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U.S. Inflation in September and Implications for the Fed

Inflation concerns continue to be the heaviest factor explaining short-term equity movements. The consensus among economists anticipated a strong U.S. inflation reading for September, which ultimately surprised on the downside: headline CPI reached +0.6%, in line with the year-over-year rate moving from 3.4% to 3.7%, while core CPI came in at +0.3% versus the +0.2% expected, shifting from 2.4% to 2.6% year-over-year. Its impact was amplified by the proximity of the Federal Reserve meeting scheduled for the 28th.

However, we believe the release was not strong enough to justify another rate hike in October. Beyond the impact of rising energy costs and the effect of AI investments on the prices of PCs, software, and mobile phones, the only aspect to monitor is the uptick in Owners’ Equivalent Rent (OER), which rose compared to the previous month.

The market’s immediate reaction to the data was to push expectations of a 25-basis-point rate hike in federal funds higher: probabilities spiked above 70%, only to quickly retreat to 12.7%, the lowest level since June. The September retail sales data (which deteriorated relative to August), the moderation in import prices shown in the Philadelphia Fed survey, and comments from Mary Daly (San Francisco Fed) and Michelle Bowman—who do not foresee a rate hike this month—exerted downward pressure on that probability, aiding the Treasury bond market. Regarding the U.S. Treasury bond, we do not believe that developments in the neocloud sector, discussed in the next section, were the main driver behind the yield compression. Investment in AI will continue to contribute positively to GDP in the coming months.

AI: Neocloud Strain and Ongoing Adoption

Inflation and its initial effect on the Treasury yield (which exceeded 5.32% on Wednesday before stabilizing near 5.08% on Friday) was also the catalyst for the sharp drop in share prices among neocloud companies. CoreWeave alarmed investors at the worst possible time by communicating that it would like to achieve an investment-grade credit rating to finance its growth on an “unlimited” basis. Its debt fell below 80 (against a par value of 100), having traded at par just a few months ago, while its CDS priced in a more than 50% probability of default over the next five years.

We consider this an isolated case affecting a subsegment of technology companies with higher financial leverage and greater sensitivity to rate hikes, rather than a red flag for the broader set of companies linked to the AI theme.

For now, the adoption of paid AI services among both large and small enterprises continues to advance, rising from 8% in large firms and less than 4% in small ones at the start of 2023 to 67% of large, 62% of mid-sized, and 50% of small businesses today—all within just three and a half years. Moreover, investments are being monetized: aggregate cloud revenues among major compute providers grew 43% year-over-year in the second quarter, based on nearly $370 billion over the last twelve months.

Geopolitics and the “Incompetence Premium” in U.S. Debt

In the short term, the evolution of inflation readings will be determined primarily by geopolitical factors. In this regard, uncertainty has heightened recently: Iran, through its Revolutionary Guard, has intensified threats against vessels that might “illegally” attempt to trade or load oil in the strait. Similarly, the Wall Street Journal reported comments from Iranian authorities regarding the deployment of troops to carry out retaliatory actions against U.S. allies in the Gulf.

As we have been explaining, one of the Iranians’ objectives is to keep the price of crude oil near $100 per barrel to minimize Trump’s chances of retaining control of the Senate as much as possible. However, the escalation in hostilities places Iran in a difficult situation to manage: overreaching in its pressure could hand Trump the justification he needs to strike with greater force once control of both houses is lost on November 3.

A poorly explained war, an imprecise central bank, and Treasury buybacks too small to move the needle have exasperated fixed-income buyers. Some strategists are already referring to an “incompetence premium” impacting the pricing of U.S. sovereign debt.

Woodford, Warsh, and the Abandonment of Forward Guidance

This is why the coincidence surrounding Kevin Warsh’s abandonment of forward guidance—which likely affected the structure of the yield curve—and the Nobel Prize in Economics awarded to Michael Woodford, arguably the academic who put the most effort into establishing a theoretical foundation for that concept, remains curious. The award arrived last Monday, October 12, four months after Warsh dropped the concept in the FOMC statement on June 17. That said, the contradiction is smaller than it appears at first glance.

In Interest and Prices (2003), Woodford argued that monetary policy operates primarily through expectations of the future rate trajectory rather than the rate applied today. At Jackson Hole (2012), he extended that concept to zero-lower-bound (ZIRP) environments. His recommendation was to communicate guidance state-contingent on the economy rather than tied to a calendar date. The Fed implemented this in December 2012 by incorporating unemployment and inflation thresholds into the FOMC statement.

His subsequent work with García-Schmidt (2019) on economic agents planning over finite horizons significantly tempers the impact of long-term projections. Thus, within his own body of work, we find reasons to believe that guidance was less potent than the models suggested.

In reality, the disagreement with Warsh lies in substance, not form. For Woodford, what must be communicated is the central bank’s reaction function to incoming data, not the path of interest rates. Warsh states that guidance has “outlasted its usefulness” and offers instead a “framework” or “roadmap,” provided it is not termed forward guidance. This closely aligns with abandoning the rate trajectory while retaining the reaction function—which is precisely what Wall Street requested.

Furthermore, an important nuance exists: Woodford advocated guidance as a tool specifically when rates are at zero. With federal funds at 3.75–4%, its marginal utility is significantly lower. Therefore, in my view, extrapolating what occurred post-COVID (in 2021, the issue lay in committing to a rate path in an unprecedented environment amid runaway inflation) with Powell’s “transitory inflation” commentary and the resulting loss of credibility would be a mistake.

What occurred then does not prove that communicating the Fed’s reaction function to the market is useless. The risk lies in leaving the market to guess it, which inherently increases uncertainty, noise, and volatility in the fixed-income market.

In summary, the Fed’s reaction function is the rule, explicit or implicit, that translates the state of the economy into a rate decision. Communicating it means telling the market how the Fed decides, without promising what it will do.

Communicating the reaction function establishes the rule: the market continues to react to data, but in the direction and magnitude intended by the Fed—exactly what Woodford advocated. The question with Warsh is whether, in removing guidance, he will also cease to communicate the rule.

Historic Record in Assets Under Management: BlackRock Crosses the $15.5 Trillion Threshold

| By Amaya Uriarte | 0 Comentarios

Photo courtesyLarry Fink, CEO and Chairman of BlackRock.

In its third-quarter results presentation, BlackRock announced that it has crossed the $15.5 trillion threshold in assets under management (AUM), driven by $869 billion in net inflows over the last twelve months, representing organic growth in base fees of 10%. “These results demonstrate the value of our integrated platform, as clients increasingly choose us as a partner in investment, financing, and technology. That client trust is translating into greater earnings power, with shareholders benefiting from a more than 35% year-over-year increase in adjusted earnings per share, an adjusted operating margin of 47.8%, and annualized organic base fee growth of 11% in the third quarter,” highlighted Larry Fink, CEO and Chairman of BlackRock.

This momentum is reflected in the $205 billion in net inflows recorded during the third quarter and an 11% annualized organic base fee growth, reflecting broad-based strength across iShares ETFs, systematic active equities, private markets, and cash. In this regard, Fink added: “Clients entrusted us with $205 billion in net inflows this quarter, and $869 billion over the past year. Our results reflect BlackRock’s scale, with 12% growth in technology ACV (Annual Contract Value) and net inflows across all asset classes, client types, regions, and in both active and index management.”

Solid investment performance drove $66 billion in active net inflows led by fixed income and systematic franchises, while iShares generated $135 billion in net inflows. “BlackRock brings together issuer relationships built over decades, financing expertise, investment performance, and the technology and data that connect everything. That combination is differentiating us in every region,” commented the CEO, highlighting the securing of mandates at the forefront of capital markets, raising $68 billion in private markets over the past year, and the first deployment of its AI Infrastructure Partnership. “We are entering our seasonally strongest fourth quarter with accelerating momentum and a broad pipeline. Demand for capital is growing across the global economy, and BlackRock is increasingly at the center of how that capital is deployed and managed,” Fink concluded.

Business Lines

On a financial level, investment advisory, administration fees, and securities lending revenue increased by $990 million compared to the third quarter of 2025, driven by organic base fee growth and the impact of market beta on average AUM. Compared to the second quarter of 2026, the increase was $310 million, also supported by the effect of one additional day in the quarter. Within this category, securities lending revenue reached $253 million (compared to $203 million in the third quarter of 2025 and $239 million in the second quarter of 2026), reflecting higher spreads and higher average balances of securities on loan.

On the other hand, performance fees grew by $114 million compared to the third quarter of 2025, primarily due to higher revenues from liquid alternative products related to a single hedge fund, partially offset by lower revenues in private markets. Compared to the second quarter of 2026, these fees increased by $325 million, driven by liquid alternative and private market products.

The firm’s technology business continued its expansion with 14% growth in technology services and subscription revenue year-over-year. In figures, this represented an increase of $73 million compared to the third quarter of 2025 and $22 million compared to the second quarter of 2026, reflecting sustained demand for Aladdin and multi-product solutions, with ACV increasing 12% year-over-year.

Finally, distribution fees experienced an increase of $59 million compared to the third quarter of 2025, an increase directly driven by the company’s higher average assets under management (AUM).

Franklin Templeton Launches First Active UCITS ETF from Putnam Investments

| By Amaya Uriarte | 0 Comentarios

Franklin Templeton has today announced the launch of the Franklin Putnam Focused US Research UCITS ETF, which it explains is the first actively managed ETF from Putnam Investments in Europe. The firm details that the fund will list on Deutsche Börse Xetra, the London Stock Exchange, and Borsa Italiana on October 15, 2026. In addition, the fund is registered for distribution in Austria, Denmark, Finland, France, Germany, Ireland (country of domicile), Italy, Luxembourg, the Netherlands, Spain, Sweden, and the United Kingdom.

The firm notes that the launch “builds on the strong momentum of Putnam’s investment capabilities in Europe and follows the recent launch of the FTGF Putnam Global Research Fund.” Both new products are based on Putnam’s distinctive investment approach, which centers on stock selection and combines deep fundamental research, collaboration among sector specialists, and disciplined portfolio construction. The new ETF provides access to a more concentrated portfolio consisting of the U.S. equity investment ideas in which the investment team has the highest conviction.

“The launch of Putnam’s first active ETF in Europe represents a new step in expanding our investment offering in the region. European investors are increasingly seeking differentiated alternatives for accessing U.S. equities, and we see significant opportunities to meet this demand by combining Putnam’s investment expertise and track record with the flexibility and accessibility of the ETF format,” commented Javier Villegas, Head of Iberia and Latin America at Franklin Templeton.

In his view, bringing Putnam’s established US Research strategy in an ETF format also reflects their commitment to bringing Franklin Templeton’s full range of global investment capabilities closer to European clients, “offering them a wider variety of strategies and investment vehicles tailored to their needs.”

About the Fund

As explained, the Franklin Putnam Focused US Research UCITS ETF is a high-conviction U.S. equity strategy focused on large-cap companies with a core approach, delivered in an actively managed ETF format. It will invest in between 30 and 45 securities representing the investment ideas in which the team has the highest conviction within the broader US Research strategy, which has outperformed the S&P 500 index in 7 of the last 8 years across both growth-driven and value-oriented markets.

The managers collaborate with sector specialists to develop high-conviction ideas through rigorous fundamental research, which are subsequently integrated into a concentrated equity portfolio. Matt LaPlant, CFA, is responsible for implementing the integrated risk management component in order to mitigate any bias toward specific investment factors or styles. The ETF will be managed by Kate Lakin, Matt LaPlant, CFA, Jackie Cavanaugh, Robert Gray, and Will Rives, CFA, who bring an average of 22 years of investment industry experience.

“The ETF leverages the deep sector expertise of our research team, with stock selection as the core of the investment process. By focusing on our strongest ideas, we aim to generate superior returns while utilizing disciplined risk management to limit exposure to specific factors or investment styles,” explained Kate Lakin, portfolio manager at Putnam Investments.

Vanguard Anticipates High-Growth Macroeconomic Environment Similar to the 1990s Driven by AI Development

| By Amaya Uriarte | 0 Comentarios

Not one, nor two, but three: three have been the shocks that markets have been experiencing this year. A shock produced by AI, the energy price shock on account of the conflict between Iran and the United States, and, more recently, the sharp correction seen in sovereign debt. Josefina Rodríguez, an economist with Vanguard’s Investment Strategy Group team, recently shared at a media breakfast in Madrid how her firm’s macro vision is articulated around these three shocks. A clue: the central scenario her team’s experts are working with is more optimistic than the consensus, particularly regarding AI.

Artificial Intelligence Shock

Consensus estimates capex spending by major hyperscalers at around 1.3 trillion euros for 2026, a figure that rises to 1.7 trillion looking toward 2027… six times higher than the numbers these companies were handling a year before the pandemic, in 2019. Rodríguez noted that market expectations are high, but added that if these companies actually manage to capitalize on their investments, it will have a direct impact on the real economy and, in turn, drive private investment, particularly in the U.S.

The expert added that Vanguard’s view is that “the investment cycle will be higher and longer than the historical average, and with greater demand.” According to the firm’s calculations, private investment in the U.S. could reach 10%. Considering that investment accounts for 20% of total U.S. GDP, she anticipates that the country will grow next year at a rate of 3%, compared to the 2% anticipated by the consensus.

This optimistic view on AI will obviously be reflected in equities. The economist recalled that the current environment features high valuations backed by solid earnings, “which offer breathing room to face today’s high rates,” and indicated that the consensus forecast for next year is for corporate earnings to grow once again at a double-digit rate.

However, the expert clarified that the trajectory of the AI investment cycle will not be linear. Vanguard’s baseline scenario foresees continued gains at a rate similar to the current one over the next 12 to 18 months, followed by an inevitable market correction triggered by one of these catalysts, or a combination of several:

Lack of monetization
Commoditization of competition, with high levels of uncertainty driven by the launch of new models
Physical bottlenecks
Potentially stricter regulation

Energy Shock

The expert described the recent surge in gas prices and Brent crude climbing back above $100 as “a second wave,” referring to the initial peak recorded following the outbreak of hostilities between the United States and Iran. The difference is that this time it has been accompanied by a decoupling between refining margins and crude prices, which is also impacting final consumer prices. Furthermore, she highlighted that the spike in natural gas prices has left Europe in a vulnerable position as it entered this autumn with inventories at very low levels.

How is this energy price escalation impacting inflation? Rodríguez asked to frame the data within the context that major central banks have failed to maintain inflation at their 2% target on a sustained basis over the past five years. For her, the issue is that now the base effect of rising prices is also being channeled via goods-related inflation (transportation, for example), which carries a larger weight in the CPI calculation. Thus, Vanguard forecasts that both the ECB and the Bank of England (BoE) will raise interest rates twice each over the next six months.

The expert also detailed another important consideration when approaching inflation under these macro conditions: the possibility that the neutral interest rate could be higher than in the past. Two main factors would press against financial conditions and justify a higher neutral rate: elevated government deficits and an increase in capital demand from both governments and corporations.

Specifically, the thesis Vanguard is working with is that this neutral rate should sit above 4% in the U.S., compared to the Federal Reserve’s estimate that it should lie between 3% and 3.5%. “This could explain why the Fed has not been able to get inflation back down to its target,” commented Rodríguez.

Bond Shock

The third component of the equation is the recent correction in bonds, with the yield curve under particular pressure at the long end. Here, the economist detailed that Vanguard is working with three baseline scenarios, with its central scenario being the most optimistic of the three: a macro environment similar to that experienced in the 1990s during the expansion of telecommunications, with interest rates near 4% and inflation at 2%. This environment would be marked by AI’s ability to meaningfully boost productivity, driving growth and reducing government deficits. Additionally, the firm considers that part of AI’s transformative power could also impact longevity and healthy habits, translating into a reduction in healthcare expenditures.

The second scenario to which the firm assigns a higher probability is similar to the 1980s: AI is not transformative enough to drive productivity demand with a positive impact, leaving interest rates at 5% and inflation between 2% and 3%. It would also be a scenario marked by higher fiscal pressures.

The final scenario, assigned the lowest probability, would resemble the 1970s: a period of fiscal dominance where the Fed’s margin for maneuver would be narrow, as it could not raise interest rates sufficiently due to fiscal risks. In this scenario, rates would sit at 4% with inflation above 3%, pushing nominal rates above 7%.

Which Assets Could Perform Best?

The final part of the presentation revolved around Vanguard’s estimates regarding performance across different asset classes over the coming decade. The firm expressed a preference for fixed income assets, calculating based on its central scenario that annual returns for both equities and fixed income will hover around 5% per year over the next ten years, making fixed income the alternative offering the best risk-adjusted return.

How Do the World’s Largest Institutional Investors Invest in Crypto?

| By Amaya Uriarte | 0 Comentarios

Large institutional investors have demonstrated strong resilience in their adoption of digital assets, as Bitwise asserts in its latest report, “Inaugural Report on How the World’s Largest Institutions Are Investing in Crypto Today,” noting that none reduced their exposure during the recent 50% market decline, and several even took advantage of the dip to buy more.

The report reveals that all of these investors hold Bitcoin as their core and longest-held position, increasingly treating it as an asset paired with gold within allocations that mostly range between 1% and 2% of their portfolios. Likewise, although they maintain secondary positions in Ethereum and Solana with shorter horizons and explicit exit conditions, the report emphasizes that price is not a reason to sell for any of them; they would only liquidate their investments in the event of a failure in their initial thesis, adverse regulatory changes, or an industry credibility crisis.

These institutions rarely disclose their crypto asset positions, whether for competitive or reputational reasons. This study aims to break that silence by asking managers directly which assets they hold, in what amounts, for what reasons, and under what circumstances they would sell.

The findings suggest that adoption is occurring faster and more permanently than the general public perceives, supporting Bitwise’s forecast that a majority of institutional investors will hold crypto assets in their portfolios within five years.

“Institutional investors are adopting crypto assets as a major component of their portfolios. Adoption is happening faster and more consistently than the general public may realize,” notes Matt Hougan, Chief Investment Officer at Bitwise. He adds: “Markets fell by roughly 50% between Q4 2025 and Q2 2026, yet not a single institution we interviewed reduced its allocation during the sell-off, while several bought more. When asked what would trigger an exit, none mentioned price. That directly contradicts the common assumption that institutions are weak-handed investors during pullbacks.”

According to Ryan Rasmussen, Head of Research at Bitwise, what stands out from these conversations is the consistency reached across industry criteria. “Institutions with different mandates, governance structures, and constraints have arrived at a strikingly similar framework for approaching crypto assets in their portfolios,” he states. “Bitcoin serves as the anchor, often alongside gold, while Ethereum and Solana are earning their place. This pattern holds true across the world’s largest institutions, from sovereign wealth funds to university endowments, pensions, and foundations,” he concludes.

Tax Structure: The Factor Gaining Weight Among Global Citizens Evaluating Relocation

| By Amaya Uriarte | 0 Comentarios

Global Citizen Solutions (GCS), the international firm specializing in residency and citizenship planning consultancy, has published a new report prepared by its research department, the Global Intelligence Unit (GIU), titled Tax Optimization for Global Citizens, a comparative study of tax positions across 48 jurisdictions for internationally mobile individuals. The report evaluates each jurisdiction based on 11 indicators grouped into three pillars (Tax Burden, Tax Structure, and Investment Migration, with weightings of 42.5%, 42.5%, and 15% respectively), under the premise that how a tax system treats foreign income and departing residents matters just as much as the nominal rate it charges.

The United Arab Emirates leads the overall ranking by combining a 0% personal income tax rate with a 5% consumption tax and no charges at the time of departure. Antigua and Barbuda, Paraguay, Hong Kong, and the Bahamas complete the top five. Malta and Cyprus are the only two European jurisdictions to enter the top ten, doing so through preferential regimes rather than low nominal rates.

Tax Optimization Chart for Global Citizens. Source: Global Intelligence Unit in its report “Tax Optimization for Global Citizens”

Tax Structure Weighs Heavier Than the Nominal Rate

The central finding of the report is that a jurisdiction’s tax rate and the structure of its tax system are largely independent of one another. Uruguay charges 36%, a rate closer to Western Europe than the Caribbean, yet records the highest Tax Structure score in the entire sample, placing twelfth overall exclusively due to that structure. Hungary, by contrast, charges 15% but ranks 31st because it taxes its tax residents on worldwide income and offers no substantial relief to newcomers.

Two mechanisms explain a high score in Tax Structure: a tax base that never reaches foreign income, as in Uruguay, Panama, and Hong Kong, or that only reaches it upon remittance, as in Malta and Mauritius; and a preferential regime superimposed on a system that otherwise taxes worldwide income, as in Cyprus, Portugal, and Italy.

“The countries that break the dilemma between taxes and quality of life—among them Malta, Cyprus, Uruguay, Costa Rica, Mauritius, Switzerland, and Portugal—do not achieve this by charging zero taxes. They manage it by taxing on a territorial or remittance basis, or through a well-designed preferential regime, leaving room to fund the public services that quality of life depends on. That is the true decision facing anyone who relocates: it is not simply about the lowest tax rate, but how foreign income is treated, whether through automatic exemption, partial relief, or more targeted exceptions, and how much certainty that structure actually offers,” comments Artur Saraiva, Founder and COO of Global Citizen Solutions.

Living Well, Departing Well

The report’s two structural findings point in opposite directions. Jurisdictions charging fewer taxes tend to rank lower in quality of life, meaning that what a resident saves in taxes is weighed against what they sacrifice in daily life. Thirty-one of the 48 jurisdictions in the study impose no exit tax, including all jurisdictions in Latin America and the Caribbean, so a lower cost of living rarely comes accompanied by a lower cost of departure, and a higher cost of living does not guarantee an easier exit either.

Seven jurisdictions break this quality-of-life pattern by combining a tax position in the top half of the table with a spot among the world’s top 50 in quality of life: Malta, Cyprus, Uruguay, Costa Rica, Mauritius, Switzerland, and Portugal. None achieves this by charging zero income tax. Each instead utilizes a territorial, remittance, or preferential regime structure that leaves room to fund the public services upon which quality of life relies. Regarding departure, eleven of the seventeen jurisdictions that do charge upon departure—including Australia, Canada, Denmark, Germany, Norway, Spain, and Switzerland—apply a broad charge with the possibility of deferral, while five, including Portugal, the United Kingdom, and Japan, apply a more limited version. The United States concentrates the highest tax burden in the entire sample, both by rate and by structure, while also imposing the most demanding departure conditions of all analyzed jurisdictions: deferral is only available against collateral acceptable to the U.S. Treasury, only if the expatriate permanently waives treaty protections, and only with interest that accrues until the tax is paid.

Death, Taxes, and Exceptions

Inheritance tax separates higher-burden systems from the index leaders more clearly than any other metric. France charges up to 60%, Japan 55%, and Germany 50%, whereas none of the thirteen leading jurisdictions in the index levy an inheritance tax. The report also highlights the United States as an outlier: since it taxes its citizens on their worldwide income regardless of where they live, relocating alone does not end a U.S. citizen’s tax obligations.

Highest Percentage Inheritance Tax Chart. Source: Global Intelligence Unit in its report “Tax Optimization for Global Citizens”

Net Wealth Tax, a Rarity

Net wealth tax applies in only eight of the 48 jurisdictions in the sample, with rates ranging from 0.1% in Uruguay to 3.5% in Spain. None of the jurisdictions that do not levy personal income tax apply a wealth tax either, meaning the absence of an income tax and the absence of a wealth tax usually go hand in hand rather than offsetting each other.

The report concludes that no single jurisdiction fits every profile. Entrepreneurs approaching a liquidity event are guided by the treatment of capital gains and the cost of departure; retirees, by inheritance, healthcare, and consumption taxes; and remote professionals, almost exclusively, by the tax base applied to foreign-source income. The full report presents specific lists for each of these profiles across the 48 analyzed jurisdictions.

What Fees Are Associated with Active Management?

| By Amaya Uriarte | 0 Comentarios

Choosing an actively managed fund involves paying for the work of a team that selects assets with the goal of outperforming its benchmark index. That service comes at a price, and understanding its components is key: costs directly reduce the return the investor receives, year after year.

Management fees are the most well-known charge. They are expressed as an annual percentage of the fund’s assets and compensate the manager and their research team. Investors do not pay them explicitly: they are deducted daily from the share value, so they are rarely perceived as an out-of-pocket expense. The amount varies depending on the asset class and strategy. Specialized equity or emerging market funds tend to sit at the higher end of the range, while fixed income funds are usually cheaper.

Performance fees. Some funds, especially alternative ones, also charge a fee tied to performance, subject to the product’s terms. Among the mechanisms that can protect the investor are the hurdle rate, which must be surpassed before charging, and the high-water mark, which prevents charging again for recovering previous losses within the established reference period. Not all funds incorporate both mechanisms. This fee aims to align the manager’s interests with those of the client, although it can also incentivize taking on more risk.

Subscription, Redemption, and Distribution Fees

Some management companies charge a percentage when entering or exiting the fund. It is a one-off charge, which many share classes eliminate, especially those aimed at institutional clients.

It is also worth distinguishing distribution costs. A portion of the management fee is often allocated to the bank, platform, or advisor marketing the fund through rebates or trailer fees. Transparency rules vary by jurisdiction, so it is worth asking how much of what is paid goes toward compensating distribution.

Transaction Costs and Other Expenses

Every time the manager buys or sells an asset, the fund absorbs brokerage fees, bid-ask spreads, and transaction taxes. Higher portfolio turnover generally means higher costs. In many markets, these expenses are reported separately from the expense ratio, so investors must look for them in the documentation. Added to these are custody, administration, audit, and legal advisory expenses.

How to Compare Them

The most widely used benchmark is the total expense ratio, known as the TER. The ongoing charges figure is also used, although both may include different concepts, especially regarding performance fees. They summarize much of the annual charges, but not all the costs of investing. It is advisable to check what each metric includes in the fund documentation.

To gauge its impact, a simple example: a $100,000 investment with a gross return of 6% annually over 20 years. Assuming constant returns and costs and reinvestment of earnings, excluding taxes, with an annual cost of 1.5%, the net return would be 4.5% and the final capital would be around $241,000. With a cost of 0.2%, the net would be 5.8% and the result close to $309,000. The difference, of about $67,000, illustrates how a percentage that seems small compounds over time.

This does not mean active management fails to justify its price. The relevant question is whether the manager’s added value, measured after fees and against its benchmark index and comparable funds, compensates for the additional cost. Knowing each component enables the investor to ask that question with sound judgment and make better-informed choices.

Besides Buffett, Who Are the Other “Legends” of the Investment World?

| By Amaya Uriarte | 0 Comentarios

The legendary Warren Buffett has stepped away from the day-to-day operations of Berkshire and, in a way, the markets have been left without a touchstone that accompanied them for years; however, the financial industry has many other figures who transformed the understanding of risk, value, markets, and wealth creation.

Now that Berkshire Hathaway has formally entered a new phase—Buffett was named Chairman Emeritus on September 18 and Greg Abel remains CEO—an inevitable question arises: who are the other figures who have built schools of investing capable of transcending their own results? The answer lies not in searching for another Buffett.

In fact, perhaps that is the primary lesson: the investment world does not have a single formula, it has different schools of thought: value investing, macro investing, credit, quantitative analysis, growth, corporate activism, and global stock selection.

Some of these figures managed funds for decades; others built institutions; some retired years ago, while others continue to actively participate in the markets. But all of them left behind something more than a profit-and-loss statement: a way of thinking that continues to be studied by professional investors. These are some of those other legends.

Peter Lynch: Finding Opportunities Where Others Are Not Looking

If Buffett turned value investing into an almost universal philosophy, Peter Lynch did something different: he enabled millions of everyday investors to understand that daily observation could also become an analytical tool. Lynch directed Fidelity’s Magellan Fund between 1977 and 1990. During those 13 years, the fund achieved an average annual return of 29.2%, compared to 15.8% for the S&P 500, according to Wharton. His philosophy was condensed into a phrase that became part of market vocabulary: “invest in what you know.”

However, reducing Lynch to that phrase would oversimplify his method. Behind the idea was a discipline of research: observing companies, understanding their businesses, identifying growth opportunities, and subsequently analyzing their financials. Lynch retired from Magellan in 1990 at just 46 years old. Since then, he has become one of the great advocates for equity investing. His legacy is perhaps particularly relevant in an era dominated by algorithms, artificial intelligence, and large quantitative models: before buying a stock, one must understand what the company does.

Howard Marks: The Investor Who Placed Risk Center Stage

There are investors known for their returns. Howard Marks belongs to a different category: he is also known for how he thinks and writes about risk. Marks co-founded Oaktree Capital Management in 1995, after developing years of expertise in high-yield bonds, distressed debt, and convertibles.

He currently continues as Co-Chairman of Oaktree, but his influence extends beyond asset management. His memos to investors became reference texts within the professional community, and books like The Most Important Thing popularized an idea that sounds simple, yet proves extraordinarily difficult to execute: investing is not solely about seeking returns, it is about understanding what risks are being assumed to achieve them. Oaktree’s own philosophy summarizes much of his legacy: an opportunistic, value-oriented approach with risk control, particularly developed in credit markets. Marks represents, in a sense, the other side of Buffett: while Buffett built much of his reputation around buying extraordinary businesses and holding them for a long time, Marks made moments of financial stress and misperceptions of risk a realm of opportunity.

Seth Klarman: Waiting Is Also an Investment Decision

Seth Klarman is another direct heir to the tradition of Benjamin Graham, but he expanded the concept of margin of safety into broader territories. He is the CEO and Portfolio Manager of The Baupost Group, a firm he founded in 1982 and whose investments he has supervised ever since. Baupost applies a value discipline with a tilt toward special situations, including public and private equities, distressed debt, bankruptcies, and real estate.

His book Margin of Safety, originally published in 1991, became one of the most sought-after texts by those who study value investing. Klarman’s teaching has a characteristic that is particularly uncomfortable for today’s markets: not investing can also be an investment decision. When prices do not offer a sufficient margin of safety, capital can remain in cash until an opportunity appears. In an industry accustomed to measuring success by the amount of assets deployed and manager activity, that patience is almost a provocation.

Stanley Druckenmiller: When Conviction Outweighs the Label

Druckenmiller belongs to an entirely different school. He did not build his reputation buying undervalued companies to hold them for decades. His domain was macro investing: interest rates, currencies, economic cycles, monetary policy, and major market moves.

At the helm of Duquesne Capital Management, he generated approximately 30% annualized returns between 1981 and 2010 and did not record a single losing year, according to Morgan Stanley. But perhaps the most interesting aspect of Druckenmiller is not the figure, but his mindset.

In a recent conversation with Morgan Stanley, he explained that he does not consider being a contrarian a virtue in itself. The market can be right many times; what matters, in his experience, is recognizing those moments when there is strong enough conviction to step away from the crowd.

After closing Duquesne Capital in 2010, he continued managing his wealth through his family office. Druckenmiller represents a lesson different from Buffett’s: not all great investments require decades to mature; some require correctly identifying a regime change and having the conviction to act.

Ray Dalio: Turning a Philosophy into a System

Ray Dalio achieved something few investors accomplish: he transformed a personal philosophy into an institution. He founded Bridgewater Associates in 1975 out of a two-bedroom apartment in New York and turned it, over the decades, into one of the largest alternative investment firms in the world. Dalio stepped down as CEO in 2017, as CIO in 2020, and as Chairman in 2021; he currently focuses primarily on passing down the principles developed throughout his career. His most famous contribution to the investment world is the All Weather concept and the development of risk parity strategies, alongside an investment architecture based on diversification across stocks, bonds, currencies, and commodities.

Yet his major conceptual contribution perhaps lies elsewhere: the obsession with turning investment decisions into repeatable processes. Bridgewater developed systems that combine historical research, algorithms, backtesting, and human judgment. The idea is simple: if economic cycles repeat with specific characteristics, studying the past allows one to build rules to navigate future scenarios. Dalio thus turned manager experience into something akin to decision engineering.

Cliff Asness: Where Wall Street Meets Academia

If Buffett represents business-based investing and Marks the reading of risk, Cliff Asness represents another revolution: quantitative investing based on statistical evidence. Asness founded AQR Capital Management alongside David Kabiller, Robert Krail, and John Liew in 1998. He had previously served as Director of Quantitative Research at Goldman Sachs. His career is deeply tied to academic research on factors such as value, momentum, quality, and other sources of return.

AQR was born precisely at that intersection of economics, behavioral finance, data, and technology. Asness has also defended an idea that is especially important in the era of artificial intelligence: a good backtest is not enough. In an interview published by the Journal of Portfolio Management, he explained that the challenge consists of finding strategies supported by both statistical evidence and a coherent economic rationale. Otherwise, the model may end up capturing simple historical noise. His legacy is, in essence, a question: what happens when a manager’s intuition can be converted into data, rules, and testable processes?

Bill Ackman: The Shareholder Who Does Not Sit Still

William Ackman belongs to another tradition: shareholder activism. He founded Pershing Square Capital Management in 2004 and built a strategy concentrated on a relatively small number of companies. Pershing Square notes that it typically holds between eight and 12 core positions, fundamentally in large North American public companies.

The philosophy differs from conventional diversification: select a few high-quality businesses, study them deeply, and, when necessary, use the equity stake to drive operational, financial, or corporate governance changes. Pershing Square’s track record is also part of the conversation. Its corporate documentation reports that from 2004 through December 2025, the Pershing Square, L.P. fund achieved a cumulative compound annual return that materially outperformed the S&P 500 over that period, net of fees.

Ackman represents an evolution of the investor’s role: not just allocating capital, but attempting to alter the path of the company in which one invests. It is a philosophy that can produce massive successes and also significant controversy, precisely because the manager ceases to be a passive shareholder and becomes an active participant in corporate strategy.

John Templeton: Buying When the World Wants to Sell

If one had to select one of the great pioneers of global investing, it would be difficult not to mention Sir John Templeton. Templeton began his Wall Street career in 1938 and created the Templeton Growth Fund in 1954, one of the first major global investment vehicles. His philosophy consisted of searching for opportunities where pessimism had driven prices to extreme levels.

His first major trade is almost a parable of value investing: when World War II began, he borrowed money to buy 100 shares in 104 companies trading at one dollar or less. Of those 104 companies, 34 were in bankruptcy; only four turned out to be complete losses. The result of that philosophy became legend. According to the John Templeton Foundation, a $10,000 investment in the Templeton Growth Fund at inception, with dividends reinvested, would have reached approximately $2 million by 1992, when Templeton sold the fund family to Franklin Group.

His legacy is especially interesting today, when investors tend to concentrate on specific countries, sectors, and companies. Templeton taught that the best opportunities are not always where enthusiasm lies, but where price reflects a pessimism that may be exaggerated.

Schools Outlast Their Masters

Taken together, this gallery explains something important about Buffett’s departure from leading Berkshire: There is no single intellectual successor. Lynch taught how to look at companies through everyday life. Marks put risk at the center of the conversation. Klarman took the margin of safety to its ultimate conclusions. Druckenmiller demonstrated the power of macro investing and conviction. Dalio turned diversification and risk management into a system. Asness shifted investing toward data and quantitative research. Ackman transformed the shareholder into an agent of corporate change. Templeton made global pessimism a source of opportunity.

These are different and even, in some cases, contradictory philosophies, but that is precisely why they remain relevant. In truth, everything indicates that the investment industry is not entering a post-Buffett era, but rather a stage where Buffett’s influence coexists with many other ways to understand how capital is created and protected. Perhaps that is the true legacy of investment legends: not leaving behind a formula to copy, but demonstrating that behind extraordinary returns, there is usually a distinct—and disciplined—way of thinking.

Buffett will continue to be part of that story from Berkshire, now as Chairman Emeritus and Director. But while his seat changes occupants, the various schools that helped build modern investing remain active. And the markets, as always, will continue to put each of them to the test.

Wall Street Turns Wealth Management into a Growth Engine: Citi and JPMorgan Attract Billions of Dollars

| By Amaya Uriarte | 0 Comentarios

The management of client wealth is gaining significant weight in the financial results of Wall Street’s major banks. In a quarter marked by market volatility, high interest rates, and uneven investment banking activity, Citigroup, JPMorgan Chase, Goldman Sachs, and Wells Fargo reported progress in their businesses linked to asset management, financial advisory, and wealth management services.

The financial results published this Tuesday offer various signals regarding the industry’s evolution. For instance, Citi registered a 15% growth in revenue within its Wealth division alongside a 93% surge in net income; JPMorgan reported $5.2 trillion in assets under management across its Asset & Wealth Management business; Goldman Sachs raised its revenues from management fees and incentives, while Wells Fargo saw gains in both client assets and advisory revenues.

Beyond the differences in their respective business models, all four banks demonstrate how building relationships with clients and their wealth can serve as a revenue engine combining fees, interest on deposits and loans, and investment services. The figures also reveal that not all growth stems from new client contributions: market movements and portfolio valuations heavily influence the volume of total assets managed.

Citi Accelerates the Profitability of Its Wealth Business

The case of Citigroup stands out due to the combination of revenue growth, asset gathering, and improved profitability. The Wealth division generated $3.269 billion in revenue in the third quarter, a 15% increase compared to the same period in 2025. Net income reached $585 million, up 93% year-over-year, while client investment assets grew 15% to $759 billion.

The bank also reported net investment asset inflows of $38 billion, doubling the $19 billion recorded a year earlier. Positive performance extended across all three areas comprising the business: Citigold and retail wealth banking, Private Bank, and Wealth at Work, which caters to workplace- and corporate-related wealth management needs.

Wealth net interest income increased 20% to approximately $2.3 billion, while non-interest revenue grew 5%. This trend underscores the continued importance of deposits and lending alongside investment service fees in Citi’s wealth model.

This momentum occurred alongside an improvement in the institution’s overall results. Citi reported total revenue of $23.845 billion and a net income of $5.245 billion, compared to $3.752 billion in the third quarter of last year. However, comparing consolidated net profits requires noting that the 2025 results included a goodwill impairment charge related to Banamex operations. Excluding that extraordinary item, the bank’s profit increased by approximately 16%, rather than 40%.

The trajectory of the Wealth segment is key to the strategy led by Jane Fraser, Citi’s Chair and CEO, who seeks to boost returns and reinforce business lines with higher growth potential. The firm noted that the return on capital for Wealth exceeded 14% during the quarter, well above the previous year’s level.

Based on the data provided in its latest financial report, it is evident that Citi is not merely capturing assets, but actively translating the expansion of its wealth franchise into top-line revenue and bottom-line profitability. Combining private banking, investment services, and custom financing enables the firm to diversify revenue streams while deepening relationships with high-net-worth clients.

JPMorgan Highlights the Scale of Asset Gathering

JPMorgan Chase offers another perspective on business expansion: the sheer scale of its platform. Its Asset & Wealth Management division reported $5.2 trillion in assets under management, up 13% year-over-year, while total client assets reached $7.9 trillion, representing a 15% annual increase.

Division revenues rose to $6.909 billion, up 14% from the third quarter of 2025, with net income reaching $1.843 billion, an 11% increase. The bank also reported net client inflows of $263 billion during the quarter—a figure notable for its sheer magnitude that highlights the platform’s capacity to attract capital.

The expansion of these business lines coexists with robust performance in other parts of the firm. JPMorgan recorded managed revenue of $50.9 billion and a reported net income of $15.3 billion. Nonetheless, overall results were somewhat tempered by investment securities losses and softer performance in select investment banking segments.

The scale of its wealth operations demonstrates the structural competitive edge that major banking platforms can build: unifying institutional asset management, private family and individual advisory, specialized investment products, and credit facilities. Within this framework, scale aids in diversifying revenue sources while amortizing technology, research, distribution, and regulatory compliance costs across a broad client base.

For the asset management industry, JPMorgan’s growth is also significant because its division encompasses activities beyond traditional private banking. Consequently, the $5.2 trillion figure under management should not be interpreted as capital strictly belonging to high-net-worth individuals, nor as funds deployed exclusively within mutual fund products.

Goldman Sachs Capitalizes on Fee Growth

Goldman Sachs provides a more direct reading of the relationship between capital markets and asset management. Its Asset & Wealth Management division reported revenue of $5.051 billion, a 14% increase year-over-year, while assets under supervision reached $4.097 trillion, reflecting a 19% annual jump.

One of the most notable highlights occurred in management and other fees, which totaled $3.587 billion, up 22% compared to the third quarter of 2025. Incentive fees rose to $587 million from $76 million a year earlier, driven by investment fund distributions.

These incentive payouts are particularly relevant because they illustrate how investment monetization fluctuates depending on asset performance and fund lifecycles. When managed vehicles execute exits or realizations, managers can capture significant fee income; however, this variable component does not necessarily recur with equal intensity in subsequent quarters.

Goldman Sachs also recorded $97 billion in net long-term asset inflows across equity, fixed income, and alternative strategies. Total divisional inflows, including liquidity products, came in at $83 billion, as liquidity vehicles registered $14 billion in net outflows.

Alternative assets reached $491 billion under supervision. This segment merits attention as it covers strategies outside traditional stock and bond portfolios, forming a key pillar of product offerings for institutional and private wealth clients.

Across the broader firm, Goldman Sachs posted quarterly revenue of $18.679 billion and net income of $5.290 billion, driven heavily by equity trading. The simultaneous growth in markets and Asset & Wealth Management illustrates two distinct revenue drivers: market operations, which fluctuate with volume and volatility, and management fees tied to recurring asset balances and fund performance.

Wells Fargo Confirms Momentum in Advisory Services

Wells Fargo completes the picture with a model where wealth management coexists alongside an expansive retail and commercial banking customer footprint. Its Wealth & Investment Management division posted revenue of $4.104 billion, a 12% annual increase, as client assets expanded 11% to $2.45 trillion.

Investment advisory and other asset-based fees reached $2.706 billion, up 15% year-over-year. Segment net income came in at $603 million, marking a 19% increase.

These figures show that the expansion of wealth management services is not restricted to institutions historically dominant in private banking or capital markets. Growth can also be driven by extensive branch networks, long-standing client relationships, and integrated offerings that combine investments, advice, and credit.

In consolidated terms, Wells Fargo reported a net income of $5.950 billion on total revenue of $21.870 billion. Profit growth occurred even as top-line revenue came in below market expectations, amid ongoing pressure on net interest margins and weaker trading activity in certain desks.

Asset Gathering Matters, but So Does Monetization

Taken together, these quarterly reports show that wealth management relies on multiple growth levers: first, capturing net new money; second, market appreciation as portfolio valuations rise; and third, generating multi-layer revenue via management fees, advisory services, deposits, and lending.

Distinguishing between these levers is critical because a rise in total assets under management does not automatically mean an influx of new client capital. Market fluctuations can expand or contract portfolio values, whereas net organic inflows provide a clearer measure of client adoption and franchise strength.

Differences in reporting metrics across institutions should also be taken into account. Citi groups wealth retail banking, private banking, and professional corporate accounts; JPMorgan combines institutional asset management with private wealth advisory; Goldman Sachs incorporates a large institutional and alternatives platform; and Wells Fargo blends traditional brokerage and investment advisory into its wealth division.

While these revenue and asset metrics do not form a strictly uniform comparison across fund managers, they clearly illustrate that Wall Street’s largest institutions are leveraging core client relationships to expand their investment franchises and diversify earnings.

Nevertheless, headwinds remain. Executive leadership across the major banks cautioned about persistent inflation, elevated interest rates, and macroeconomic and geopolitical uncertainty. These factors continue to impact funding and deposit costs, capital markets activity, asset valuations, and corporate or household investment decisions.

The key takeaway for the financial industry is that wealth management has evolved into a strategic centerpiece for Wall Street’s largest banks. Yet sustainable growth relies as much on attracting and retaining clients as it does on favorable market cycles and the quality of fee income generated by those portfolios. Citi stands out for its accelerated wealth profitability; JPMorgan for its structural scale and net inflows; Goldman Sachs for fee expansion; and Wells Fargo for sustained momentum in advisory services.

For asset managers and investment firms, the message is plain: client wealth represents not just an asset base, but a long-term financial relationship whose profitability increasingly depends on integrating investments, advisory solutions, and end-to-end services.

Crypto ETFs “Normalize Digital Assets”

| By Amaya Uriarte | 0 Comentarios

The growing use of cryptoasset ETPs is normalizing the inclusion of digital assets within standard portfolio allocations, according to a new global study by Nickel Digital Asset Management (Nickel), a European leader in digital asset hedge fund management based in London and founded by former executives from Bankers Trust, Goldman Sachs, and JPMorgan. The research, conducted among more than 200 senior executives from institutional investors and wealth managers, reveals that 84% agree that the rise in the use of cryptoasset ETPs will normalize digital assets in allocation models within three years, with 26% showing strong agreement with this statement.

More than half (55%) of respondents state that it is very likely they will use cryptoasset ETPs for the first time in the next two years, either to increase their exposure or to make their initial investment. About a fifth (19%) indicate that they already use them, while 23% point out that they are quite likely to invest in them. Only 3% appeared unsure or unlikely to use them.

Respondents show confidence in the expansion of global net inflows into digital asset ETFs: more than four out of five (81%) expect net flows to increase in the next 12 months, including 19% who foresee very significant increases.

The study, conducted in the U.S., UK, UAE, Germany, Switzerland, France, Italy, Netherlands, Singapore, Brazil, and the Nordic countries, concludes that the increase in flows into ETPs will be beneficial for the overall sector. Nearly 90% state that the growth of ETPs has had a positive impact on their organization’s perception of the digital asset market.

Almost nine out of ten respondents (87%) predict that the growth of ETPs will increase demand for active digital asset managers and hedge funds in the next 24 months, with 22% estimating a significant increase. Only 3% expect ETF growth to slightly reduce demand for active management.

However, more than half (52%) note that regulatory uncertainty remains the biggest obstacle to increasing institutional use of cryptoasset ETPs. Around 44% fear that ETFs do not solve underlying market or custody risks, while 40% express concern over liquidity and trading costs.

The main reason for using cryptoasset ETPs cited by respondents is the greater ease of obtaining approval from investment committees or boards of directors (28%). Around 21% value their liquidity and transparency, while 20% highlight operational and custody simplification. Nearly three out of four (74%) state that fees or TER (Total Expense Ratio) are critical or very important when selecting funds.

Opinion is divided on which region will experience the fastest growth in institutional assets under management (AUM): 27% point to the U.S., another 27% point to Europe, and 26% to the Middle East. Only 11% chose the UK.

By product type, multi-asset crypto baskets are expected to register the highest institutional growth over the next two years (45%), followed by actively managed digital asset ETFs (43%). Nearly two out of five (39%) opted for staking or yield-generating products, and 38% for tokenized real-world asset funds.

“Crypto ETPs are fast becoming a vital bridge between traditional finance and digital assets. By providing familiar, transparent, and operationally simple access, they are helping investment committees bring digital assets into the mainstream portfolio construction conversation. However, ETPs primarily offer passive market exposure. As institutional participation deepens, we anticipate rising demand for specialized active managers capable of navigating the market’s inefficiencies, volatility, and operational complexity. At Nickel, we have built an institutional-grade risk management framework, custody infrastructure, and investment capabilities designed to capture these opportunities with the governance and protection standards demanded by institutional investors,” highlights Anatoly Crachilov, CEO and Founding Partner of Nickel Digital.