, in part to prevent being taken advantage of by competitors.

– See more at: BrokerDealer.com

ETF.com June 17 Global Macro Conference Preview

In advance of the June 17 ETF.com Global Macro Conference in NYC, MarketsMuse.com is pleased to provide our readers with a teaser of what is expected to be one of this summer’s best programs for investment managers, RIAs and Family Office practitioners who embrace the underlying approach and value proposition to global macro-style investing.

The speaker panel for the June 17 event includes a selection of the sharpest knives in the drawer and last minute registration can be made by simply clicking on the ad banner on the right side of your screen. We recommend getting there bright and early for the 8:30 am session,  The Map: Geopolitics, Your Portfolio & the Quest for Alpha

For a taste of the talking points that panelists will be touching on, click this link: June 2015 ETF Report Special Edition

To secure your edition of ETF.com June edition of the ETF Report, a special monthly publication that profiles real experts and actionable thoughts, please click here


5 Reasons To Be High on High Yield Bonds

While high-yield bond followers are seemingly caught between a rock and a hard place as interest rates may be poised to pick up, some expert investors are positing that high yield positioning is precisely the tactical approach to maintain.. The following MarketsMuse.com fixed income fix is courtesy of contributed article “5 Reasons to Hold High Yield” from Philadelphia-based RIA Clark Capital Management Group’s Chief Investment Officer, Sean Clark, CFA.

Editor Note: Before any MarketsMuse followers pooh-pooh the notion that spreads are bound to widen (and in turn, disrupting HY bond exposure), Clark Capital has been successfully navigating fixed income markets since 1986 and currently has $3billion AUM. The firm recently launched Navigator® Tactical Fixed Income Fund.

Sean Clark, CFA; Clark Capital
Sean Clark, CFA; Clark Capital

“The high yield market was bloodied in the second half of last year, primarily due to the collapse in energy prices.While yields and spreads backedup,broader-based credit remained firm, suggesting that it was an isolated problem due to the collapse of the energy market.We believe that the high yield market will reward investors who adopt a tactical approach.Below are five reasons we anticipate a reemergence of opportunities in the high yield space in 2015: Continue reading

Pre-Thanksgiving Special: Custodians Flip The Bird to RIA Customers Seeking ETF Best Execution

riabiz logo  Courtesy of RIABiz and reporter Lisa Shidler

MarketsMuse Editor Note: Kudos to Lisa “Lois Lane” Shidler for her insightful expose profiling how custodians to RIAs excel at squeezing lemons from customers who they must think are lemmings. Though Ms. Schilder neglected to spotlight the fact that custodians systematically sell their customer orders to select principal trading firms (e.g KCG) who cherry-pick orders they can exploit for trading profit, her insight i.e. the practice of imposing exorbitant trade-away fees on those very same customers who seek to secure the real best prices via independent execution only firms is a topic worthy of sharing this story with industry regulators. Too bad those latter folks don’t get it…perhaps because they’re beholden to the biggest custodians in the industry?

Here are a few excerpts:

The big four RIA custodians are now charging advisory firms giant new fees — in the tens of thousands in some cases — relating to some ETF purchases.

Schwab Advisor Services, TD Ameritrade Institutional, Pershing Advisor Solutions LLC and Fidelity Institutional Wealth Services are levying what are known as “trade-away” fees to RIA firms that buy exchange traded funds through a broker-dealer other than the one owned by the custodian. The advisor typically chooses to use these third parties because they believe that RIA custodians are executing trades poorly along the bid-ask curve and forcing them to make ETF purchases at unacceptably high prices.

At first blush the fees look fairly benign. The fee at Fidelity is a $20 fee per account per trade. TD Ameritrade charges $25 per account. Pershing’s fee ranges from $8 to $20 per account depending on the volume of the trade. Schwab declined to disclose its fee through its spokesman, Greg Gable.

These fees have put RIAs like Chris Romano, director of research and trading with Fusion Investments Group LLC in Pittsburgh invests, in a bind in certain instances.

Though his firm manages about $139 million in assets, the bulk of them are institutional and banks custody them. Fusion advises for other RIAs but those assets are held away. In short, his firm manages just $11 million of mostly ETFs with Fidelity’s RIA custody platform, which means Fidelity’s $20 fee is too costly for the size of trades that he does.

“We don’t even consider trading away [in effort to get best execution] at Fidelity because of the high ticket trade away fee,” Romano says. “On the smaller account sizes, it can be a really significant fee. If the fee is $20, that can really add up.” Continue reading

4th Annual World Series of ETFs-Boston


Hosted by IMN, this is a must-attend event for hedge fund managers, institutional portfolio managers, RIAs and financial planners active within the exchange-traded-fund (ETF) space.

This year’s speakers and panelists include leading sell-side trading desk professionals, market strategists and top-gun investment managers.

Click on the image above for the conference website and more information.

Institutions Eye Options: Buy-Writes and Butterflies

Yes, the equities markets are on a roll; the bulls are boisterous, and the “buy and holders” are popping champagne corks. Given this scenario, who would even suggest the idea of a fiduciary fund manager employing option-based hedging strategies that can potentially cut into upside returns?? After all, even though major exchanges throughout the globe have facilitated option-based hedging products for almost 30 years, options are “too complicated,” right?

OK, I’ll admit that I’m hearing about the “growing number” of large institutional managers that are using options, but options are just too complicated for all but those few MIT-educated portfolio managers who have found themselves working for a select group of forward-thinking and open-minded institutions.

Am I right?? I mean, gee–if I’m a long-only hedge fund, an RIA, an endowment, a pension manager, a family office, or a corporate treasurer, I have to not only figure out what a strike price is, but I need to figure out the difference between a call and a put, I have to consider tax implications, calculate break-even points, and I have to worry about the risk of stocks being “called away”, and when that happens, I lose out on the gains that I know will come, because I only pick stocks (or ETFs) that will go up at least 10%-15% within a few months of buying them, and more likely, 20%-30% over the next two or three years.

Well, if you’re a fund manager that’s been walking and talking the markets for more than a few years, you might know that bulls and bears make money, and pigs get slaughtered. Other than single stocks such as AAPL, equities markets (just like any other asset class) are cyclical. Prices go up, down, or they go side-ways.

Surprise! After almost 30 years of tepid use by fund managers handcuffed by mandates, the use of options by responsible and conservative institutions is finally gaining traction. Continue reading

BuyWriting Back in Vogue: Mutual Funds Warm To “CYA”

We all know that equity markets have been climbing the wall of worry for the past number of months. With both the Dow and S&P recovering to the sanguine levels not seen since the spring of 2008, covered call (buy-write) strategies within the mutual fund complex has until recently remained  a relatively untapped strategy, despite the time-tested success of many fund managers who have systematically used this style of hedged investing throughout both bull and bear market cycles.

But, “the tide seems to be turning,” according to recent coverage by Peter Chapman over at Traders Magazine, who spotlights a trend change in the course of his profiling the launch of two new covered-writing closed-end funds courtesy of Mario Gabelli’s GAMCO (” GAMCO Natural Resources, Gold & Income Trust”) and John Hancock’s  “Hedged Equity & Income Fund.” These are only two of the funds that are embracing a “CYA” strategy in the face of most market pundit predictions that the current upward trend is your friend, and should be expected to remain positive throughout the balance of 2012.

Whether the renewed interest in using the simplest of “hedging” strategies is attributable to percolating geopolitical concerns, or a need to enhance yield as interests rates continue to race to zero, or the growing consensus among market skeptics that what looks and sounds too good to be true often is (despite historical trends where markets typically rise into presidential elections), traders who have been around for more than 15 minutes  see the resurgence of institutional option-related strategies as an approach that simply makes sense.

Observed option market pro David Beth, the Pres/COO of  institutional options and ETF broker WallachBeth Capital, ” Its good [for investors] to have more options, no pun intended. The fund industry’s limited use of the most conservative option-related strategies has always been a “head-scratcher” for those who have lived through multiple market cycles over the years and always perceived that big funds are obliged to use conservative strategies.  Regardless of where one thinks the market is headed in the short or medium term, these new funds illustrate the growing recognition that systematic covered call writing can cushion downside exposure and enhance portfolio returns in both low-interest rate and stagnant market cycles; especially for funds with conservative mandates.” Continue reading

No Free Luch Re: “Commission-Free” ETFs

As observed by Forbes contributor Janet Brown, it seems the race to zero is becoming rampant in the brokerage community when promoting “commission-free trading for ETFs.” A closer look at the story tells us that discount broker talk is even cheaper than the commissions, and RIAs (and others) should read the fine print imbedded in various brokerage firm marketing materials.  Hold firm to Rule #1: : “There really ain’t no free lunch..”

According to Andy McOrmond, co-head of ETF trading for agency-execution firm WallachBeth Capital, “the article serves as yet another reminder that  beauty is not in the eyes of the ETF beholder when it comes to looking at trading screens, which simply don’t display the real best price available for even the most seemingly illiquid ETF product.”