Simple, but Not Easy: Recent Episodes
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Simple, but Not Easy is a podcast about investing and behavioral science by Morningstar Investment Management LLC. Most shows focus on our asset class research, our principled approach to managing money, or our insights on using behavioral science to help investors and advisors make better decisions.
Private markets were once the exclusive playground of institutions and ultra-high-net-worth investors. That's changing. Where's the puck potentially going? It's possible we look up one day and realize private markets aren't a third asset class — they're just equity and credit accessed differently. We cover the case for private markets, the education hill that needs to be climbed, how to talk to clients about fees, and why implementation is the real bottleneck. With Apollo Managing Director and Cross-Asset Client Portfolio Manager Lucy Xin. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.comfor information about our collection and use of personal data foradvertising.
Creative Planning has been trusted with more than $700 billion in client assets under management and advisement. A simple truth? That doesn’t happen by accident. Jeff Stolper – the firm’s Director of Financial Planning – joined us to discuss how Creative Planning’s client-centric philosophy has helped the firm reach that scale. One key takeaway: wealth management is a people and relationships business. Before emotional intelligence, investment knowledge, or communication skills, the most important character trait may simply be being a positive, likable person. Be someone clients enjoy being around! Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.comfor information about our collection and use of personal data foradvertising.
FINNY founder Eden Ovadia shares how the firm is tackling one of financial advice’s biggest challenges: organic growth. Advisors can spend up to 60 hours to win a single client – consuming their most valuable asset: time. And that doesn’t scale. FINNY’s approach – using AI to identify high-intent prospects and automate outreach – aims to change that. The goal? A more efficient growth engine, especially for advisors with clearly defined niches. In an increasingly competitive business, specialization and smart use of technology can compound over time – separating firms that grow from those that don’t. After all, if you’re not growing, you may be dying on the vine. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.comfor information about our collection and use of personal data foradvertising.
Savant Wealth founder and CEO Brent Brodeski shares the firm’s journey to $50 billion in assets under management. In short, compounding isn’t just an investment concept – it applies to building a business as well. The early years now look invisible on a long-term AUM chart, but they were arguably the most formative – defined by trying new things, iterating the process, and refining what worked. That foundation compounded over time and has put the firm on a trajectory to impact one million lives. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.comfor information about our collection and use of personal data foradvertising.
Morningstar’s 2026 Investment Outlook is live, offering clear context on the forces that will shape the year ahead and beyond. If there’s one takeaway for investors, it’s this: Preparation beats prediction. Markets will keep shifting—tariffs, the Fed, geopolitics, and the rapid buildout of AI infrastructure—and trying to forecast every twist isn’t a strategy. Building resilient portfolios is. That’s why our outlook avoids bold predictions and instead focuses on rational, evidence-based decision-making across the issues that matter most to advisors and their clients. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.comfor information about our collection and use of personal data foradvertising.
It used to be simple: small companies went public, grew, and investors participated along the way. Today, companies stay private longer, and private markets have claimed many opportunities that once lived in public stocks. Historically a source of some of the strongest market returns, small caps have shred that reputation. The question becomes: Where did the small caps go? Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.comfor information about our collection and use of personal data foradvertising.
In this episode of Simple But Not Easy, we’re joined by Ryan Murphy, Morningstar’s Global Head of Behavioral Insights, to explore how financial advisors can help clients set better goals, avoid costly mistakes, and build lasting trust. We discuss why goals—not asset allocation or stock selection—should be the true starting point of an investment journey, and how a simple multi-step framework can uncover what really motivates clients. Ryan also shares insights from Morningstar’s Mind the Gap study, which shows how investor behavior often drags down returns, and explains how advisors can reframe conversations from performance to progress. If you want to better understand what drives investor decisions and how advisors can make the biggest difference, this episode is for you.
In our midyear outlook, we break down some of the biggest factors driving markets in 2025 — tariffs, AI, and the potential for rate cuts — and attempt to help investors sift through the short-term noise while keeping a long-term perspective.
As of late May, the US ranks 39th out of 44 global stock markets—firmly in the bottom 15%. Meanwhile, international markets are gaining momentum, with 7 of the top 10 performing countries located in Europe. This performance gap appears to be supported by improving fundamentals, favorable currency trends, and rising earnings expectations across the region. Can it continue? In this episode of Simple, But Not Easy, host Nick VanDerSchie is joined by Morningstar’s Paul Tait and international equity portfolio manager Nabil Salem to explore why now may be the right time to take a fresh look at international diversification.
When markets hit a rough patch—as they did in early April—investors often lose confidence. Emotions run high after paper losses, and that’s when many fall into the “ready, fire, aim” trap. Decisions become reactive, not disciplined. It’s common to see investors flee to cash or pivot to more conservative positions in an effort to feel safer. But more often than not, resisting that urge is the better path.In this episode of Simple, But Not Easy, we sit down with Morningstar’s Global Chief Research & Investment Officer, Dan Kemp, to explore how advisors can guide clients through uncertainty—not with bold predictions, but by remaining anchored to a clear investment philosophy.
We explore the growing convergence between public and private markets and what it means for today’s investors. As private market strategies become more accessible, advisors and their clients are gaining new tools to diversify portfolios and pursue long-term growth. We break down what’s driving this shift, the opportunities and risks involved, and how financial professionals can help investors navigate this evolving landscape.
Time is a financial advisor’s most valuable asset. As industry tailwinds push the profession toward greater client-centricity—and as clients demand more from their advisors—many are recognizing the benefits of outsourcing investment management. By doing so, they can focus on what truly drives their business: being in front of clients and strengthening relationships.
Morningstar Wealth's Chief Investment Officer, Philip Straehl, and Head of Investments, Ricky Williamson share insights on the key themes shaping the investment landscape for 2025 and beyond.
While presidential elections often create tension and leave many feeling on edge, the stock market didn’t share this level of apprehension. Remarkably, October was one of the least volatile months in history leading up to a presidential election.Although this might seem surprising, it’s not entirely unusual. Markets frequently display greater resilience than we might expect. However, it’s important to remember that volatility isn’t always synonymous with selloffs or down days.As Morningstar Wealth Chief Multi-Asset Strategist Dom Pappalardo recently explained during his podcast appearance on Simple, but Not Easy, market activity post-election highlights the varied forms volatility can take. In his role, Pappalardo focuses on helping clients understand how Morningstar's research efforts translate into actionable portfolio management decisions.
Some have called this the weirdest housing market in recent history due to the unusual mix of high interest rates and declining affordability. And yet, we still have record high home prices across the 20 largest housing markets in the country. This month, we're diving into the U.S. housing market, a topic very relevant to many investors given a house is often the largest single asset one owns.In this episode, we're excited to shed light on the US housing market, what makes it challenging, what makes it unusual, and what needs to change for it to improve. We're joined by Preston Caldwell, Morningstar's Chief US Economist and Brian Bernard, Director of Equity Research specializing in the industrial sector, which includes homebuilders.
Welcome back to Simple But Not Easy. We hope you had an enjoyable summer and are ready to finish the year on a high note. In today's episode, we're excited to dive deep into the world of investing, market strategies, and the future of wealth management. We'll start by getting to know Philip Straehl, Morningstar's new Chief Investment Officer of the Americas, as he shares insights from his career journey and a wealth of knowledge on the evolving market landscape. From there, we'll explore Morningstar's mission and investment philosophy, and importantly, what sets it apart in an ever-evolving financial world. Wealth management industry trends are also on the agenda, and we'll close with some investing themes that everyone should be thinking about.
A special live episode from the Morningstar Investment Conference. Two of Morningstar Wealth’s investment leaders—Matt Wacher and Ricky Williamson—joined the show to help us dig into what’s already happened this year and where we may be headed. The topics covered included:•The Fed and where rates may be headed•Further discussion on fixed-income•US stocks are off to another hot start this year. Can outperformance continue?•Every business is thinking about AI. How is it impacting markets?•And how should investors be preparing for a presidential election?And as always, we address the implications on client portfolios and help consider action items.
The evolution of financial advice in a few decades time has been nothing short of revolutionary. The industry's transformation has been driven by technological advancements, regulatory changes and evolving investor preferences. Traditional methods of in-person advice have been expanded to include digital platforms, providing investors with greater accessibility and customization. And we've all observed an evolution in financial planning journeys and an increase in the number of advisors making financial planning core to their value proposition. But we still have to ask, is there room for improvement?
Much of the discussion around financial advice tends to be around asset allocation, product selection, and fund structures. These are all worthy conversations and topics we’ve enjoyed discussing previously on this show. But one topic that feels underexplored: how do advisors deliver financial advice to clients across generations? A retired client in their 70s needs a much different advice offering than a 40-year-old client in their prime work years. In this episode, we are diving into the fascinating intergenerational dynamics of financial advice.
The Magnificent Seven continue to capture the attention of advisors and investors, dominating U.S. equity performance over the last year. Will this trend continue throughout 2024? Will growth stocks continue to beat value? What about large versus small? And what is 2023's signal about where markets are headed this year? We're delighted to be joined by John Owens, Senior Portfolio Manager for Morningstar's Select Equity Strategies, and Paul Tait, Portfolio Specialist at Morningstar Wealth. Together, they help unpack the landscape for U.S. stocks in a digestible manner.
The topics we're discussing today align with the recent release of Morningstar Wealth's 2024 Market Outlook.A recession seemed to be the consensus view entering the year, but markets love to fool the masses, and a stock market rally followed. However, the rally was not evenly distributed. Bonds, for example, remain in a multi-year drawdown, and many investors are questioning their role in a portfolio. With this as the backdrop, what actions make sense to support clients? In today's episode, we're delighted to have Morningstar Wealth's CIO of the Americas, Marta Norton, and Chief U.S. Economist, Preston Caldwell with us to dig into the outlook, share their perspectives, and, as always, be sure to address the implications on client portfolios and any suggested actions to take
A lot has already been said about the potential of artificial intelligence, or AI, but how are people actually engaging with it? And how should investors think about their AI exposure in a portfolio? Morningstar has invested heavily in generative AI, with Morningstar Mo taking the stage at our investment conference, and in a first, we're delighted to be joined by a special guest: Mo the AI character. We’ll also be joined by Adley Bowden, Head of Individual Investor and Grady Burkett, Portfolio Manager of the Hare strategy. This marks the start of a new season of Simple But Not Easy, with Nick VanDerSchie taking the mic from Jonathan Linstra, whom we thank for his fabulous insights. Together, let's turn AI speculation into real-world application.
Financial technology is going through a new wave of change, with artificial intelligence – or AI – taking the world by storm. But the wealth tech space is already incredibly complex, with literally hundreds of tech providers battling for market share across the advisor workflow. So, what does Ezra Group, a prominent WealthTech consultant, have to say about this? How can we get ahead of this change? We're delighted to be joined by Craig Iskowitz, Founder of Ezra Group. Together, we’ll dig into his latest technology predictions, covering AI, integration opportunities, fractional outsourcing, and more. A key takeaway: "Meet once a year with your team and talk about your technology."
The need for great financial advice continues to grow, with a landscape we haven’t witnessed in 15 years. So, what does Blackrock, the world’s largest asset manager, have to say about this? What might we expect from here? In this episode, we’ll dig into the latest advice trends, covering the use of models, behavioral application, and evolving investors’ needs. We're delighted to be joined by Liz Koehler, Managing Director and Head of Advisor Engagement from Blackrock.
Jonathan Linstra: Well, hello everyone. Welcome to Simple But Not Easy, the podcast live here in Chicago at the Morningstar Investment Conference. We're really excited to be here. It's been a fantastic conference so far. And the topic we're going to be covering today, I can't think of two better people that have. So, what we're going to be discussing today is advisor trends in general, we're going to explore a little bit about big problems that advisors are attempting to solve, we're going to talk about trends in product and trends in technology and explore each one of those areas.
So, with me today, I'm really, really excited, we've got Evan Rapoport, who is the Founder and CEO of SMArtX, and we also have Matt Apkarian from Cerulli Associates. Matt is a member of Cerulli's Product Development Practice, which focuses on trends related to asset managers, product development and managed functions. He's also the lead author in a report that many in the room I would imagine have read already for Cerulli's U.S. product development and U.S. asset allocation model portfolio report. So, thanks for being here, Evan and Matt.
Matt Apkarian: Thank you for having us.
Linstra: Fantastic. So, before we get into it, we've got a lot to explore here in a limited amount of time and you've got so much great information. But we all know who Cerulli really is obviously. I think a lot of the advisors that are listening to us are already consuming their data and reports. But Evan, maybe for those that aren't as familiar with SMArtX, can you just give us a two-minute flyover, how did you start it, why did you start it and a little bit about – and also please mention as well full disclosure, we've got a very important strategic relationship with SMArtX and Morningstar. Tell us a little bit about that.
Evan Rapoport: Sure. So, let me start off by saying how I got started actually. So, I was working within the hedge fund industry, and I've been doing that for about 10-12 years or so. And what we started to see was that more of our clients were looking for separately managed accounts as opposed to being an investor in the fund structure. The inefficiencies of a hedge fund structure, the structural inefficiencies are quite obvious, but 2008 really brought those to the surface where investors recognized that they didn't have transparency, liquidity, security, they were subject to style drift and other problems that they couldn't really stay on top of. And so, the separately managed account cures those issues by giving the client their own account where they have the transparency, liquidity, security.
The problem, of course, is being able to administer both the hedge fund and the separately managed account at the same time. And so, we had a couple of technology that would allow our hedge fund managers to be able to operate their fund at the same time as us being able to manage the separately managed accounts that they were then commanding. And so, technology, of course that we developed allowed us to do that, and that's how we got started in this space. We did something that no one else had ever done, even to this day had never done in making strategies that are long-short, short-only, option-specific, market-neutral available in an SMA and an UMA construct.
Now after we did that, the long-only folks saw what we were doing, recognized that the technology was far more advanced, they said it humbly, than the legacy unified managed account architecture that was out there and we then retrofit our technology to service the long-only part of the industry, understanding that the way in which we transact, which was for example, real-time or near real-time. So, a lot of the TAMPs and the UMA technology, they trade twice a day. We don't do that. We don't batch trade. We trade all day, every day, no windows, no cut-offs. So, that type of trading had never been done in the UMA space. In addition, the breadth of product that had never been offered for UMA, sleeve-based architecture which we then put together for hedge funds, worked perfectly for long-only and open architecture. We had the benefit of coming later to the game and so, we were able to build with the most modern technology, API-first cloud micro services. And so, that's kind of how I got into this space, and the product continued to evolve as the use cases continued to present themselves.
Linstra: Great. That's an award-winning, by the way. Well, let's get into it. We're here to talk about trends in the advisory landscape, and Matt, maybe I'll start with you. You leave these reports, and we consume all that data, all the great insights that you and team are developing. What are the big problems right now that advisors are facing? We know there's a lot of opportunity, but what are some of those challenges that are material, and maybe share what's in the report and maybe if you have any insight what's maybe beyond the pages, that'd be interesting too?
Apkarian: Sure. Well, now is a great time to be having this conversation. I'm nearing the end of writing for our 2023 asset allocation models report. I've gotten the opportunity to talk to majority of the biggest model marketplaces and model technology providers as well as talk to the model delivery programs as well about what's going on. And really, we're continuing to hear the story of about customization, tax loss harvesting and then creating an opportunity for advisors to scale and grow their practice without sacrificing elements of their practice that are important to the client experience.
So, we hear that for asset managers, enabling customization for these advisors is a top three initiative. It was a top three initiative for like a third of asset managers last year and it jumped to 55% of asset managers who consider enabling customization in managed accounts and model portfolios to be a top three initiative.
I think it's important to have a conversation when we talk about the word customize or customizable that there's a difference between these two things. They both can enable certain things that happen within the industry. So, for example, we're seeing a lot of change in the model portfolio space right now, enabling customized solutions that are built for particular broker-dealer, home offices or large RIAs, for example, that come to the advisor, able to be deployed for a certain need for the client base of these larger firms. As opposed to what technology like SMArtX enables and Morningstar's model marketplace can enable another technology providers, customizable leaves a little bit of choice or a lot bit of choice still in the hands of the advisor and for their ability to be able to change what comes to them as maybe a set solution in a model portfolio construct and then being able to add tilts that meet the needs of their clients, whether it's for values-driven changes or for tax-driven changes there's a lot that's enabled by technology today. So, I think that those are the key trends that we're seeing in product development we focused on in the managed account space.
Linstra: It's a good distinction to make. I'm just kind of curious how you see – is there any danger in that? Like I think in the world we live in, we've said a number of times, everything is customized. I mean, our Starbucks orders take 3 minutes to actually place. So, in this world and seeing that trend and knowing what's behind that, do you see any concerns there?
Apkarian: Well, it could be, in some ways, a step in the wrong direction in some circumstances. And what I mean by that – I just mentioned, we're trying to create more time for advisors to have more effective conversations with their clients and meet the financial planning needs of their clients. And if you're handing over more of the investment process back to the advisor by enabling customization, then they could be customizing for the sake of customizing and they could be adding portfolio tilts that aren't necessarily adding value when they can be spending their time adding value to their clients' financial experiences in other ways. So, it could enable us step in the wrong direction, but I think that there are significant ways in which it can enable better outcomes for clients where it's appropriate.
Linstra: Evan, how are you seeing this play out on your platform?
Rapoport: Yeah. I think Matt is obviously dead on. So, we are continuing to see more demand for customized solutions and those come in different ways. So, we're seeing a good deal of demand for tax-optimized models. So, whether it'd be Parametric or Aperio or Canvas or the Morningstar Direct indexing platform, there are these models now that can be optimized again and managed to make sure that not only are you not taking all the gains or losses – or the gains mostly that you should, but you can also manage the tax budget. So, for example, if you have a certain amount of gains, you can manage those over a period of time, 5% a year, 10% a year and you can manage that through the technology platforms that hasn't been available before. So, that's probably one of the biggest demands that we see today is for either tax-optimized individual strategies, tax-optimized technology or technology to help to optimize those portfolios manually for the advisor and direct indexing solutions that are tax-optimized as well.
Linstra: So, how much work is this putting on the advisors now, I guess, and how do you balance that, or how are you seeing advisors balance that with client service needs? There's a growing demand that we've seen anyway from even our own advisor base as far as even COVID, when the crisis calls were coming in and they were still trying to optimize portfolios or make investment choices. How is customization going to play out long term? What do you think of that?
Rapoport: So, what's great for the advisor is that the providers have actually stepped up and made these products easily digestible. So, in the past there were only, for example, Parametric and Aperio. Now, we have a lot of…
Linstra: We don't know those names but go ahead. I'll learn more about them afterwards.
Rapoport: OK. So, there are a lot of other choices out there now and those products aren't ones where the advisor really has to do a lot of work. They're allocating those assets out, understanding the objective, both from a risk and return perspective and then getting those portfolios managed for them, and they can focus on revenue-producing activities. And that's really one of the biggest benefits, of course, of allocating your assets to third-party asset managers is that you don't have that responsibility of managing those assets on a day-to-day basis, and you can focus on all of the other things we have to do as advisors. And I say we because I'm a registered investment advisor as well. I don't practice any longer, but I am licensed, and that's what we've always done. It's hard to do both, both manage a book and grow a book and at the same time do all the servicing necessary that we have as advisors.
I would also add to that. When things go wrong, it's very difficult to fire yourself. Whereas it's very easy to go in and make adjustments to a portfolio and switch managers or strategies out to become or move the portfolio more in line with the current objectives of that advisor. So, I think those are some of the bigger benefits of outsourcing. I know we kind of transitioned to that. But both the ability to focus on revenue-producing activities and provide more service to the client in addition to being able to optimize portfolios for current demands both from risk return and from markets.
Linstra: Interesting point on that. So, we hear a lot that the higher-end producing advisors that we're engaging are spending a lot more time on their client service model versus their investment model. It seems to align Matt with your research. I think it's advisors with over $500 million if I'm incorrect. I think it's 62% spend far more time client engagement and only 17% on the investment actually. Is your most current report updating that stat, or tell me where I'm off?
Apkarian: Oh, I'm sure. Well, we don't quite have that stat. That should roll off the press in about a week or two here.
Linstra: Keeping it under wraps. I love it. Teasing us.
Apkarian: If I had it, I would share. Trust me. I have some points that I'll share today. But an advisor who outsources portfolio construction for at least the majority of their portfolio on average gets to save about 10% of their time that they would otherwise spend on investment management for client-facing activities, for run the business activities and for professional development activities. And it overall creates a much better client experience when you're leaving something that in many cases is done better in the hands of an asset manager that has more will, skill and time to be able to handle the investing and allows you to be able to focus on creating that client experience.
Linstra: And there's also that modifier group, right, that might outsource certain portions, right, and then build in their own alpha as far as part of that end solution their value prop, if you will, for an advisor?
Apkarian: Right. I mean, you don't necessarily have to use an outsourced investment solution for the entire portfolio. It depends on the advisor, depends on your book, depends on which asset classes you want to focus on. So, I heard a great quote recently that beta is free, and alpha is expensive, so why not focus on buying cheap beta in areas where you can't simply add a lot of value in the portfolio and then you can spend money and spend time on adding value in areas that are going to be less efficient and you're able to add more value to your clients' investment.
Linstra: Fantastic. Well, we've already started, but let's pivot fairly into product and in trends in product evolution, if you will. So, $30 trillion right now as per Cerulli in advisor-managed assets, of that 35% in managed accounts, two biggest drivers being unified managed accounts and direct indexing. So, let's unpack that a little bit. Matt, are those still the drivers of those managed assets that you're seeing now and maybe this is where you tip your head on that current report, I'm not sure?
Apkarian: Yeah, absolutely. So, we're seeing about a 10% projected growth rate in managed account assets over the next five years, about a 13% growth rate for UMA. So, slightly out edging other managed account constructs such as mutual fund, ETF, advisory. Rep as PM is still saying pretty high, but we're looking at these figures by assets. So, Rep as PM assets are still going to primarily remain as Rep as PM assets for those really large client segments that have dedicated investment teams. But we are seeing really strong growth in model portfolio assets as well. So, high-teens, low-20 year-over-year growth rate in model portfolio assets for asset managers and for third-party strategists. And we expect to be able to keep rates in the high-teens for quite some time. We're seeing assets shift over. We're seeing more advisors realize that they add value in other ways than investment management and are more willing to outsource.
And things like DI, for example, that's another area – I have a stat here. 90% of asset managers based on our 2022 survey were working on more DI products, 97% of asset managers. And there's a direct agreement with the value that managed account sponsors see in DI and the value that asset managers see in DI and that's around algorithmic tax loss harvesting, tax transition and then ESG factors. Those are the top three, like no question, across the board. So, for the sake of DI and the growth of DI and being able to see it used as a building block within portfolio construction inclusive and exclusive of model portfolios, the future is right there for the sake of those that are developing those products.
Linstra: Great update there. Evan, you built a firm that caters to that UMA growth. Tell us a little bit about the growth that you've seen even within your firm and what you see going forward?
Rapoport: Sure. So, we continue to see tremendous interest obviously in UMA. Just to back up, what Matt said, you know, it's interesting. I went to a Tiburon Conference recently, and the quote was UMA is eating the world. Because the ease of both managing the portfolios and for the client on the other side to be able to digest those as a single account versus multiple accounts, it's just a much better experience for everybody. But interestingly, you talked a little bit about Rep as a PM, and we talk about outsourcing and the benefits of outsourcing. And Matt has got a lot of data. I've got some data too. And what's interesting about our platform is that when I look at the managers or the advisors, rather, that are outsourcing investments versus those that are managing the investments by themselves, we've got one firm that has 93% of their advisors using Rep as a PM. They are by far the worst performing firm that I have in my entire roster of clients. And so, the data tells us that those that manage portfolios on their own versus outsourcing typically underperform not just a little, but by a substantial margin versus those that outsource in addition to those that are outsourcing being able to scale their practice. So, it really does solve both of these problems, right? It's a huge benefit for the advisor…
Linstra: Is that an outlier client, would you say, even from your view of the platform?
Rapoport: The ones that tend to be more Rep as a PM tend to be more brokerage as opposed to advisory. And so, the brokers have a hard time giving up stock selections sometimes, right?
Linstra: Got it.
Rapoport: And so, those are the folks that tend to do a little bit more of that. But I see that also on the advisory side, folks that are building their own models because they feel that that's more cost efficient or effective for their clients, when in actuality, the performance alpha that you're losing by managing the portfolios on your own far supersedes the cost. And so, what you do is you create – and this is what happens with high-priced models – there's some negative selection bias in a sense, right? And in this case, it's not necessarily negative selection, but it's that you want to use your own because it costs less. But it produces less, right? And that's the same attitude that you have when you look at a model and it's more expensive versus one that's free and use the free one because the client doesn't want to see the fees.
Linstra: Good stuff. Let's unpack the DI portion a little bit. We did cover UMA a decent amount. But everyone is – I think I've heard it maybe four times this week, Matt, at the conference about all the growth projections for DI at 12.4% from 2021 to 2026, outpacing everything including ETFs at 11% and change. So, are those still consistent and really still standing behind that? And if so, what are you seeing as far as adoption? Is it a crowded conversation right now? And where does implementation really come in?
Apkarian: Yeah, it's a great question. We also think with the tax transition, it's a huge focus, huge barrier for advisors to adopting model portfolios in the first place is the need to blow out a client's account and realize embedded capital gains that could be years, decades old to transition a client's investment strategy. However, if you can use DI to understand parts of the portfolio that you don't necessarily need to blow out, that you can conserve to convert into the new strategy, then you can avoid significant tax burden and plan that tax burden over a longer period of time or reduce it. So, I think there's great opportunity. We still stand by that we see this tremendous growth going forward and the asset managers that we're talking to see the same.
Rapoport: Can I just do one comment on that? It's interesting. So, as long as I've been doing this, I was asked about direct indexing maybe 5% to 10% of the time. This past year, it's probably 50% of the clients that I speak to that are interested in direct indexing. So, I think the message has gotten out there and the tools now are finally have come to the surface for folks to be able to utilize. Before, they were pretty hard to hard to access. They were for higher-net-worth individuals and for larger accounts. But today, with the technology, it's really democratized the usage and you can use them for accounts as low as $5,000 or $10,000, which is really great.
Linstra: Yeah. And again, as per Cerulli, 61% of advisors are either utilizing a direct indexing strategy now or service now or indicating that they will in the near future. So, sounds like, fingers crossed, those growth projections do pan out, we're banking on that as well. One thing we haven't talked about investment product is alternatives. Just kind of curious to both of your takes on the growth of alternatives here, and it's certainly having its day in the sun, especially in the year like '22. What are your takes on those? And where do they belong? Or do they belong in the 60/40 that some have declared as archaic?
Rapoport: Who do you want to take that first? Do you want me to take that?
Linstra: Go ahead.
Rapoport: So, I come from the alternatives field. I spent about 10-12 years specifically with hedge funds and private equity funds, and I run a big hedge fund database in addition. I can tell you that the interest in alternatives is certainly larger now than it's ever been because of the market gyrations and the volatility within. But most of the interest is really in private equity, not in hedge funds, because the hedge fund products can now be replicated, the similar risk/return, et cetera, through some of the managed account offerings. Because the managed account providers can now go to cash, for example. They can use inverse ETFs. So, they can replicate a lot of that performance without all of those costs and all the structural inefficiencies we talked about earlier. But the one area that they can't get access to is private equity. That lack of correlation and exposure to what could be asymmetric returns is hard to achieve outside of those private equity products. And so, we're seeing increased demand for those.
Linstra: Matt, do you see that lining up with the data as well as far as adoption and usage?
Apkarian: Yeah, absolutely. So, we've had advisors telling us for a long time that they are going to increase their portfolio allocation to alternatives. It's been much slower than they've told us that it's going to happen, but they still, without fail, we see over the next 24 months or so a 2% overall portfolio allocation increase to alternatives.
I think there's so many things to unpack when it comes to the conversation of alternatives. I have been getting so many questions as I've been going through my research at the beginning part of this year about alternatives, alternative use in managed accounts and model portfolios. And so far, the conversation is primarily around liquid alternatives, especially for use in model portfolios. There aren't really a ton of real great solutions to be able to incorporate illiquid alts in a manner other than having a section of the portfolio blocked off and just kind of letting it do its thing in the corner and not trade when the rest of the portfolio trades. But who knows? We may see technologies such as blockchain and tokenization be able to enable something like that in the future.
Another conversation that we've been having around alternatives is about whether the rise of fixed income yields, again, is going to affect the adoption of alternatives that was foreseen. So, basically, the conversation was, were alternatives being used as a fixed income replacement. And what I've been told so far is that, no, it wasn't really being used as a fixed income replacement. If anything, it was part of the equity sleeve that was being carved out and that alternatives were being used in place of it because it was being used as a portfolio diversifier rather than a fixed income replacement. So, I think those are overall the two good signs for alternatives used to increase going forward, and that's good news for all the asset managers here because like everyone is working on something in the alternatives space.
Linstra: Good update. So, let's pivot to technology. I think it's obvious that that's what's been driving a lot of this now as far as the evolution of DI and even UMA for that matter. What are you seeing that we may not be seeing as far as trends in technology? Maybe Evan, we'll start with you?
Rapoport: So, again – I mean, I'm continuing to look at – and there are three things that we're sort of focused on at SMArtX and that would be – first would be the tax. We talked about that continued increase of tax optimization tools within the system, tax-optimized strategies. And then, also, some of the firms are willing to do the work manually. So, they'll come in and they'll do the work at no cost if you use their strategy. So, it's really interesting there. But the other area that we're continuing to see a lot of interest in is unified managed households, so UMH. And within UMH what now we're seeing – so, UMA, most folks know what that is and there's a lot of usage as we've discussed. But what has not happened yet within the UMA effectively is the ability to give control of that UMA to third-party asset managers. So, today in an UMA, typically the UMA provider or the TAMP is trading that entire portfolio. What is now happening is, the clients, the advisor are looking for a fixed income sleeve to be managed within the UMA, an equity sleeve like tax-managed sleeve to manage within the UMA. Today, those sit outside in a separate account. And so, those two we're seeing pretty consistently – or those three – UMH and the need for those two manager sleeves within the UMA, and then one more I'll give you, which is even more difficult and that's asset location. So, taking an individual strategy and then breaking it up into three separate accounts, even though it's one single strategy and that has never been done before. So, we're seeing a lot of interest in the evolution of UMA.
Linstra: And how are home-offices that you're engaging, are they bringing you in for some advice? How are they handling this? How are they viewing the trends toward and the desire for the UMH approach?
Rapoport: Well, I mean, they want it.
Linstra: And what are the challenges to that? What are the obstacles?
Rapoport: Well, the challenge is that no one really provides it today. Everybody wants it, but no one has it. And so, everybody's got to build it, right? So, we've got a lot of firms that are working towards that goal. With SMArtX, we are innovators, and we like to do things a little bit different than some of the legacy providers because of the tools that we have at our disposal. And so, elegance is important and making sure that not only can the advisor digest these and use these properly, but also the asset manager can trade these. And I think that's been the part that most folks don't recognize is how hard it is for the asset manager to manage a sleeve of an UMA. So, anyway, handling all of that and producing that and delivering that to market is where we're focused.
Linstra: Matt, are you seeing that showing that the UMH, the unified managed households, show up as again another key initiative in the future that we should be paying attention to?
Apkarian: Yeah, absolutely, especially for the tax conversation, just like you brought up. I mean, I think there's several different ways to think about tax management, tax optimization. We talked about the word tax, and it gets thrown around with several trailing words after it in different conversations – so, tax loss harvesting, tax optimization where in tax optimization we define that as the primary objective being minimizing taxes versus tax sensitivity, which doesn't necessarily mean that the minimization of taxes is the primary objective there. And then, tax transition, tax loss harvesting, you know, we've thrown around so many different things. It's almost like, I mentioned earlier, with the customized versus customizable conversation needs to be defined and people need to understand what's available out there.
To touch on your question about technology, I think we're not very far off from a day where the incorporation of ETFs in model portfolios or the blending of ETFs and mutual funds in model portfolios was like a novel new technology. Like it wasn't that long ago. And so, we're still seeing incorporation of new investment vehicles like separate accounts and therefore direct indexing within model portfolios as a key focus for a lot of firms that are looking to develop these products. Also, even open architecture – a lot of these things kind of seem like a given nowadays, but a lot of firms are just starting to open up their architecture and use third-party managers and blend their strategies with third-party managers in order to better meet the unique needs of their clients and meet the demands of their advisor clientele. And so, I think technology is moving faster than the financial world can take hold of it, but there's still a lot of work being done around things that almost seem foundational nowadays.
Linstra: Well, I don't know. Did you meet Morningstar Mo yet? We're doing our own here.
Apkarian: I did. I asked him a great question earlier on – what the value is for advisors in using model portfolios. And I'm pretty sure he gave an answer that I'm going to need to license from you to use in my report.
Linstra: Yeah, he's the trusted source of all Morningstar data. Well, great. Well, let's get – change is inevitable, and I feel like for those who have been in the business for a while, it just feels like we've seen a lot in recent years. And harkening back to General Eric Ken Shinseki, the former U.S. Army Chief of Staff, where, if you don't like change, you're going to like irrelevancy even less.
Rapoport: Great quote.
Linstra: What do you see? Is this change really having a transformation and a transformative impact on actual client accounts? Is this improving investor outcomes?
Rapoport: I mean, I would say, absolutely. There's no question. And I think Matt will probably touch it. It all depends on how you use it. You can take any tool and you can misuse it and you can produce worse outcomes. So, sometimes that can create a problem. But very often these tools are pretty easy to use, and if you follow the instructions, if you will, and follow your guidance, you should improve returns for clients and you should help to address their specific risk/return objectives in a way that you could never do otherwise without the technology that you have today.
Linstra: So, I think we haven't addressed under technology banner yet that you think we should be aware of, Matt?
Apkarian: Well, I think that change is really necessary for stability nowadays. I think that we're starting to see some really good signs where there used to be some major demarcations in age and use of various technologies and even use of model portfolios, for example. And the old story of younger, less experienced advisors are more likely to use model portfolios is fading away. We're actually not really seeing a difference in our portfolio construction segments and personas that we break out to basically help asset managers figure out who's a potential model user and who's not, and using the age of the advisors is no longer a key indicator there. I think a lot of that's driven by a younger advisor population more willing to use model portfolios, but then also older advisors thinking about how they're going to transition their practices as they go to retire at some point in the near future, and then also just driven by the fact that these advisors need to scale their practice in the face of fee compression in order to continue running a profitable business. So, overall, good signs. I think that technology is really being adopted at a pretty good pace for the sake of the end client.
Linstra: Fantastic.
Rapoport: One thing Matt just said that I think is so important, and that's the succession planning. We've got advisors that are clients that have been managing a large portion of the book themselves. And unfortunately, one of them passed away recently, and the heirs, the children, et cetera, tried to salvage the business, but they couldn't because the clients ran because he was the guy. He was the one that made all the decisions. He allocated all of the assets versus if they were in model portfolios where there could have been easily transitioned, the new advisor could have picked that up and there would be no real loss in terms of management or difference in the way in which the portfolios were managed, because of that outsourcing. So, the succession planning is enormous in terms of the benefits as a result of the outsourcing.
Linstra: That came up in an earlier session even today, just about valuation of practices, and it's great to be unique, but at what cost and as far as…
Rapoport: Yeah. I mean, they try to sell the practice, they couldn't do it because the clients were fleeing. Whereas to your point, if they had the models, those can be easily passed on and the value of the practice would be substantially up.
Linstra: Let's pivot. This is just open forum now. So, I'm just really curious to pick your brains a little bit just on maybe from anything you've heard even this week or just what you've been thinking about in recent months, what is the industry not paying enough attention to right now in your opinion? Is there anything that's being missed?
Rapoport: I'll let Matt go first.
Apkarian: Great question. All right. I get put on the spot here. What's the industry not paying attention to? I think that advisors really need to think about the core needs of their clients. We hear advisors tell us through our surveys that the reason that they don't use things like model portfolios is they don't meet the unique needs of their clients, and that might have been true 5-10 years ago. There's new products nowadays that can meet the needs of their clients and they might need to do a better job at suitability and understanding the true needs of their clients and how you can use the products that are available in today's world to meet those needs.
The other half of that is, maybe you just need to educate your client more. Maybe you need to make them understand what you're doing to improve the outcome that they are successful in their goals. The picture has been painted to me several times by several different advisors that you're going to get those clients that are going to come to you and they're talking to their buddies in the golf course that are saying, my friend is getting 20%, why am I only getting 15%? But if you, as an advisor, can then show, well, I've got a 95% probability based on 10,000 simulations that you're going to meet all the goals that you told me about, then you're going to satisfy their needs there and going to maintain that client. You're going to tell your client that you really understand what their needs are, that you care about them and maybe they won't care about the fact that they own something that's not getting top tier or well above benchmark returns.
Linstra: So, again, focusing more on that service model as opposed to the actual investment.
Apkarian: Yeah, absolutely.
Linstra: Evan, what do you see?
Rapoport: I think it's accessibility. I mean, there's a lot of great solutions out there, but I don't think a lot of advisors, specifically the smaller ones, really know that they're out there and they don't have access to them because they don't have enough size. So, they're $25 million, they're not $100 million, so they can't get access to some of the better tools out there. And what I love now – and the industry is addressing this to an extent – is the democratization of a lot of these products, bringing them down to the level where even the startup could access them. And one step further in that would be the all-in-one sort of solution. So, we are very focused on UMA technology, and we provide that to Morningstar. But what we look forward to is a solution where, for example, Morningstar is providing an entire wealth solution. It's all in one place, very easy for the advisor to do their planning, go ahead and allocate, access the reporting, do the tax loss harvesting all in one easy-to-use solution. And that's one of the benefits, of course, that the API structure allows for and that's something that I know that you and others are building towards. So, I think it's really exciting for a lot of the advisors, specifically the smaller ones.
Linstra: Well, thanks for that insight, because there's a lot of conversations going around, but sometimes it's in those finer nooks and crannies that we find some real gems that could be the future trend going forward. Thank you for that. Appreciate it. All right. Listen, before we leave, we also always like to ask a little bit about our guests just personally. So, I'm going to ask you both what's the book that you've read that's had the biggest impact on your career and then maybe what you're currently reading now that might be of interest? I know Evan you're a listener here, but not a reader.
Rapoport: Well, on my career, I mean, that's a big one. We just talked about. I mean, I'm unfortunately not – fortunately or unfortunately not going to be telling you the most interesting books out there. I read a lot of business books. So, one of the ones that I'm reading right now is called Designed to Scale, and it talks about scaling an organization, the different teams, how you manage those teams, et cetera. That's been a really good one. Good to Great is another great book if you haven't read it and really tells you how to accelerate your business, move it from one to another and where you should be focused or not focused and such. And so, that's been a really instrumental easy-to-read book, but helped me focus on where the business should be headed.
Linstra: Fantastic. What's the book that's had the biggest impact on your career? You tried to escape that one? Is there anything that stands out?
Rapoport: Let me think about that for a second. That's a tough one.
Linstra: You can think about it. I'll shift to Matt.
Apkarian: I think the one that had the biggest impact on my career is probably the first investing book that I read. So, for some back story, I was a biology major at UNH before I entered naturally into the world of finance through the traditional path. I was working at Fidelity, and I read The Intelligent Investor and so, basic, staple of the investment industry. I could probably not count the number of investing mistakes that book has prevented me from making by hopping on momentum trains. I mentor students that do equity research for a student endowment fund, and I tell them they are really, really lucky to be learning how to invest right now versus anyone who learned how to invest over the past decade because that learned how to invest in a bull market when you might not know the skills that you need to be able to weather what's happening right now and what's happened over the past couple of years if you have a decade ago. So, I think that's how the biggest impact on my career and has really kept me interested and got me interested in finance in the first place.
A really interesting book that I've read recently I would say it would be the Bogle Effect. So, a great book about John Bogle, the impact that he has made on the finance world and the massive amounts of money that he has saved investors by what he did and the impact that he had on our industry. What he did might not have been the best for a lot of the people here as businesspeople, but as investors and the fees that he saved us all in our portfolio by doing what he did at Vanguard is astounding. So, a really good read that I would highly recommend.
Linstra: Fantastic.
Rapoport: All right. He gave me an idea. So, I'll give my first financial book.
Linstra: See, you got one. I saw you Googling, but OK.
Rapoport: I'm going to say Peter Lynch One Up On Wall Street. It's like the first book that I read. I was kind of dating myself a little bit. Maybe some of you in the room don't know who Peter Lynch is even, But certainly, I think that was the book that really got me started in understanding investing. And the old legs, if you guys were around long enough, sort of saw his wife buying it. Buy what you know. And so, I think that was a great book on getting me started.
Linstra: Still a lot of people walking in and out of malls trying to do the Peter Lynch.
Well, great. Well, listen, we never close an episode without the – it's usually a 10 second. I'm going to give you 30 seconds. 30 seconds takeaways. If people have tuned us out by now, give us the one nugget that they should all be walking away with. Matt, we'll start with you.
Apkarian: Yeah, I'd have to say, and I think I said this earlier, so I'm going to repeat it because how important it is that in a world where customization is being enabled to the max, customization for customization's sake is not a value add. Be sure that you're really understanding the needs of your clients and whether they need customization or whether they need education, and then the tools that you have available to you to be able to improve the probability that you're meeting the needs and the goals of your client.
Linstra: Fantastic. Evan?
Rapoport: Well, again, I said this earlier also. But I would say outsource, outsource, outsource. The amount of time that you will bring back into your life to be able to service those clients, the amount of time that you'll have to spend with your family, those things are important. And the stress that investing sometimes brings to an average advisor who is not an analyst but typically a planner is not necessary. And so, I think outsourcing to me and I think about all my largest clients who are some of the largest advisors in the world, they outsource the majority of their investments. And so, that's what's really helping scale.
Linstra: Great takeaways. Well, Evan, Matt, thank you again for being here. We really appreciate your time. You can find more information on Morningstar at mp.morningstar.com. Guys, thanks again and thanks everybody for your participation. Appreciate it.
Rapoport: Thanks, Jon.
Apkarian: Thanks everyone.
(Disclaimer: This podcast is produced and issued by Morningstar Investment Management LLC, a registered investment advisor and subsidiary of Morningstar, Inc. The content is intended for U.S. audiences only. Individuals featured in this podcast are employed by Morningstar, Inc. and its subsidiaries. This includes, but is not limited to, Morningstar Investment Management LLC and Morningstar Research Services LLC. Morningstar Investment Management and Morningstar Research Services are registered with and governed by the U.S. Securities and Exchange Commission. This podcast is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of publication. Such opinions are subject to change. No Morningstar entity, including Morningstar Investment Management and Morningstar Research Services, shall be responsible for any trading decisions, damages or other losses resulting from or related to the content presented. Morningstar makes no representation as of the completeness or accuracy of the information presented. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives, and risk profile before making any investment decision.)
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Conviction. The term derives from the Latin verb convincere, which means “to argue.” And that’s the basis for Morningstar Investment Management’s quarterly global convictions: to present an argument that helps an investor achieve their goals. Or perhaps more directly, what are our high-conviction ideas to fuel investor success? We’ll cover a lot of ground in this episode, including recent market performance and trends, what those developments mean in terms of reward versus risk, inflation concerns, economic-recovery, and more.
An economic recovery is cause for celebration, but how, exactly, do we capitalize on it? Since it began in 2020, the decline that COVID brought us has been called the deepest and shortest economic crisis in history, and the nature of the forced shutdown followed by the subsequent reopening is an indication of just how unique this recovery has been. In this episode, we examine the recovery’s progress as it stands now. We also touch on where some of the risks may lie and how our portfolios are positioned to best take advantage of the recovery as it marches on.
China is a key talking point in the investment community today, as a regulatory crackdown has spooked markets. Chinese regulators have targeted specific sectors such as technology, education and real estate as part of a crackdown aimed at aligning the Chinese private sectors with its long-term policy agenda. In today’s episode, we will take a closer look at recent events in China and discuss both risks and potential opportunities in Chinese stocks today.
Changes in the corporate tax rate can have large, one-time effects on a company’s financial statements. Michael Budzinski, Senior Investment Analyst and Portfolio Manager, shares recent Morningstar Investment Management LLC research around corporate tax rate changes.
ESG investing, which focusses on an investment’s environmental, social, and governance impact or risk, has grown immensely in recent years, attracting significant inflows. But what happens to ESG investing during a market downturn? Are ESG considerations left by the wayside as investors focus on financial market risks? Ryan Murphy, Head of Decision Sciences for Morningstar Investment Management, discusses his research on the behavioral sustainability stress test.
With stocks reaching new highs and companies borrowing at historically low rates, broad markets offer limited upside. So how should investors position their portfolios in face of that?
As more of the US reopens and people begin to return to their normal routines we’ve seen a disconnect between supply and demand, and many are worried that price increases are here to stay. Alfonzo Bruno, associate portfolio manager, shares insights around the current state of inflation, how to interpret updated guidance from the Fed, and how he anticipates inflation pressures around supply chains to ease in a post-pandemic market.
Other than the strong recovery this year, the energy sector has been avoided by many investors. Whether environmental concerns of an increasing number of ESG-focused investors or worries about the secular decline in oil revenues as the world transitions to renewal energy sources, energy stocks have been among the least popular investments out there.
Philip Straehl, global head of research at Morningstar Investment Management, welcomes James Foot, Head of Research, Asia Pacific from Morningstar Investment Management Australia, to dive deep into why they think certain energy stocks may offer attractive long-term returns.
Our Select Equity portfolio managers share five key takeaways from the 2021 Berkshire Hathaway Annual Meeting. Portfolio specialist Jeff Wagner sits down with Mike Corty, Morningstar Investment Management’s Head of our Select Equity Portfolios team and the portfolio manager of our Tortoise portfolio, as well as senior portfolio manager John Owens, who manages Select Equity portfolios, All-Cap Equity and Small/Mid-Cap Equity.
After the late-2020 rally continued into 2021, Philip Straehl and Edward Fane assess the aggregate reward-for-risk picture in world markets and share their views on select asset class opportunities.
Philip is the Chicago-based global head of research at Morningstar Investment Management LLC. Ed, based in London, is head of research for Europe, the Middle East, and Africa at Morningstar Investment Management Europe, Ltd., which is an FCA-regulated firm.
Slides for this episode are available here, or by emailing us at simple@morningstar.com.
We'll have a new episode next week, then every other week for a temporary period. Thanks for listening!
Stocks have generally roared back from their pandemic lows about a year ago. But what about income? Many dividends were cut when COVID-19 shuttered businesses and kept us at home. What’s the outlook for dividend investors now that stock prices have rebounded?
George Metrou, portfolio manager for the Dividend Select Equity Portfolios at Morningstar Investment Management, shares his thoughts on managing through the pandemic, and on the current landscape and his outlook for dividend-paying stocks.
While we're off for spring break, we're reprising this episode featuring Terry Hawkins, sales manager at Morningstar Investment Management and Paul Kaplan, research director for Morningstar Canada. They discuss dollar-cost averaging, or the practice of investing slowly over time instead of in one lump sum. Research by Kaplan and others show that dollar-cost averaging might be expected to underperform a lump-sum approach. But what if it's what gets an investor into the markets?
While we're off for spring break, we're revisiting this episode that considers whether and when retirees should buy annuities to insure a steady stream of income, based on David Blanchett's research at the time of original airing. Few products are as polarizing among financial advisors than annuities, but certainly they have a place in the retirement picture for some individuals. In this episode, we look at Blanchett's research, which may help advisors decide when a client should annuitize or not, as well as a way savers can self-annuitize.
Blanchett is head of retirement research at Morningstar Investment Management.
Click here to download the slides for this episode, or email us at simple@morningstar.com.
In this episode, Gareth Lyons and Nabil Salem discuss the somewhat unusual South Korean stock market--unusual in that, this tech-dominated market remained attractively priced until recently.
Lyons and Salem review the recent valuation history of this market, analyze drivers of outperformance in 2020, and summarize their current views on South Korea as an asset allocation opportunity.
Gary Lyons is a portfolio manager on the Asset Allocation team at Morningstar Investment Management LLC, as well as co-lead on active-passive portfolios.
And Nabil Salem is an Associate Portfolio Manager on the Asset Allocation team, as well as the global asset class lead for emerging markets stocks at Morningstar Investment Management.
Read more from Morningstar Investment Management at mp.morningstar.com, including John Owens' article on the subject of this episode here. And find articles from David Whiston, Steve Wendel, and many more at morningstar.com.
To read articles, watch videos, and learn more about Morningstar Investment Management, go to mp.morningstar.com.
2020 was roller coaster of a year for investment markets, with the US stock market surging early, crashing in March with news of the pandemic and related shutdowns, then rebounding quickly and continuing to rally—especially in the fourth quarter—to end the year up about 20%, depending on the index you look at.
So where does this leave asset class valuations? Philip Straehl and Edward Fane explore the global aggregate reward for risk picture, then discuss their current outlooks on major asset classes.
Philip, based in Chicago, is global head of research at Morningstar Investment Management LLC, and Ed, based in London, is head of research for Europe, the Middle East, and Africa at Morningstar Investment Management Europe, Ltd., which is an FCA-regulated firm.
In this panel discussion, portfolio managers from Morningstar Investment Management discuss how to match portfolios with key investor characteristics. The panel is moderated by Marta Norton, CIO for the Americas, and looks at five investor profiles.
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Why might contrarian investing outperform, and how might an investor know when it's time to head in the opposite direction from the crowd?
Daniel Needham, president and global chief investment officer at Morningstar Investment Management, explores why markets are frequently efficient and what makes them become inefficient; explains how contrarians can act like a thermostat for markets; and explains how bees can be better decision-makers than humans at times. He also shares a checklist his team uses to help them make rational decisions that go against the crowd.
Advisors and investors are hearing more and more about behavioral science and behavioral economics, essentially how our humanity gets in the way of rationality, and what we can do to improve our decision-making. But what about investment managers themselves? Are they naturally more rational? How can a portfolio manager avoid making behavioral errors?
Dan Kemp, chief investment officer for EMEA at Morningstar Investment Management joins host Drew Carter to discuss who is susceptible to behavioral biases and Annie Duke's book, "Thinking in Bets."
While we're off for the holidays, please enjoy this rerun of Episode 34.
In "The Tipping Point," author Malcolm Gladwell looks at how ideas can spread like viruses. Citing psychological studies and using many examples, Gladwell shows how people, environments, and changes in an idea itself can lead to explosive growth in popularity. In this episode, Jarred Watts considers how the ideas in this book, which turned 20 years old in February, apply to investing. Watts is a client portfolio manager at Morningstar Investment Management.
To access the slides discussed in this episode, click here or email us at simple@morningstar.com.
From all of us at Simple but Not Easy and Morningstar Investment Management, Happy Thanksgiving! If you’re in a mood to give thanks—or just want to hear others do so—you might check out Episodes 23 and 24, in which a passel of our guests share what they were thankful for this time last year, or something they’d be thankful to see in the future.
Or, here we rebroadcast Episode 16, a conversation with Daniel Needham about value investing and why we take a valuation-driven investing approach. We were reminded of this episode after reading a recent article in the Financial Times by one of our favorite market commentators, Michael Mauboussin.
In this episode, Needham, president and global chief investment officer at Morningstar Investment Management, shares his views on value investing and the way his team uses a valuation-driven approach to multi-asset investing.
As Charlie Munger has famously said, “All intelligent investment is value investment because why would you want to buy something which wasn’t worth as much as you were paying for it, and who wouldn’t like buying something for less than it’s worth?" Needham describes how we aim to do this in an asset allocation and portfolio construction context.
Good decisions are often built on good forecasts. But forecasting is hard, in part because it requires us to be aware of both what we know and what we don’t—or even can’t—know. Dan Kemp and Ryan Murphy discuss what good forecasting looks like. Dan is CIO for EMEA at Morningstar Investment Management Europe Ltd., an FCA-regulated firm. Ryan is head of decision sciences at Morningstar Investment Management LLC.
Click here to download the slides for this episode, or email us at simple@morningstar.com.
Click here to download the slides for this episode, or send us an email at simple@morningstar.com.
For the slides referenced in this episode, please click here or email us at simple@morningstar.com.
To access the slides from this episode, please click here or email us at simple@morningstar.com.
Slides referred to in this episode are available here, or by emailing us at simple@morningstar.com.
To download the slides discussed in this episode, tap here or email us at simple@morningstar.com.
To view the slides discussed in this episode, please tap here or send us an email at simple@morningstar.com.
Before her Ivy League education and starting her financial advice practice, Ephie Coumanakos grew up in Athens, Greece. Rooted in business and hard work, she connects with her engineering and other analytical clients in Wilmington, DE, with clear communication. Financial advice from books or the media is too generic to be worth much, she says; people who want added financial value should seek an advisor who delivers personalized advice.
To download the slides mentioned in this episode, click here or send us an email at simple@morningstar.com.
Slides referred to in this episode are found here. Or you can contact us at simple@morningstar.com.
Global stock markets this year have gone through a dramatic sell-off and recovery in record time. Perhaps more importantly, we’ve seen a significant decline in economic activity since February, likely marking the onset of a recession. In this episode, Daniel Needham and Philip Straehl look at past recessions and compare them with the current environment. We consider what past market recoveries have looked like and discuss how our investment team is considering these lessons from the past to uncover potential long-term opportunities today. Daniel Needham is president & global CIO, and Philip Straehl is head of capital markets & asset allocation, Americas, at Morningstar Investment Management.
George Metrou, portfolio manager for the Dividend Select Equity Portfolios, talks about the poor performance of dividend-paying stocks so far in 2020, despite their reputation for being defensive. He also discusses why he holds cash, his thoughts on companies cutting dividends, and his outlook for income going forward.
John Caserta grew up in North Haven, Conn., where he’s now a Chartered Financial Consultant and managing director at Caserta & de Jongh LLC. His second office is in New Haven, home to his alma mater, Yale, where he studied Italian and played trumpet in concert and jazz bands. His frequent media appearances and alumni connections are helping him grow his practice. Listen to hear Caserta share the most underrated piece of financial advice.
Find slides referred to in this episode at https://morningstaronline-my.sharepoint.com/:b:/g/personal/drew_carter_morningstar_com/ERJNlLpWN0xItcK6zzHH7-8BSz2imrSKymOTc-3U7Bqc8A?e=OmDV7c
Sarah Newcomb, director of behavioral science at Morningstar, Inc., discusses emotions brought on by market loss, talks about how they can affect decisions, and offers some ways to cope. Ryan Murphy, head of decision sciences at Morningstar Investment Management, discusses cognitive biases to watch out for and ways investors can make better decisions.
Kevin Schaefer coaches clients to plan for the worst, and to be content. An obsession with money distorts smiley faces into ones with dollar-sign eyes and a squiggly mouth because it often leads to aggressive investing that's like being on a roller coaster. A smoother ride, he says, keeps "a simple smile on your face."
Schaefer, a CFP and founder at Spirit West Certified Planning, LLC in Scottsdale, Arizona, says, "There aren't enough contrarians" paying attention to risks embedded in passive index-linked investments. "I'm hoping that trend (toward passive) will break and people will get back to basics."
Portfolio managers Dan McNeela and Michelle Ward talk about positioning in our Asset Allocation managed portfolio series and their outlook for key asset classes.
To view the slides for this episode, please click here. The slides will be available until July 22, 2020. After that date, please email simple@morningstar.com for access.
For more information about Morningstar Managed Portfolios, click here.
Our equity portfolio managers talk about how they're navigating the COVID-19 crisis and their outlook.
In this episode, we take a closer look at the recent US stock market rally from its March low, and address some questions frequently asked by advisors around assessing risk and behavioral coaching in these unusual times. Guests, via a previously recorded webcast, are Daniel Needham, president and global CIO, and Ryan Murphy, head of decision sciences, at Morningstar Investment Management.
Growing a financial planning practice can be challenging at the best of times. But what if you had to replace your in-person presentations and meet-and-greets with online events and marketing tools? In this episode, Erik Bowman talks about how he’s looking to attract new clients in a shelter-in-place COVID-19 world.
Inflation has been tame for some time. But where will inflation go from here? Will the massive COVID-19-related stimulus by the Fed and the Treasury lead to higher inflation? Or will rocketing unemployment weaken inflation—in fact, is deflation a greater concern in the near term?
Income investors might despair in today's COVID-19-ravaged environment—the Federal Reserve has lowered cash rates to near zero, shuttered businesses can’t pay stock dividends, and defaults are expected to rise.
Yet, our income-focused portfolio managers say their prospects for income have improved greatly since February. Marta Norton, head of outcome-based strategies, and Hong Cheng, associate portfolio manager, share where they see income opportunities in today's markets.
We continue our series of episodes based on webcasts, with this week looking at what messages advisors might share with clients to help them understand how today's market environment may affect their long-term financial goals. Guests are Morningstar Investment Management president and CIO Daniel Needham and head of decision sciences Ryan Murphy.
Andrew Lill, CEO, Americas, and Philip Straehl, head of capital markets & asset allocation, Americas, discuss the extraordinary markets in the first quarter of 2020, and share some thoughts on where they see opportunity in the days ahead.
Derek Notman writes the Love Your Finances blog. More information about Intrepid Wealth Partners and Conneqtor are found by clicking these links.
You can also click here to read Morningstar Investment Management's investment insights and learn more about and learn more about Morningstar Managed Portfolios.
Daniel Needham, president and global chief investment officer at Morningstar Investment Management, discusses the recent stimulus and unemployment announcements, as well as asset class views--both going into the market crisis and as of the day of recording (March 26, 2020). Then Daniel and Alex Riedel, portfolio specialist at Morningstar Investment Management, answer questions from the webinar audience.
Daniel Needham and Andrew Lill share their views on markets, the economy, and how we're dealing with the crisis brought on by the novel coronavirus. Also, Ryan Murphy on how to keep clients calm amid market declines. Needham is president and global CIO, Lill is Americas CIO, and Murphy is head of decision sciences, all at Morningstar Investment Management.
Should retirees buy annuities to insure a steady stream of income? Few products are as polarizing among financial advisors than annuities, but certainly they have a place in the retirement picture for some individuals. In this episode, we look at new research by David Blanchett that may help advisors decide when a client should annuitize or not. Blanchett is head of retirement research at Morningstar Investment Management.
In "The Tipping Point," author Malcolm Gladwell looks at how ideas can spread like viruses. Citing psychological studies and using many examples, Gladwell shows how people, environments, and changes in an idea itself can lead to explosive growth in popularity. In this episode, Jarred Watts considers how the ideas in this book, which turned 20 years old in February, apply to investing. Watts is a client portfolio manager at Morningstar Investment Management, where he also leads the investment team's book club.
Market losses like the recent coronavirus-induced decline can be upsetting. We're rebroadcasting this episode in which Andrew Lill and Ryan Murphy discuss what investors can do to prepare for market declines and how to respond once losses happen. Lill is the chief investment officer, and Murphy the head of decision science, both at Morningstar Investment Management LLC.
We conclude our two-part conversation on our Outlook for 2020 and beyond with views on asset classes we view as being attractively priced. Philip Straehl, head of capital markets & asset allocation, Americas, and Tanguy de Lauzon, head of capital markets & asset allocation for EMEA, return to share their views.
Important Disclosure: Returns for U.S. stocks are indicated by the Morningstar US Market Index.
We begin our two-part conversation on our Outlook for 2020 and beyond with a look at the aggregate risk/reward landscape around the world. Host Drew Carter welcomes Philip Straehl, head of capital markets & asset allocation, Americas, and Tanguy de Lauzon, head of capital markets & asset allocation for EMEA.
Important Disclosure: Returns for U.S. stocks are indicated by the Morningstar US Market Index; for global stocks by the Morningstar Global Markets Index; for emerging markets stocks by the Morningstar EM Index; and for Russia by the Morningstar Russia Index.
Terry Hawkins, sales manager at Morningstar Investment Management and Paul Kaplan, research director for Morningstar Canada, discuss dollar-cost averaging, or the practice of investing slowly over time instead of in one lump sum. Research by Kaplan and others show that dollar-cost averaging might be expected to underperform a lump-sum approach. But what if it's what gets an investor into the markets?
Peter Dugery, head of sales at Morningstar Investment Management, leads a discussion on the environment advisors face today. His guests are Matt Unger, the founder and managing director at Focus Asset Management, an independent RIA in Dallas, and Jason Baker, co-founder and president of Baker Wealth Management in North Carolina.
Four portfolio managers describe how they evaluate and select stocks for their concentrated portfolios.
Why might contrarian investing outperform, and how might an investor know when it's time to head in the opposite direction from the crowd?
Daniel Needham, president and global chief investment officer, explores why markets are frequently efficient and what makes them become inefficient; explains how contrarians can act like a thermostat for markets; and explains how bees can be better decision-makers than humans at times. He also shares a checklist his team uses to help them make rational decisions that go against the crowd. Drew Carter hosts.
Questions? Contact us at simple@morningstar.com.
Learn more about Morningstar® Managed PortfoliosSM at mp.morningstar.com.
In part two of our giving-thanks episode, more members of our investment team share what they're thankful for, and what they'd be thankful for if it were to happen. John Owens talks IPOs, Marta Norton is doubly thankful, Paul Arnold looks forward to greater wealth equality, and Shannon Steiner--new to the podcast--is thankful for her internship with Investment Management and discusses the findings of her study of Morningstar Investment Management's record of selecting funds over more than two decades. Drew Carter hosts.
Ryan Murphy talks about why it's good to give thanks, and how it can make us better investors. Then Brian Huckstep, Dan McNeela, Cindy Galiano, and Mike Stathakis share what investment developments they're thankful for, as well some things they would be thankful for if they came to pass. Drew Carter hosts.
How should a portfolio to seek to deliver income to an investor? By maximizing dividend yield? Total return? Or perhaps through an endowment model that tries to keep capital from drawing down? Our guests today, who manage three very different income strategies, agree that a balanced approach is key to a robust income strategy.
This episode continues our series of panel discussions from a recent event we sponsored in Chicago. This discussion focuses on delivering income in a low-yield market environment, and our panel of portfolio managers addresses the importance of global exposure and downside protection in their strategies.
Leading today’s discussion is Michelle Ward, portfolio manager at Morningstar Investment Management. She's joined by George Metrou, equity portfolio manager, and Hong Cheng, associate portfolio manager, both of Morningstar Investment Management, and Rahul Sharma, portfolio manager at Schafer Cullen Capital Management, Inc.
Three portfolio managers at Morningstar Investment Management gathered at a symposium we hosted in Chicago on Oct. 22, 2019, to discuss their best ideas in equities.
This episode gives our listeners access to that panel discussion, featuring Matt Coffina, who manages the Hare strategy, John Owens of the All-Cap and Small/Mid-Cap Equity strategies, and Dan McNeela, an equity specialist on the multi-asset team.
The PMs share nuanced views on tech stocks, reiterate our thoughts on buying stocks in their initial public offerings, and discuss opportunities in international markets.
Market losses can be upsetting. Aside from the pain of losing money, there’s something about it that just doesn’t feel right. Yet, we know that market dips, declines, and disasters are all a part of investing. So, what can investors do about them?
Host Drew Carter is joined by Andrew Lill, chief investment officer, and Ryan Murphy, head of decision science, both at Morningstar Investment Management LLC, to discuss what investors can do to prepare for market declines, and how to respond when we find ourselves in the middle of an unfortunate drop in prices.
On September 14, 2019, Saudi Arabian oil fields were attacked, leading to a spike in oil prices. But the spike quickly subsided, with prices falling back—and even below—their pre-spike prices about two weeks later.
But the phenomenon of lower oil prices is of course not new. And that’s reflected in the returns of U.S. stocks in the energy sector, which lost an average of about 5% a year over the five years ended September 30, according to S&P 500 sector index data on Morningstar Direct. The S&P 500, during that same period, rose nearly 11% annualized, while the IT sector climbed more than 18% on average each year.
How does this weigh on our views of the energy sector going forward? We think energy is the most underpriced sector and, as valuation-driven investors, we therefore believe this sector may be poised for better growth than the broad market in the future.
Getting more women into portfolio management might seem like a no-brainer.
But Marta Norton, portfolio manager at Morningstar Investment Management, says "it’s a knotty problem because you don’t want people to have women or diversity on their team … just for the sake of having that kind of diversity. As a woman, I find it kind of insulting when people say, 'We need to have a woman here,' because then you don’t feel like you’re earning it by your own merit. And I feel very strongly that I’ve earned it by my merit, I feel that Michelle has, that Hong has. None of us want to feel like we are some sort of token by any measure, and I would imagine that most people would feel the same way. But at the same time, I like to express this as diversity of thought—if you have people all thinking the exact same way, you’re gonna have biases and your gonna make mistakes. But like Abraham Lincoln’s cabinet—a team of rivals—if you have people with different perspectives, you going to be able to challenge each other and maybe come up with views that you would have otherwise ignored that help you come to a better decision.”
And we're all about better decision-making.
Host Sammie Spector speaks with Marta and her investment team colleagues Michelle Ward and Hong Cheng about their careers in finance, struggles and joys along the way, and how we might encourage more women to investment career paths, including those that require quantitative skills.
Getting more women into portfolio management might seem like a no-brainer.
But Marta Norton, portfolio manager at Morningstar Investment Management, says "it’s a knotty problem because you don’t want people to have women or diversity on their team … just for the sake of having that kind of diversity. As a woman, I find it kind of insulting when people say, 'We need to have a woman here,' because then you don’t feel like you’re earning it by your own merit. And I feel very strongly that I’ve earned it by my merit, I feel that Michelle has, that Hong has. None of us want to feel like we are some sort of token by any measure, and I would imagine that most people would feel the same way. But at the same time, I like to express this as diversity of thought—if you have people all thinking the exact same way, you’re gonna have biases and your gonna make mistakes. But like Abraham Lincoln’s cabinet—a team of rivals—if you have people with different perspectives, you going to be able to challenge each other and maybe come up with views that you would have otherwise ignored that help you come to a better decision.”
And we're all about better decision-making.
Host Sammie Spector speaks with Marta and her investment team colleagues Michelle Ward and Hong Cheng about their careers in finance, struggles and joys along the way, and how we might encourage more women to investment career paths, including those that require quantitative skills.
Too often value investing is confused with the value style, and value investors are mistakenly thought to buy only value stocks.
Daniel Needham, president and chief investment officer at Morningstar Investment Management, shares his views on value investing and on the way his team uses a valuation-driven approach to multi-asset investing.
After all, as Charlie Munger has famously said, “All intelligent investment is value investment because why would you want to buy something which wasn’t worth as much as you were paying for it, and who wouldn’t like buying something for less than it’s worth?
Is "outsourcing" a dirty word? Are managed money offerings all the same?
Matt Radgowski and Peter Dugery share insights on the challenges and rewards for financial advisors when choosing a money manager to handle client portfolios. Drew Carter hosts.
Matt is managing director, Americas, at Morningstar Investment Management, and Peter is head of sales at the same firm.
In this episode, John Owens and Ryan Murphy talk about why price-weighted indexes like the Dow Jones Industrial Average can be distracting to investors.
John, who's a senior equity portfolio manager at Morningstar Investment Management, explains why investors should disregard single-day Dow point drops, and also any short-term performance.
Ryan, who's head of decision science at Morningstar Investment Management, shares some recent research that shows someone's risk perspective can be affected by what they pay attention to.
Together, our guests discuss with host Drew Carter how discipline and nudges can help investors ignore the noise and stay focused on their financial goals.
In today's episode, host Drew Carter gets up close and personal--into investing, that is. Getting personal might elicit nervousness, but why does it seem so antithetical to investing? We explore personalization and customization in financial practices: If you’re an investor, how well does your financial advisor know you? And advisors, how much time have you taken to get to know your clients? Joined by Morningstar Investment Management group's Matthew Radgowski, chief operating officer for the Americas, and Marta Norton, head of outcome-based strategies in the Americas, as well as Ryan Murphy, Ph.D. head of decision sciences, the conversation reviews Morningstar's belief that getting personal can be good for investors AND advisors—but it may be more complicated than you think.
While host Drew Carter is on sabbatical, producer Sammie Spector guest hosts a two-part series on top reading recommendations from Morningstar employees. Guests include everyone from our portfolio managers to our sales directors, as well as a glimpse into our Investment Management Book Club and an interview the Morningstar HQ librarian.
While host Drew Carter is on sabbatical, producer Sammie Spector guest hosts a two-part series on top reading recommendations from Morningstar employees. Guests include Christine Benz as well as portfolio managers, sales directors, and behavioral scientists, to provide a variety of reading material ranging from investment self-service books, to environmental sustainability, as well as one 'picture book' and perhaps the only investment principles book in the fiction genre.
When you save and invest, most likely your biggest financial goal is retirement, a topic that can be daunting or even frightening on both a personal level and on a macro level. Host Drew Carter discusses the state of retirement with David Blanchett, head of retirement research at Morningstar Investment Management, who has called retirement the "largest purchase most Americans will ever make."
Today's discussion revolves around the "right" age to retire, online savings and management tools, retiring earlier than planned, and how far off people tend to be when planning for retirement, as well as if there is in fact a retirement crisis.
Today's episode explores what the role of financial advisors really entails. When you think about, did the role of 'behavioral coach' cross your mind? Guest Ryan Murphy, Ph.D., head of decision sciences at Morningstar, Inc. thinks it should. Host Drew Carter and Ryan Murphy discuss the responsibilities, such as behavioral coaching, that may be central to an advisor’s role, perhaps even more important than some traditional roles, like, say, building investment portfolios.
Millennials. Has a generation ever attracted so much attention from—or created so much angst within—the financial services industry? If you Google “Millennials and financial advisors” or “Millennials and investing,” you’ll find a dizzying array of surveys and published opinion pieces on the topic. And for good reason—Millennials and those that will come after them represent the future of investing and financial advice. Host Drew Carter decides to leave the surveys and data behind, and focus some interviews on real… live… Millennials, here in the studio to talk about investing and financial advice. Drew Carter asks our 4 millennials in the studio about their investing habits, their opinions on working with a financial advisor--and what specific types of financial advice they're looking for, and their approach to savings.
Like all investments, MLPs have risks investors should consider before making an investment decision. Those risks include governance features that can favor management over other investors, potential conflicts of interest, and concentrated exposure to a single industry or commodity. Since most MLPs are clustered in the energy sector, they can therefore be sensitive to shifts in oil and gas prices. There may be advantages and disadvantages associated with MLPs including, but not limited to, MLPs’ net income being passed through to the investor, which is then taxed at the investor’s individual tax rate and certain distributions being deemed as return of capital. Morningstar and its affiliates, including Morningstar Investment Management do not provide tax advice. Individuals should consult with their Financial Adviser and/or tax professional about this and other tax issues relating to their accounts
Developed equity markets outside the U.S. have struggled mightily for about a decade since the global financial crisis. Individually, these markets have their unique struggles, whether it’s Brexit in the U.K. or sustained economic growth and profitability in Japan. So, why would anyone want to invest in these markets, let alone prefer them to the U.S. market?
Portfolio manager Gareth Lyons, who covers equity markets outside the U.S., discusses his views with host Drew Carter.
The U.S. Treasury market has seen a stunning turnaround in about six months. The Federal Open Market Committee voted to continue to raise rates last December, despite the ongoing stock-market rout. Shortly into the new year, the Fed changed its tune. Stocks rallied, but so did Treasuries, pushing the yield on 10-year notes down to nearly 2%.
The fact is, we don't really know why this has happened. Assumptions of rate cuts, the possible end of the economic cycle (read: a pending recession), and even actions of bond vigilantes might be at play. Regardless of the cause, the yield curve has come down and is now inverted, with very short-term and long-term rates appearing like shoulders on the curve above an intermediate-term "belly."
This belly is where yields have fallen most. So, as valuation-driven investors, we have naturally asked ourselves whether yields have fallen too much—in other words, do these prices call for trimming exposure to these assets?
We'd previously looked at our Treasury exposure as a sort of barbell approach, with short-term bills offering strong yields and less duration—or interest rate risk exposure—which might lessen the damage of rising rates. On the other end of the barbell were long-term bonds. These bonds weren't attractively priced, necessarily, but were decently attractive to us relative to government debt from other countries, as well as in light of their potential portfolio protection in a downturn (recessionary environment or a crashing stock market).
After prices of Treasuries across the curve were bid even higher, we expected to find them less appealing, especially in that belly area. But, as contrarians, we want to challenge predictable conclusions. Also, as a reminder, we don’t know what's next for bond markets—if a recession is at hand, yields could possibly go even lower, but if this is an overreaction by the market, they may bounce back quickly. Those were our two central scenarios when thinking about this probabilistically—that is, the most likely outcomes that we might try to assign probability weightings to. From there, we built a model to test how different portfolios might respond in different environments, which is known as scenario testing.
Our test results may seem surprising: The middle of the curve now looks most attractive. Certainly, long-term bonds appear to offer the widest range of potential outcomes—positive or negative—but the likelihood of a meaningful positive outcome is low. The positive skew only points to overweighting long-term bonds under relatively high probabilities of the more extreme downturn, in which we might expect the long end of the yield curve to move to, or below, its lowest point since 1993.
Otherwise the balance is less attractive. Short-term bonds appear exposed to very little downside risk, but also don't offer much upside in the event that yields continue downward. The belly, which we'd previously avoided, may be the sweet spot for Treasury exposure now, with Treasuries of between three and seven years to maturity offering what we believe to be the best trade-off of potential rewards and potential risks in a highly uncertain environment.
The key here is that if we did move into a recession, we could expect the Fed (as one of the only central banks globally that has managed to raise rates) to cut the fed funds rates aggressively. Unless a recession is severe enough to affect expectations for long-term growth and pull long-term bonds materially lower, the middle of the curve has enough duration to benefit from the steepening that would likely occur as the Fed unpinned the short end by cutting rates toward zero, but not enough to greatly offset its income if we saw a more positive economic outcome where rates actually reverted toward previous higher levels.
The market for initial public offerings, or IPOs, in the U.S. is hot, with household names like Lyft, Uber, and Pinterest coming to the public markets with a lot of media coverage and interest from investors. But many of these so-called unicorns who’ve achieved $1 billion valuations before they’ve gone public have never turned a profit. So, how can investors tell if these IPOs are potentially worth investing in?
Host Drew Carter speaks with Ali Mogharabi, senior equity analyst at Morningstar Research Services, about the history of the IPO market, internet bubble, and 'tech unicorns.' Then, we learn from John Owens, senior portfolio manager at Morningstar Investment Management, about the caution taken when approaching 134 firms that went public last year.
Recorded on: May 14, 2019
Now that we've been given a great background on sustainable investing, Drew Carter turns our attention to how advisors and investors might go about investing in a sustainable way.
Recorded on: April 5, 2019
Are you new to sustainable investing and ESG? Guests Jon Hale and Julie Koska of Morningstar Research Services explain how managers are incorporating environmental, social, and governance into investment decisions, why investors are flocking to ESG portfolios, and the effect of ESG on investment returns (which might surprise you). Drew Carter hosts.
Recorded on: April 1, 2019