Capital Group Enters the Active UCITS ETF Business

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Photo courtesyGuy Henriques, President of the Europe and Asia-Pacific Client Group at Capital Group, and Jamie Sinclair, Head of ETF Product and Sales for Europe and Asia-Pacific at Capital Group.

Capital Group has received regulatory approval from the Central Bank of Ireland for its first active UCITS ETFs. According to the firm, the four strategies are scheduled to launch across Europe and Asia-Pacific during the first quarter of 2027, “bringing Capital Group’s long-term active investment capabilities to investors through a UCITS ETF structure,” they stated.

Since launching its first active ETFs in North America in 2022, Capital Group has built a $160 billion active ETF business comprising 25 strategies and eight model portfolios in the U.S., along with seven funds in Canada. With this step, the company—currently the third-largest active ETF issuer in the U.S.—is expanding its active ETF platform globally.

“Our goal is to bring Capital Group’s long-term investment outcomes to our clients through the investment vehicle that best suits their needs. Investors are increasingly seeking to combine the flexibility and efficiency of ETFs with the benefits of active management. This approval marks a major milestone in the global expansion of our active ETFs. Our active ETFs are among the fastest-growing in the United States, and bringing this offer to Europe and Asia-Pacific reinforces our position as a go-to investment partner for intermediary and institutional clients worldwide,” noted Guy Henriques, President of the Europe and Asia-Pacific Client Group at Capital Group.

According to the firm, its initial range of Irish-domiciled active ETFs is designed to serve as core holdings in investor portfolios, providing exposure to both equities and fixed income. “These strategies benefit from Capital Group’s fundamental research, long-term investment approach, and multi-manager investment system,” they highlighted.

“Investor demand for active ETFs continues to grow, and our goal is to broaden access to Capital Group’s active management capabilities around the world. As equity markets become increasingly concentrated, investors are placing greater value on fundamental research, active management, and diversification. In an uncertain market environment, our active UCITS ETF solutions are designed to offer investors in Europe and Asia-Pacific differentiated opportunities across equities and fixed income, as well as serve as building blocks for long-term portfolio construction,” added Jamie Sinclair, Head of ETF Product and Sales for Europe and Asia-Pacific at Capital Group.

Nuveen Completes Acquisition of Schroders

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Photo courtesyWilliam Huffman, CEO of Nuveen, and Richard Oldfield, Group Chief Executive of Schroders.

Nuveen has completed the acquisition of Schroders, bringing together two renowned institutions with highly complementary businesses. According to the announcement, the merged entity is the only asset manager ranked among the top ten globally in active management across equities, fixed income, and private markets, managing $2.6 trillion in assets through institutional and wealth management channels. Operating in more than 40 markets, the company maintains a significant presence in the U.S., the U.K., Europe, and Asia-Pacific.

“Our historic merger presents a unique opportunity to redefine our industry and deliver a value proposition to clients that did not exist until now. Together, we will create a platform with leading investment performance across major capital markets, with the flexibility to tailor solutions to clients’ specific objectives. We will deliver investment excellence and global reach, backed by the credibility earned over decades of local presence worldwide,” noted William Huffman, CEO of Nuveen.

According to the firm, the combined entity will continue to grow and innovate through increased investment in capabilities, personnel, and client offerings, with ongoing support from TIAA (Teachers Insurance and Annuity Association), a long-term shareholder that co-invests alongside clients and has backed Nuveen’s strategic priorities across market cycles.

Over the next 12 to 18 months, Schroders will continue to operate independently within Nuveen under the leadership of Richard Oldfield, Group CEO of Schroders, who will report to Mr. Huffman.

Key Executive Perspectives

“Nuveen is fundamental to our ability to deliver lifetime income and financial security to millions of people. The completion of this acquisition gives rise to one of the largest active asset management firms globally, with the scale, talent, and capabilities required to compete and succeed in every relevant market. This union accelerates our strategy and reinforces the investment capabilities powering our retirement and annuity products, solidifying our ability to fulfill our mission of providing lifetime income for generations to come,” added Thasunda Brown Duckett, CEO of TIAA.

For his part, Richard Oldfield, Group CEO of Schroders, commented: “Today’s milestone is an extraordinary moment for our clients and our business. The world is changing rapidly right now, which is why we believe active management is more relevant than ever—helping clients navigate uncertainty and achieve the outcomes they need. By combining our complementary strengths in active investing, we will offer more to our clients and unlock greater growth opportunities, underpinned by a shared investment-led culture, a long-term perspective, and a strong heritage.”

The Future of the Investment Platform

Reflecting the merged entity’s investment-centric culture, the firm explained its intention to establish, over time, a unified investment platform spanning the full spectrum of capabilities across public and private markets. This platform will be led by Saira Malik, who will serve as Chief Investment Officer reporting to Mr. Huffman. Additionally, Johanna Kyrklund will become Chief Investment Officer of Public Markets & Solutions for the combined firm, with responsibility over equities, fixed income, multi-asset, and solutions, ultimately reporting to Ms. Malik.

In line with this, the company intends to organize its combined $400 billion private markets platform by asset class, reflecting its commitment to expanding its product lineup for clients. The combined investment platform, extending from public to private markets, will offer new approaches to retirement income management, greater capital efficiency in insurance portfolios, and enhanced customization in wealth management.

Continuity for Clients

Furthermore, they explained their intention to retain current investment teams across both asset and wealth management for at least 12 to 18 months following the deal’s closing while integration planning takes place. According to the announcement, they will leverage the strong presence and market positioning of Schroders’ wealth management business—including Cazenove Capital—which forms a key strategic pillar of the merged entity’s strategy.

Under Mr. Huffman’s leadership, Matt Oomen will lead global client coverage, assisting clients in accessing the firm’s full suite of services. Client service remains a top priority, and any adjustments made by the combined firm will be executed with the goal of delivering maximum benefit to clients.

Finally, building on Schroders’ heritage, London will serve as the non-U.S. headquarters for the combined entity. It will also be its largest office, with key leadership positions based in the U.K., reinforcing London’s role in global asset and wealth management.

Jane Fraser (Citi) Sets Limits on AI Agents: “We Need the Right Controls”

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Jane Fraser, CEO Citi Group
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Jane Fraser, Chair and CEO of Citi, put the spotlight on the risks posed by the advancement of artificial intelligence agents in the financial sector during the opening session of Sibos 2026, held this Monday in Miami. Her message was clear: before allowing these systems to move from providing information to autonomously executing actions, it will be necessary to guarantee their identity, authentication, and oversight.

Fraser illustrated the technology’s potential with an everyday example. “I don’t trust my husband to do the grocery shopping, so I can’t wait to have an agent that doesn’t just build a list for me, but actually does it for me,” she joked.

However, the leap between recommending and acting introduces much greater risks. Authentication, she stated, is one of the issues that “keeps us all up at night.” The challenge consists of being able to verify that an agent is truly acting on behalf of a person, and that both the bank and the other participants in a transaction can confirm its legitimacy. “Until then, I am confident I won’t have wild agents without the right controls in place,” she affirmed.

A Control Layer for Citi’s Agents

Fraser explained that Citi has already developed a specific mechanism to control the deployment of AI agents within the institution: a layer known as ARC. “You cannot create an agent without going through ARC,” she noted. This infrastructure concentrates the control framework and observability layer necessary to verify that agents do what they were designed to do, and that their activity can be monitored at all times.

The Citi CEO even anticipated a shift in the supervision model. If traditionally a manager might supervise nine employees, in an environment dominated by AI agents the ratio could invert: a single agent could be subjected to nine different oversight mechanisms, many of them managed in turn by other agents. “It is very early days in those controls, as we can all see,” Fraser acknowledged.

The IMF Focuses on Cyber Risk

The risks associated with artificial intelligence were also present in the remarks by Dan Katz, First Deputy Managing Director of the International Monetary Fund (IMF), who pointed out that there is a broad debate on whether increasingly powerful AI systems might eventually demand new regulatory responses.

Among the most immediate threats, Katz placed cyber risks “at the top of the list.” AI, he explained, is transforming this domain by accelerating the speed, frequency, and scale with which vulnerabilities can be detected and potentially exploited.

For public policy makers, the challenge will be creating an environment that allows innovation to be harnessed without compromising the integrity and stability of the financial system. Fraser agreed in identifying cybersecurity as one of the great challenges of this new technological era. “We have a tsunami of patches that need to be applied right now, and we have to be very responsible in achieving that,” she stated.

Innovating Without Breaking Trust

Citi’s CEO extended this need for control to the financial system’s broader technological transformation. “If you move fast and break things, we are failing in our mandate,” she asserted. Contrasting with the well-known tech axiom of moving fast even if errors occur, Fraser maintained that financial institutions must innovate rapidly without jeopardizing the trust upon which the system rests. “If we break trust, it is a huge problem for the macro, for the markets, for everywhere,” she warned.

As the velocity of money increases, she added, “resilience and trust go hand in hand.” Citi moves roughly six trillion dollars daily, and Fraser foresees transaction volumes rising significantly as artificial intelligence gains ground in the economy. Clients, furthermore, demand round-the-clock, instantaneous services that are also safe and reliable. Fraser cited Citi Token Services’ digital deposit solutions as an example, which enable money transfers via blockchain technology and integrate with clearing capabilities available 24 hours a day, seven days a week.

The next step, she noted, will be for other components of the financial infrastructure to move toward continuous availability as well, including central banks. Fraser summarized the equilibrium that, in her view, should guide this transformation: “Let’s do it safely, securely, and fast.”

30 Years, Five Cycles, and One Certainty: The Fed Is the Fed and Rules the Markets

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There are few economic decisions capable of simultaneously altering the price of money, currency values, credit costs, stock market behavior, bond markets, and international capital flows across the entire globe. One of them is a decision by the Federal Reserve. The Fed demonstrated this once again on September 16, when it raised its benchmark rate by 25 basis points to a range of 3.75% to 4.00%, in a unanimous decision by the Federal Open Market Committee. The reasoning was familiar: inflation remains elevated and the U.S. economy maintains a solid enough pace of activity to justify a more restrictive monetary policy.

However, this time there is something different. It is not merely an isolated hike; markets are beginning to price in that the movement may continue, and several signals point in that direction. For example, the Federal Reserve Bank of San Francisco noted in early September that financial markets were expecting the rate to reach approximately 4.25% by mid-2027, which would be equivalent to two or three additional 25-basis-point increases from current levels.

The Fed itself is somewhat more cautious: its September projection places the median rate at 4.1% at the close of both 2026 and 2027, although the distribution among officials shows considerable dispersion. The difference between both views is important, but even more important is history, because this is not the first time the Fed has embarked on a path of monetary tightening.

Over the last 30 years, at least five major episodes can be identified that allow us to observe what happens when the U.S. central bank decides that money should stop being so cheap:

  1. 1994–1995: The Greenspan Scare

  2. 1999–2000: The Fed Cools Down the Tech Party

  3. 2004–2006: Greenspan’s Measured Pace

  4. 2015–2018: Normalization After Near-Zero Money

  5. 2022–2023: The War Against Inflation

Five episodes, five distinct economic circumstances, and five different market responses. But with one common element: when the Fed moves rates in a sustained manner, virtually no major market remains indifferent.

1994: When the Fed Surprised the World, and Mexico Collapsed

The first of the major episodes of the period began in 1994. The U.S. economy was growing, and the Federal Reserve decided to preempt potential inflationary pressures. The result was one of the most aggressive tightening processes of the modern era up to that point. The federal funds rate went from around 3% at the beginning of 1994 to 6% in February 1995. Among the most remembered decisions was the 75-basis-point increase in November 1994; the problem was that markets were unprepared for the speed of the adjustment. As a consequence, U.S. bond yields surged sharply, causing a major correction in fixed-income markets. The impact was not confined to the United States either, as Mexico was particularly exposed.

The rising cost of money in the United States contributed to tightening financial conditions for emerging markets just as Mexico faced its own vulnerabilities: debt, external imbalances, and an exchange rate that would prove unsustainable. In December 1994, the peso crisis erupted. The Federal Reserve Bank of Dallas has noted that U.S. tightening delivered the final blow to a Mexican economy already exhibiting internal vulnerabilities. Between November 1994 and March 1995, the real exchange rate of the peso collapsed by more than 40%, while three-month Cetes rates had risen from around 10% in February 1994 to 14% in November. The episode left a primary lesson:

The Fed does not need to directly trigger a crisis to become part of it. It is enough for it to change the price of money in the United States for highly indebted countries, vulnerable currencies, and markets dependent on external financing to begin feeling the pressure.

1999–2000: Cold Water on the Tech Party

Five years later, the backdrop was completely different; the U.S. economy was enjoying the expansion associated with the technological revolution, the internet had transformed corporate expectations, and equity markets had entered a genuine frenzy. Then, the Fed raised rates again, with the federal funds rate going from 4.75% in mid-1999 to 6.5% in May 2000 after several consecutive hikes. The Nasdaq reached its historical peak of that era on March 10, 2000.

At that time, the largest companies on the Nasdaq were dominated by tech firms; six of the top 20 companies had not even recorded profits in the final quarter of 1999, according to a subsequent analysis by the Federal Reserve Bank of San Francisco. The Fed did not create the tech bubble nor was it the sole cause of its eventual burst. Extreme valuations, expectations around new technologies, and massive capital inflows played fundamental roles, but rising borrowing costs altered financial conditions.

Then a recurring feature of Fed cycles reappeared: when rates rise, the price investors are willing to pay for future growth changes, and tech companies were particularly sensitive to that shift. The epilogue of this Fed tightening brought a long correction for the Nasdaq and a subsequent economic recession in the United States.

2004–2006: The Measured Pace That Couldn’t Prevent the Storm

The next cycle is especially interesting because the Fed tried a different approach. After lowering the benchmark rate to just 1% in 2003 and keeping it there for an extended period, the central bank began a process of gradual increases in June 2004. There were 17 consecutive 25-basis-point hikes, pushing the rate from 1% to 5.25% by June 2006.

The Fed’s own language spoke of “measured” adjustments, but the economy had already accumulated significant imbalances, especially in the housing market and mortgage credit. In June 2006, when the Fed raised the rate to 5.25%, it acknowledged that growth was moderating and the housing market was cooling down, while warning that inflationary risks persisted. A year later, rate cuts began, and shortly after came the global financial crisis.

The link between the 2004–2006 hikes and the 2008 crisis must be handled with care: monetary tightening alone does not explain the crisis, as mortgage market dynamics, leverage, securitization, and risk management were decisive. But the cycle left a vital lesson: the effects of rate hikes do not necessarily show up the moment the Fed presses the button—they can take months or even years to manifest.

2015–2018: The End of the Near-Zero Money Era

The following experience was even more peculiar. After the 2008 financial crisis, the Fed slashed rates to near zero and kept them there for years. It was not until December 2015 that the normalization phase began. The first hike was 25 basis points, moving the target range to 0.25%–0.50%. Gradual increases followed in 2016, 2017, and 2018; by December 2018, the rate stood at 2.25%–2.50%—a policy clearly distinct from 1994.

The Fed was not trying to rein in an overheating economy or a tech bubble; it was attempting to return gradually to a more normal monetary policy after nearly a decade of extraordinary easing. But the market ultimately remembered who held the keys to money. Toward the end of 2018, concerns grew over global growth, trade tensions, and financial conditions. The Fed signaled it would be patient regarding further adjustments; consequently, the rate did not come close to 2000 or 2006 levels, yet the market still reacted. After years of near-zero rates, 25 basis points carried a very different significance for investors.

2022–2023: The Fed Brings Out the Heavy Artillery

If the previous four cycles had demonstrated the Fed’s power, the episode starting in 2022 recalled something even more fundamental: when inflation becomes the primary threat, the Federal Reserve can raise rates with extraordinary speed. In March 2022, the target range was 0.25%–0.50%, but by December of that year, it had reached 4.25%–4.50%. That was seven rate hikes in nine months, including four consecutive 75-basis-point increases between June and November. The rate continued upward in 2023 to reach 5.25%–5.50%, triggering global financial tightening. The U.S. dollar surged against numerous emerging currencies, sovereign yields rose, financing costs escalated, and investors sought shelter in U.S. assets.

The IMF had warned that accelerated Fed tightening could trigger capital outflows and currency depreciations in emerging markets. In July 2022, the institution noted that dollar strength was exacerbating inflationary pressures in other nations while capital was departing emerging markets. Once again, the Fed moved a U.S. rate, and once again, the impact crossed borders. Now, a story seen across at least the past three decades of financial globalization begins anew as we enter 2026.

The Fed has just raised its reference rate again to 3.75%–4.00%, but the context differs from 2022. Four years ago, the U.S. economy was emerging from the pandemic with inflation at multi-decade highs. Today, the economy continues to expand, productivity has strengthened, and corporate investment remains robust, though inflation stays above the 2% target. The Fed projects 2026 PCE inflation at 3.7% before gradually declining toward 2% by 2029. Meanwhile, markets are beginning to price in additional hikes.

The San Francisco Fed estimated in early September that markets were discounting a rate near 4.25% by mid-2027—equivalent to two or three additional 25-basis-point moves. That does not guarantee it will occur, but the Fed’s median forecast sits at 4.1% for late 2027, with a wide dispersion of scenarios among officials. For markets, the debate is already underway.

The Fed Changes a Rate; Markets Change Regimes

Here lies perhaps the main lesson of the past 30 years. There is no formula stating that every Fed hike triggers a stock market crash, a crisis, or a recession. In some episodes, equities continued rising during much of the cycle. In others, bonds suffered first. In still others, emerging currencies or speculative market segments took the hit. What does repeat is something else:

A rate hike changes the relative price of money, altering valuation rules for virtually every asset class. Rates impact credit costs, affecting consumption and investment; rates alter the relative appeal of bonds versus equities; and the spread between U.S. rates and the rest of the world influences capital flows, the dollar, and emerging currencies.

The Chicago Fed summarizes this transmission mechanism: changes in the federal funds rate propagate to other interest rates, the international value of the dollar, and asset prices that shape spending and investment decisions. That is why the Fed can make a decision in Washington and trigger moves in Mexico City, São Paulo, London, Tokyo, or Buenos Aires.

Five Cycles, Five Different Markets

Another takeaway is essential: the five episodes did not produce identical outcomes because the world the Fed confronted was different each time. In 1994, the key risk for emerging markets was external debt dependency; in 2000, tech exuberance; in 2006, housing and financial leverage; in 2018, unwinding a decade of near-zero rates; in 2022, global inflation forcing central banks off emergency policies.

Today’s landscape introduces new variables: massive fiscal deficits, extraordinary funding needs, huge AI investments, geopolitical shifts, energy, tariffs, and a U.S. economy showing an unusual mix of growth and persistent inflationary pressure. The sixth episode will not necessarily mirror any of the previous five, but the underlying mechanics endure. When the central bank issuing the primary global reserve currency alters the price of money, the rest of the planet must adjust.

The Certainty

Thirty years provide enough perspective to distinguish between a coincidence and a pattern: not every Fed rate-hike cycle ended in crisis; not all triggered bear markets; not all hit emerging markets equally. But all of them forced markets to recalculate the price of money and the value of assets.

The core question should not just be whether the Fed will raise rates another 25 or 50 basis points, but what happens when investors, after adapting to specific financial conditions, realize the rate regime is shifting once again. The past 30 years offer five different answers, none suggesting a Fed rate hike is a minor event. Amid few certainties in financial markets, one stands firm: when the Fed changes course, the markets listen. Traders capture this reality in a phrase repeated through every cycle: The Fed is the Fed.

AllianceBernstein appoints Onur Erzan as President and Chief Executive Officer

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Photo courtesyOnur Erzan, President and Chief Executive Officer of AllianceBernstein

AllianceBernstein Holding L.P. and AllianceBernstein L.P. have announced that Onur Erzan, President, has been appointed President and Chief Executive Officer of AB, effective April 1, 2027. According to the firm, he will succeed Seth Bernstein, who will retire on March 31, 2027, after nearly a decade at the helm of the firm. Bernstein will continue to serve on AB’s Board of Directors.

“Onur is an exceptional leader with broad experience in asset management and insurance. Since joining AB, he has helped define the firm’s strategy, expand its capabilities, and position the business for sustained growth. At the same time, this transition provides an opportunity to recognize Seth’s extraordinary contributions over the past decade. He has led AB through a period of significant growth and helped strengthen the partnership between Equitable and AB at a decisive moment for our company. I thank Seth for his leadership and am pleased that he will continue to serve on AB’s Board of Directors,” said Mark Pearson, CEO of Equitable Holdings and member of AB’s Board of Directors.

During his tenure as CEO, Bernstein supervised a period of deep transformation at AB. Under his leadership, the firm has continued to evolve beyond its traditional roots in active public markets asset management to become a leading, diversified global investment manager with scaled businesses across public markets, private alternative assets, private wealth management, insurance asset management, and retirement solutions. Furthermore, Bernstein drove structural improvements in the firm’s profitability by relocating AB’s headquarters to Nashville, establishing and developing AB India, and transforming Bernstein Research into a joint venture with Société Générale. Bernstein also promoted initiatives to reinforce the firm’s culture, broaden its global distribution platform, and open new avenues of profitable growth, with AB’s assets under management nearly doubling to top $919 billion as of August 31, 2026.

“It has been the privilege of my life to lead this extraordinary firm,” said Bernstein. “Over the past decade, we have expanded our reach, strengthened our distribution, and developed durable growth engines that enable us to better serve our clients around the world. I am thrilled that Onur is taking the reins to lead AB into this next phase, as he has played a key role in our strategy and led much of its execution. He embodies many of the values that I believe distinguish AB’s success: putting our clients’ interests first, applying a rigorous intellectual process to the decisions we make, and demanding excellence in everything we do. I have full confidence in Onur’s leadership and in the opportunities ahead for this firm.”

Onur assumed the role of President in January 2026 and oversees AB’s Private Wealth Management, Global Private Alternatives, and Global Asset Management Distribution businesses, as well as the firm’s Strategy and Corporate Development functions. He has served on the Executive Committee of Equitable Holdings since 2021 and, following the closing of the previously announced merger between Equitable Holdings and Corebridge Financial, will join the company’s executive leadership team led by CEO Marc Costantini.

“It is an honor to lead AB at such a decisive moment in our history. For nearly six decades, AB has been distinguished by investment excellence, intellectual rigor, and a collaborative culture relentlessly focused on clients. In an environment where the wealth and asset management industry is undergoing rapid transformation—with clients seeking closer relationships, broader capabilities, and more integrated solutions—AB is uniquely positioned to deliver the insight, capabilities, and collaboration they need to achieve differentiated outcomes. I look forward with excitement to writing the next chapter of AB’s history alongside our talented and dedicated colleagues around the world,” stated Erzan.

Since joining AB in 2021, Erzan has helped define and execute the firm’s global asset management distribution strategy, in addition to playing a key role in AB’s expansion into new business areas, including the launch of its active ETF offering, the creation of an integrated insurance asset management division, and the expansion of AB’s private credit and broader retirement income generation solutions. As head of Bernstein Private Wealth Management, Erzan significantly strengthened the firm’s capabilities aimed at ultra-high-net-worth clients, global families, and family offices through tailored solutions. Likewise, he played a fundamental role in strengthening Bernstein’s external partnerships with international banking institutions and custodians, while expanding the reach of its wealth management business and client coverage capabilities.

Prior to joining AB, Erzan spent 20 years at McKinsey & Company, where he most recently served as Senior Partner and co-led the Global Wealth & Asset Management practice. In that role, he advised prominent global asset managers, wealth management firms, insurers, and retirement-focused financial institutions on M&A operations, transformation processes, and long-term growth and value creation initiatives. Beyond his professional responsibilities, he maintains a strong commitment to the community and has served on the boards of directors of Graham Windham and Turkish Philanthropy Funds. He holds a bachelor’s degree in Business Administration from Middle East Technical University in Ankara, Turkey, and an MBA from Columbia Business School.

How Are Cryptocurrency ETFs And In Which Markets Do They Exist?

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ETF de criptomonedas:
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Cryptocurrency ETFs allow gaining exposure to digital assets such as bitcoin or ether without the need to buy and custody them directly. They are traded on the stock exchange through a financial intermediary, similarly to other exchange-traded products.

However, not all vehicles that the market calls “cryptocurrency ETFs” legally have the structure of a traditional exchange-traded fund. Depending on the country, they can take the form of an ETF, ETP, ETN, or trust. Therefore, in addition to knowing the asset to which they offer exposure, it is important to review the legal structure of each product.

How They Work

There are two main structures. Spot or cash products directly hold the underlying cryptocurrency in custody and seek to track its price, minus fees and other expenses. Futures-based products, on the other hand, invest in derivative contracts on the cryptocurrency. In this case, the performance may differ from the behavior of the asset due to, among other factors, the cost of rolling over the contracts.

There are also products that group several cryptocurrencies and others with leveraged or inverse exposure. The latter have more complex characteristics and are generally aimed at short-term strategies. The investor must distinguish between direct exposure to the asset, exposure through derivatives, and exposure to a combination of assets.

Why They Interest Investors

The main operational advantage is access. The investor does not need to manage private keys or directly use a cryptocurrency exchange platform. The custody of the asset, where applicable, is handled by specialized entities.

In addition, these instruments can be incorporated into a traditional portfolio and traded through existing investment accounts. For managers, advisors, and institutional investors, this makes it easier to integrate exposure to digital assets into familiar investment structures. Regulatory, tax, and operational conditions, however, depend on each market. Nevertheless, transferring custody to a specialized entity does not eliminate the risk: it delegates it. The solidity of the custodian, issuer, and product providers remains relevant.

Where They Exist

In the United States, spot products linked to bitcoin and ether are traded, in addition to futures-based vehicles. Many are legally structured as ETPs or trusts, although they are commonly referred to as ETFs.

Canada was one of the first countries to authorize spot cryptocurrency ETFs. In Europe, a large portion of the offering takes the form of ETPs or ETNs and trades on markets such as Xetra, Euronext, or SIX Swiss Exchange. They are not usually traditional UCITS ETFs, partly due to the diversification rules applicable to these funds. ETNs, moreover, can incorporate credit risk from the issuer.

In Asia-Pacific, Hong Kong and Australia have spot ETFs. In Latin America, Brazil has a broad offering of ETFs linked to different crypto assets. Chile also has a bitcoin ETF fund, while in Argentina certain foreign ETFs can be accessed locally through CEDEARs.

The specific availability for each investor depends on their country, their intermediary, and the applicable marketing regulations.

What the Investor Should Analyze

The traded format simplifies access, but it does not eliminate the volatility of the cryptocurrency it replicates. Before investing, it is advisable to review what the product replicates, whether it holds cryptocurrencies or uses derivatives, who performs the custody, what its fee is, and what liquidity it has. It is also necessary to consider the tax and regulatory treatment of each jurisdiction.

In short, a cryptocurrency ETF or ETP is, above all, an access vehicle. Its operation and its risks depend on the specific structure of the product and the market in which it is listed.

Johnson’s “Guns and Butter” Analogy

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Pixabay CC0 Public Domain

The rate hike and Kevin Warsh’s press conference transmitted a certain sense of calm to equity investors, who now do not see it as likely as in 2022 that the Fed will fall behind the curve. However, the yield on 10- and 30-year government bonds has continued to be volatile and trend upward.

Uncertainty regarding the conflict in Iran and how far it could push oil prices continues to weigh on investor sentiment, encouraging some well-known Wall Street strategists to advocate the similarities between the current cycle and what happened in the early 1960s, Lyndon B. Johnson’s “guns and butter” era.

The analogy with Lyndon Johnson, who simultaneously funded Vietnam and the “Great Society,” rhymes with the current moment. But it rhymes with 1965–68, not the early sixties: a late-cycle economy, at full employment, receiving a fiscal boost when there is no longer any slack.

How does it compare to the current picture? On September 16, the Fed raised rates by 25 bps, to 3.75%–4.00%, the first hike in more than three years. Furthermore, it raised its core PCE forecast for 2026 to 3.4%. It did so even though the Administration actively pressured it to hold back. On the fiscal front, there is an added request of $1.5 trillion for defense, and the CBO projects a deficit of 5.8% of GDP and debt at 101%. The 10-year closed the week of the rate hike at 5%.

What are the similarities with “guns and butter”? Today, as in 1965, an armed conflict and an expansion of public spending coincide with full employment (procyclical fiscal spending, quite heterodox in a historical context): unemployment below 4% then, 4.1% now. The tug-of-war between the White House and the Fed is also repeating itself. In December 1965, Johnson reprimanded Martin, then head of the Fed, at his ranch for raising the discount rate; today the tension is between Trump and Warsh. In the stock market, the concentration in megacaps linked to AI recalls the genesis of the Nifty Fifty, although with much less striking valuations among its main representatives.

But there are also differences; the fiscal aspect plays against us. In 1965, debt hovered around 40% of GDP and was falling. Johnson’s deficit barely reached 3% in 1968. Today, debt is two and a half times higher and growing, so the risk is greater than back then.

Wages play in our favor. What made the inflation of the sixties chronic was the wage spiral, with strong unions and COLA clauses (cost-of-living adjustment clauses) applied to social security payments. Today wages are growing at 3.1% year-on-year, and the post-pandemic trend is clearly downward. Current inflation is largely supply-driven, due to energy and tariffs, and without indexation it can dissipate; this is made clear, for example, by the Federal Reserve Bank of San Francisco.

Finally, there are no similarities regarding the monetary regime either. Bretton Woods and financial repression allowed the adjustment to be postponed until August 1971. Today, with a floating exchange rate and “bond vigilantes” on alert in recent months, the adjustment arrives via the term premium, in a faster and more volatile manner.

And although Warsh acts today like Martin in 1965–66, his speech leaves no doubt regarding the objective of containing and controlling inflation, and thus recovering credibility and confidence in the Federal Reserve. The problem back then was not the rate hike, but what came after: the Fed overestimated the Government’s capacity to raise taxes, and its rate cuts in 1967–68 were miscalculations with the economy already at full employment. The key question is whether the Fed will maintain its focus after the midterms in November; if Trump ultimately loses control of both houses, pressure in Iran could increase significantly.

Scenario Analysis

Trying to add some color, our scenario analysis (with subjective probabilities) would look like this:

1.- “1966 Analogy” (45%). The Fed stands firm and there is a mid-cycle slowdown, similar to the roughly 20% drop in the S&P that year, followed by a recovery.

2.- “1967–68 Analogy” (25%). The Fed yields after the “midterms” and inflation gets stuck above 3%. The term premium rises steadily and a prolonged regime of poor real returns opens up for 60/40 portfolios, like the one that followed between 1966 and 1982.

3.- “AI Productivity” (30%). Capex expands capacity and absorbs the fiscal boost, as in the late nineties.

Implications for Asset Classes

And how does this outlook affect the major asset classes?

Fixed income: Conservative stance on duration relative to the index in US nominals, with a steepening bias on the curve and some protection through inflation-linked bonds. With the 10-year around 5%, we are approaching an interesting area, but the risk of higher oil prices and a more dynamic labor market will weigh in the short term.

Real assets: Gold is the most asymmetric hedge against a complacent Fed, as demonstrated in the seventies. It can be complemented with positions in energy and commodities.

Equities: Concentration in quality at high multiples was paid for dearly in 1973–74 (Nifty Fifty bubble). However, in a context of uncertainty like today’s, with tech companies putting their balance sheets on the line, quality is proving to act as a haven. We are entering a period in which analysts have historically revised their earnings growth projections downward; according to the BofA manager survey, a certain complacency is perceived regarding the evolution of crude oil prices (42% of respondents expect the barrel to range between 70 and 80 dollars at year-end), which is evident in their levels of optimism; finally, retail margin purchases, in an area of excessive expansion (+37% year-on-year), reinforce the reading of short-term fragility.

The stock market rise since the rate hike meets the historical profile analyzed. The historical median is −3% at one and three months, with recovery from the fifth month. But the most similar cycle, that of March 2022, driven by supply inflation, was the only negative one at twelve months. With six observations, it is a directional reference.

Credit and dollar: In credit, short maturities with an emphasis on issuer quality. In the dollar, the rate differential supports it in the short term, but these regimes ended up depreciating it, as in 1971. That suggests flexible hedging ratios.

Three signals to watch that would bring us closer to the adverse scenario: a Fed pause or cut with core PCE above 3%, wages growing above 4%, and a lack of consensus within the Fed, with “dissenters” supporting cuts in the FOMC after November.

How to Obtain Predictable Equity Returns with WisdomTree

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Photo courtesyTom May, Global CIO, Outcome and Derivative Strategies at WisdomTree.

Attendees at the second edition of the Funds Society Leaders Summit, in collaboration with CFA Society Spain, were able to learn a bit more about defined return investing through WisdomTree’s analysis, presented by Tom May, Global CIO, Outcome and Derivative Strategies at the firm.

In his presentation, May recalled that equity securities generate long-term returns, but these can vary considerably over time. Currently, for example, “European equities have a positive expected return, but exhibit severe drawdown events and fat tails.”

In this scenario, defined return investments—known as autocallables—increase the probability of achieving a specific return target. These types of products “harness the spread between equity forward and realized returns (ERP), as well as the persistent premium of implied volatility over realized volatility (VRP), to deliver higher and consistent yields,” May assures.

Ultimately, he poses the question of why settle for uncertainty when an investor can define their return and focus on achieving a defined yield in the most likely scenarios to maximize the investment.

WisdomTree’s defined return strategies feature a diversified portfolio of autocallable securities. But how does an autocallable security work? It is a structured investment product whose maturity and payouts depend on the performance of the underlying asset.

In short, autocallables allow for greater visibility regarding returns and a more probable path. Historically, forecasts and actual results have aligned, as seen when analyzing the real and projected performance of a portfolio of autocallable products historically managed by the WisdomTree team.

Why consider WisdomTree’s defined return autocallable strategies? May’s presentation highlights several reasons:

1.- Defined positive return in pre-established markets: Autocallables are designed to offer a positive return over their lifespan, unless the market suffers a significant drop and remains at those levels for an extended period.

2.- Higher probability of achieving expected outcomes: A diversified portfolio of autocallable securities can limit return variance within a target distribution range, increasing the probability of reaching that target.

3.- A more predictable investment process: A diversified portfolio of autocallable securities can capture long-term equity risk premiums while reducing the dispersion of returns that equity investors would otherwise face.

With its WisdomTree Defined Return Autocallable Strategies fund, the investor gains access to an equity-linked return, with defined outcomes and daily liquidity, through a product that actively manages a diversified portfolio of autocallable products and collateral, continuously optimizing maturities, thresholds, index pairs, and collateral. The product’s active approach adapts to market conditions, backed by 13 years of experience in these types of products.

Morgan Stanley’s Endorsement of Equities: Valuations Are Grounded in Fundamentals

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Wikimedia Commons

In its latest positioning report, the investment bank described valuations as “reasonable,” given corporate earnings prospects and nominal GDP growth.

According to the firm, corporate earnings remain the primary driver of the equity rally, a variable they expect to continue trending upward.

Morgan Stanley holds a particularly bullish view on the U.S., which is the only equity market they currently recommend overweighting.

Despite a global economic environment marked by inflation, uncertainty, and geopolitical tension, global equity markets have been on a run. With varying results across geographies and sectors, global equity benchmarks have risen strongly, driven primarily by the excitement surrounding the artificial intelligence boom, which has had Wall Street, in particular, as one of its epicenters. And while this positive momentum has raised several questions—and anxieties—around equity valuation levels, prices are supported by fundamentals. That is Morgan Stanley’s stance on the matter.

According to the bank’s latest global positioning report, BEAT (an acronym for Bonds, Equities, Alternatives, and Transition) for the third quarter of the year, economic fundamentals support valuations.

“While headline valuations appear elevated, they remain reasonable relative to earnings growth prospects and a structurally stronger nominal economy,” the investment bank noted in its recent report.

Along those lines, they added that they expect “the market to broaden out as geopolitical tensions ease, with many sectors still trading at lower valuations, leaving room for a rebound.”

Regarding the recent upside in equity markets, Morgan Stanley emphasized that it has been driven by corporate results rather than higher multiples. Current multiples, they noted, “are not extreme when viewed relative to the last five to ten years.”

Tailwinds for Stock Markets

One of the drivers Morgan Stanley sees for equities is related to economic dynamics. “Stronger nominal GDP growth supports corporate revenue expansion, earnings growth, and cash flow generation, creating a favorable environment for equities,” they commented in their report.

Added to this is the public policy component, given that the investment bank anticipates that fiscal policies, deregulation, and tax-driven growth “are likely to reinforce this.”

For the firm, corporate earnings remain the primary driver of the equity rally. Looking ahead, they anticipate this variable will continue to trend upward, supported by “resilient demand, productivity gains, and expanding capex cycles.” This trajectory, they predicted, will run its course as long as the capital expenditure cycle continues to rise.

Currently, an expanding capex cycle is closely tied to the rapid adoption of artificial intelligence models across all levels of the economy, in what many describe as a new industrial revolution. This deployment of corporate muscle has helped keep investor optimism alive amid uncertainties.

An Interesting Dynamic in the U.S.

Stock markets overall have posted relatively solid performance. The MSCI All Country World Index, which tracks global equities broadly, has gained 18.2% over the last 12 months. The United States as a whole has performed on par with the rest of the world—with one-year gains of 16.6% for the MSCI USA Index and 16.7% for the MSCI World ex USA Index—but its technology sector has stood out in particular.

Reflecting this, while the S&P 500 has appreciated 16.7% over 12 months and the Dow Jones Industrial Average 11.8%, the Nasdaq Composite has surged 20.4%.

Echoing its positive view on the fundamentals behind equity valuations, Morgan Stanley sees room for Wall Street to run further. In fact, in its positioning recommendations, the U.S. stock market is the only one rated Overweight.

This recommendation is backed by a “constructively positive view on overall growth and earnings in 2026.” In that regard, they highlighted that fiscal stimulus from the country’s One Big Beautiful Bill, deregulation efforts, and ongoing AI adoption “continue to support growth.”

In contrast, the firm holds a Neutral view on Japanese and Emerging Market equities, and an Underweight recommendation on European equities.

Ted Stratigos (Aladdin Wealth Tech): “Institutions Demand Technology Capable of Connecting Investment Ideas, Model Portfolios, Execution, and Oversight”

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Photo courtesyTed Stratigos, Global Head of Aladdin Wealth Tech.

As wealth management continues to evolve, institutions are seeking ways to combine the personalization and trust of traditional private banking with the scale, efficiency, and analytical capabilities demanded by today’s clients. In the experience of Ted Stratigos, Global Head of Aladdin Wealth Tech, this requires technology that empowers advisors through a comprehensive view of client needs, deeper portfolio analysis, and the ability to deliver consistent, tailored advice with greater confidence and efficiency. We discussed and reflected on these topics in this interview with him.

What specific needs do wealth management and private banking institutions have?

In addition to seeking technology that empowers advisors, many institutions are expanding their discretionary portfolio management capabilities. This creates demand for technology capable of delivering portfolio construction, execution, and monitoring in a scalable way for large client bases, while maintaining the appropriate levels of personalization and oversight.

What do these institutions value most when selecting a tech provider?

The most important consideration is whether a platform helps advisors deliver more informed and personalized advice, while reinforcing, rather than replacing, the relationship between advisor and client. In markets where private banking is heavily relationship-driven, institutions seek technology that supports more proactive advice, a clearer view of portfolios, and more personalized client interaction at scale. They also demand reliable analytics, risk supervision, and integrated workflows for both advisory and discretionary management, featuring technology that adapts to the systems advisors already use. Increasingly, institutions are also looking for flexibility, transparency, and applicability, including AI capabilities grounded in high-quality data and robust governance frameworks.

What does Aladdin Wealth offer, and why do you think it is one of the most widely used platforms in the market?

Aladdin Wealth is designed to help advisors move from insight to action within a single, connected platform. By integrating data, analytics, portfolio construction, risk supervision, and advisor workflows, it enables institutions to operate from a shared view of the client and their portfolio. The platform brings institutional-grade technology and risk analytics to the wealth management space, helping advisors and discretionary managers handle portfolio complexity more effectively.

What is its key aspect for advisory services?

A key aspect is that Aladdin Wealth supports both advisory and discretionary management business models. As wealth managers seek to scale their management capabilities while preserving a personalized client experience, institutions demand technology capable of connecting investment ideas, model portfolios, execution, and ongoing oversight across the entire value chain. Furthermore, it is important to note that the transformation of wealth management extends beyond traditional private banking. Institutions are seeking technology platforms that can support a broader range of client segments and business models.

Aladdin Wealth offers integrated workflows across various wealth management businesses, supporting private banking, asset managers, mass affluent, and retail banking segments. This helps institutions create a more connected, consistent, and scalable ecosystem for portfolio management, client interaction, and investment decision-making. Instead of devoting resources to maintaining fragmented tech environments, institutions can focus on what sets them apart most: delivering high-quality advice, superior client service, and a more personalized experience.

Where is technology heading in the wealth management and private banking sector?

The sector is moving toward a future where technology, data, and human expertise collaborate to deliver more personalized advice at scale. Technology will play a crucial role by allowing managers to execute their investment ideas, monitor risk, and maintain portfolio oversight, enabling personalization where appropriate. We anticipate that AI and intelligent automation will become increasingly integrated into the advisor’s workflow—from synthesizing portfolio insights and detecting opportunities to supporting client communication and generating investment proposals.

Wealth management firms are shifting from building and maintaining tech infrastructure to using technology as a strategic driver of growth, differentiation, and client service. The winning institutions will be those that combine reliable data, intelligent automation, and human judgment, allowing advisors to deepen client relationships, respond faster to changing market conditions, and deliver more relevant advice in an increasingly complex investment environment.

How is Aladdin Wealth responding to this evolution?

Aladdin Wealth already incorporates AI-based capabilities designed to help advisors work more efficiently and make more informed decisions. However, the effectiveness of these tools will ultimately depend on the quality of the underlying data, the strength of governance frameworks, and the ability to explain analytics in a way that advisors and clients can understand and trust. Importantly, we view AI as an enhancement to the advisor’s capabilities and workflows, never as a replacement. Wealth management is built on personal relationships and trust; AI represents an opportunity to free up advisor time so they can focus on what truly matters.