Vanguard Will Expand Its Fixed-Income Offering with the Launch of the Vanguard Short Duration Bond ETF (VSDB), an Actively Managed Fixed-Income ETF to Be Managed by Vanguard’s Fixed-Income Group.
“The Vanguard Short Duration Bond ETF adds to our growing lineup of actively managed fixed-income ETFs and offers investors the opportunity to outperform the market in their short-term fixed-income allocations,” said Dan Reyes, Head of Vanguard’s Portfolio Review Department.
The firm plans to launch this ETF in early April of this year, and it will offer diversified exposure, primarily to short-term U.S. investment-grade bonds, including some exposure to structured products such as asset-backed securities.
The ETF is designed “to provide clients with current income and lower price volatility, consistent with short-duration bonds,” according to the statement.
Additionally, it will have the flexibility to invest in below-investment-grade debt and emerging markets to seek additional yield.
“This multi-sector approach aligns with investors’ preferences within their short-term fixed-income allocations and allows Vanguard’s fixed-income group to leverage the best ideas within a broad investable universe. The VSDB will have an estimated expense ratio of 0.15%,” the manager’s statement adds.
The ETF will be actively managed, enabling portfolio managers to seek the best opportunities within their investment universe while always maintaining a highly risk-aware approach, the information concludes.
Wikimedia CommonsOfficial photo of the inauguration of the 47th presidency of the United States led by Donald Trump.
Donald Trump officially assumed office on Monday as the 47th President of the United States. In a robust inaugural address, he outlined policies aimed at making Americans “proud of their country,” while advocating for the oil industry, national manufacturing, and the reclamation of the Panama Canal.
“We will drill, baby, drill”
In a pointed critique of the Biden administration’s legacy, Trump declared the “Green New Deal” dead. He strongly criticized Democratic environmental policies and staunchly defended U.S. oil drilling (fracking) as a means to lower energy prices, which he claims have fueled inflation.
“America will be a manufacturing nation, and we have more oil than any other country. Prices will drop, our strategic reserves are at maximum capacity, and we will export to nations around the world,” Trump announced.
The president emphasized the importance of capitalizing on America’s “liquid gold,” stating that fracking would be a cornerstone of his productive strategy. “We’re going to drill, baby, drill,” he exclaimed.
The U.S. Will Be a Manufacturing Nation Again
Trump outlined plans for his administration to tackle rising prices, with his new cabinet focused on controlling inflation.
In terms of production, the president, now beginning his second non-consecutive term, reiterated his commitment to making the U.S. “a nation of domestic manufacturing” once again, particularly in the automotive and fossil fuel sectors.
On trade, Trump revisited a key theme from his first term—tariffs.
“Immediately, I will begin reforming our trade system. Instead of using our taxes to enrich other countries, we will use the taxes of other countries to enrich our own nation,” he stated.
On the Panama Canal: “China Is Operating It”
Trump also announced his intention to reclaim the Panama Canal, which he claimed is currently being operated by China.
“American ships are being grossly overcharged and unfairly treated in every way, shape, and form. This includes the U.S. Navy. And above all, China is operating the Panama Canal. We didn’t give it to China. We gave it to Panama, and we’re going to take it back,” Trump declared.
Defense, Security, and Gender Policies
The new president also addressed immigration, defense, national security, and gender-related policies.
Trump began by emphasizing national security, declaring a “national emergency” at the southern border effective immediately.
He announced an immediate halt to illegal border crossings and outlined plans to deport undocumented immigrants. “We will put an end to the practice of catch and release. We will stop the dangerous invasion that has plagued our country,” he stated.
Additionally, Trump labeled drug cartels as international terrorist organizations.
“We will eliminate the presence of gangs and criminals in our major cities and heartlands. As Commander-in-Chief, it is my duty to defend our country, and that’s exactly what we will do,” he said.
These measures had immediate consequences at the border, including the suspension of asylum applications through the CBP One system, which had facilitated asylum requests in the U.S.
On national defense, Trump vowed to restore pride in the Armed Forces and announced that the American flag would one day be planted on Mars.
Regarding gender policies, Trump took a firm stance against diversity initiatives, declaring that under his administration, there would be “only two genders: male and female.”
Inauguration Ceremony
The swearing-in ceremony at the Capitol was attended by former presidents Bill Clinton, George W. Bush, and Barack Obama, as well as outgoing president Joe Biden. Members of Trump’s family and inner circle were also present.
José Luis Blázquez Vilés has founded ALVUS Wealth Tech Wisdom, a SaaS (Software as a Service) platform designed to provide technological services for aggregating, monitoring, and managing the wealth of unregulated entities such as single family offices, religious congregations, associations, or foundations in Spain and Latin America. ALVUS currently serves single family offices in Spain, Peru, and Panama.
Most clients of this type rely on Excel-based processes. ALVUS aims to help them optimize these processes by reducing costs and increasing profitability and productivity. For example, single family offices can automatically integrate any type of asset—liquid or illiquid, active or passive—from any financial entity or jurisdiction. The platform offers global or partial reports, document management, automated accounting, tax reporting, document archiving, among other services. Additionally, ALVUS provides tools for cost control with financial entities, risk management, and asset recurrence control, including a “look through” of the total wealth of families or individuals by entity or overall.
ALVUS is a fully independent company, unaffiliated with any financial entity, and boasts over 200 connections with custodial banks and asset managers. Eighty IT professionals support the project.
ALVUS is part of a platform that already provides services to regulated entities in Spain (under CNMV) and Latin America (regulated by local market authorities). ALVUS clients benefit from the expertise and reliability of this platform, which serves securities and brokerage firms, banks, investment firms, fund managers, and more, without depending on external wealth management or advisory services.
Blázquez was the founder of Beka Values Private Banking (now Beka Finance Private Banking) and the creator of the ACUA Private Banking Project. He was also the Director of the External Advisors and Managers Model for Spain and Latin America at Andbank. He has held roles at Inversis Banco, including Director of the Independent Financial Advisors Network and Business Development, and served as Director of Asset Management for Spain and Portugal at Dresdner Bank. Other roles include positions at Renta 4, Dresdner Kleinwort, CECA London, Garban Europe London, and Renta 4 Securities Company.
Blázquez holds a degree in Business Administration with a specialization in Quantitative Methods from the Autonomous University of Madrid. He has obtained multiple postgraduate qualifications, including a Master’s in Financial Markets (Autonomous University of Madrid), a Master’s in e-Business (Instituto de Empresa), an Executive MBA (ESADE), a Management Development Program (IESE), a Fintech Program (ESADE), and a Derivatives Program (INSEAD). Additionally, he holds certifications such as Chartered Financial Technician (CFTe) and EFPA.
La Française Real Estate Managers (REM), the real estate asset management company of Groupe La Française, has announced the appointment of Astrid Bonduelle as Investment Director within the healthcare real estate division.
In her new role, Astrid Bonduelle will be responsible for analyzing and evaluating real estate investment opportunities in the healthcare sector. She will report to Jérôme Valade, Director of the Healthcare Real Estate Sector at La Française REM.
Valade stated that over the past three years, and in the current economic context, “healthcare real estate assets have demonstrated their defensive role. Driven by an aging population and the consequent increase in healthcare needs, these investments benefit from sustained demand and can withstand economic fluctuations to some extent. Astrid will contribute to the development of this strategic sector for La Française REM.”
Bonduelle brings to La Française Real Estate Managers extensive experience in the real estate value chain. She began her career in 2020 at Groupama Gan REIM as an investment analyst, where she also supported the management of real estate portfolios. She later joined the real estate management company Euryale, where she honed her investment skills by sourcing, analyzing, and conducting due diligence on acquisition opportunities in the pan-European healthcare real estate sector.
Astrid Bonduelle holds a master’s degree in Real Estate Management from Paris Dauphine University.
According to the Schroders Global Investment Outlook Survey, which interviewed 420 pension fund leaders from 26 regions worldwide representing $13.4 trillion in assets, pension funds globally are planning to increase their allocations to private markets and global equities. Specifically, the study reveals that over 94% of these funds have already invested or plan to invest in private markets, with 27% intending to do so within the next two years.
An interesting finding is that pension funds are particularly focused on private debt strategies (51%), private equity (49%), infrastructure debt (41%), and renewable infrastructure (38%). Additionally, energy transition and decarbonization, as well as the technological revolution, are key themes driving pension fund demand in private markets. Approximately 93% of funds already invest or plan to invest in energy transition, and over a third expect to make new investments in this area within the next 1-2 years.
Demand for global equities is similarly high, with 55% of funds planning to increase their allocations to gain exposure to high-growth markets and sectors. “This trend highlights a strategic shift toward global active management,” the report notes.
Nearly three-quarters (70%) of global pension funds agree that active managers are better suited to provide specialized investment approaches focused on specific sectors, regions, or investment styles. This aligns with the belief that active managers possess the expertise needed to outperform passive products in the current environment, as noted by 59% of respondents.
Alternative fixed-income strategies are also popular, though preferences vary by region: in Asia-Pacific, asset-backed securities (36%) draw significant attention; in EMEA (excluding the UK), pension funds favor sustainable bonds (27%); in the UK and North America, opportunities lie in emerging market debt strategies (27%).
“This study highlights a fundamental shift in pension fund investment strategies, driven by the desire to access high-growth markets and sectors, alongside the need to enhance simplicity and adaptability. In an economic landscape marked by persistent inflation and volatility, we’re witnessing a strategic pivot toward active management, where pension funds recognize the potential of skilled managers to add alpha through allocation flexibility,” said Leonardo Fernández, Managing Director for Iberia at Schroders.
He emphasized that pension funds are increasing their global equity allocations because it allows them to capture growth across diverse regions and sectors while providing the flexibility to dynamically adjust allocations in response to changing market conditions. For pension funds, fixed income remains a core pillar.
Fernández also highlighted the report’s regional findings, which underscore local economic and regulatory differences and varying levels of investor maturity. “Understanding these nuances enables us to better align portfolios with both global opportunities and regional specifics, effectively addressing our clients’ changing needs.”
“Private markets are key for pension funds as they offer crucial means to diversify and enhance portfolio resilience. Sectors like private equity and renewable infrastructure are particularly well-positioned for growth, driven by key trends such as the energy transition and technological innovation. As the interest rate environment evolves, the need for skilled managers to identify and manage these assets intensifies,” Fernández explained.
As Donald Trump’s inauguration as U.S. president approaches, tensions are rising, fueled by both his actions and the broader uncertainties surrounding his administration. Since December 16, 2024, the S&P 500 has lost more than 3% as of January 2, 2025, while Tesla’s stock has dropped 18% after surging over 80% between the presidential election and December 16. Experts warn that Trump’s return to office will likely bring heightened market volatility.
In the days leading up to his swearing-in, Trump has already escalated tensions with threatening statements. “On Monday, following a media report, he vehemently denied any intention of softening his protectionist policies. Yesterday, he lashed out at Canada, Mexico, and Panama, threatening tariffs and even suggesting these countries should be part of the U.S. He also proposed renaming the Gulf of Mexico as the Gulf of America. As during his first term, we must again brace for potentially destabilizing comments,” said Sebastian Paris Horvitz, Director of Analysis at LBP AM, the majority shareholder of LFDE.
Rising Concerns and Market Volatility
Experts agree that Trump’s rhetoric and policies will inject volatility into markets. According to Portocolom, uncertainties about the new administration’s impact raise questions in areas like climate regulation and social cohesion. “During his previous term, significant rollbacks were observed in climate regulations, such as the withdrawal from the Paris Agreement, and a decline in social cohesion due to polarizing policies. These precedents spark concern about the potential influence in these areas again,” they noted.
Gilles Möec, Chief Economist at AXA IM, warned that markets should prepare for significant fiscal volatility in 2025, characterized by political wrangling and limited clarity. Möec highlighted that the “transformation rate” of Trump’s campaign promises into actual legislation is crucial for global macroeconomic and financial prospects in 2025.
“There is a strong belief among investors that the new U.S. administration will follow an ‘error correction’ approach with the market as the ‘judge.’ If U.S. equity markets react negatively to the implementation of some of Trump’s more business-adverse ideas, such as mass deportations or crippling tariffs, it’s likely policies would be recalibrated. This aligns with a low ‘transformation rate,’” Möec explained.
Monetary Policy
Alexis Bienvenu, fund manager at La Financière de l’Echiquier (LFDE), highlighted mistrust toward Trump’s administration, citing concerns over Elon Musk’s controversial inclusion and a less accommodative monetary policy.
According to Bienvenu, the disenchantment stems not only from Trump’s economic policies but also from the Federal Reserve’s less expansive stance. “The Fed cut its benchmark rate by 25 basis points at its December 18 meeting but accompanied this move with a cautious message regarding further cuts, now projecting only two more by the end of 2025. Far from suggesting a swift normalization toward its long-term target, the Fed sees the rate at about 3.9% by late 2025, partly due to higher inflation forecasts compared to the September meeting. The market’s reaction could only be negative,” he explained.
Bienvenu questioned why inflation projections were revised upward when recent data does not indicate a particularly damaging inflationary outlook for 2025. Contributing factors, such as moderation in housing prices, easing in the labor market, and stable oil prices, should help contain inflation. He speculated that these revisions might partly reflect expectations around Trump’s future economic policies.
Challenges Within Trumpism
Eoin Walsh, portfolio management partner at TwentyFour AM (Vontobel boutique), noted the difficulty of distinguishing rhetoric from policy in Trump’s administration but warned of significant potential impacts from proposed measures like tax cuts, immigration restrictions, deregulation, and tariffs.
Walsh believes that as Trump’s policies become clearer and new data on inflation and unemployment emerges, markets will begin pricing terminal base rates for this cycle. “We expect this will help normalize the curve and push 10-year Treasury yields back above base rates. Ultimately, while we don’t anticipate a sustained Treasury rally in 2025, we foresee more volatility, with yields likely ranging from lows below 4% to highs near 5%,” he concluded.
Deep Divisions
Bienvenu also pointed to internal divisions within Trump’s camp as a source of market concern. “The first episode of this tension occurred on December 19 when the Republican-majority House rejected a Trump budget proposal directly influenced by Musk. This nearly caused a federal government shutdown. While a modified version was passed at the last minute, significant concessions on Musk-inspired elements left the divide within the party unresolved,” he explained.
The clash resurfaced around immigration policies, with some Trump allies pushing to ban H-1B visas, prompting Musk to vow to protect them, citing their importance to innovation. Meanwhile, Steve Bannon, a staunch Trump ally recently released from prison, lashed out at Musk, suggesting he “sit at the back of the class until he understands Trumpism.”
“These divisions could persist as Trump balances the interests of Silicon Valley billionaires with Midwestern rednecks. Crucial measures like budget votes could face stalemates, which the market will undoubtedly punish,” Bienvenu added, warning of further legislative battles aboard the “Tesla of Trumpism.”
2024 was a year of transition for the cryptocurrency universe. According to Hashdex, this market went through a recovery cycle following a turbulent 2022 marked by bad actors and fraudulent activities. Reflecting on the past year, they believe crypto assets experienced a recovery phase and the beginning of a bull market. A key turning point was the U.S. election results and Donald Trump’s victory. Evidence of this is the Nasdaq Crypto Index, which has risen more than 57% since November 5, 2024, driven by widespread optimism about the future direction of U.S. digital asset policies.
“We believe the current investment case for bitcoin and other crypto assets remains strong. The steady demand from institutional investors, advancements in infrastructure, and a regulatory environment set to improve significantly in 2025 are positioning this asset class for what could be its strongest year on record,” said Samir Kerbage, CIO of Hashdex. In his opinion, crypto assets tend to follow a cycle of four years that includes a bullish phase lasting approximately 12 months, followed by a bear market lasting one year, and then a recovery period spanning two years. In the last two bull markets, altcoins (that is, everything except bitcoin) have significantly outperformed the largest crypto asset, according to Hashdex.
“I believe we have entered a bull market, reinforced by the macroeconomic environment and the U.S. election results. But another indicator of a bull market is the superior performance of the Nasdaq Crypto Index compared to bitcoin. Over the past three months, the index has outperformed bitcoin (78% vs. 76.5%) and, since the elections, the Nasdaq Crypto Index has outpaced bitcoin by 6.8%,” added Kerbage.
2024 was a year of transition for the cryptocurrency universe. According to Hashdex, this market went through a recovery cycle following a turbulent 2022 marked by bad actors and fraudulent activities. Reflecting on the past year, they believe crypto assets experienced a recovery phase and the beginning of a bull market. A key turning point was the U.S. election results and Donald Trump’s victory. Evidence of this is the Nasdaq Crypto Index, which has risen more than 57% since November 5, 2024, driven by widespread optimism about the future direction of U.S. digital asset policies.
“We believe the current investment case for bitcoin and other crypto assets remains strong. The steady demand from institutional investors, advancements in infrastructure, and a regulatory environment set to improve significantly in 2025 are positioning this asset class for what could be its strongest year on record,” said Samir Kerbage, CIO of Hashdex.
A key area, according to the entity, is smart contract projects—platforms that will enable users to conduct transactions involving not only information but also value and ownership. Hashdex estimates that these platforms and applications will outperform bitcoin over the next 12 to 18 months, as they compete for users and lay the foundation for decentralized applications.
“Thanks to the infrastructure developments we have seen in this area in recent years, new applications are emerging in fields such as artificial intelligence, video games, and many others as tokenization continues to expand. We also believe that new regulatory advances in 2025 will be more beneficial to these applications than to bitcoin specifically, given that bitcoin already has regulatory clarity and a well-developed capital market structure, with the growth of ETFs, options, and futures,” Kerbage explained.
In the U.S. and Europe, this legislative and regulatory clarity benefiting altcoins may include market structure legislation, as proposals like FIT21 aim to eliminate ambiguities regarding crypto assets’ status as commodities or securities, while creating registration pathways that could drive adoption in the U.S.
According to the latest report from Sygnum, a global banking group specializing in digital assets, relatively small institutional investor inflows into bitcoin ETFs could have a disproportionate impact on the market due to limited liquid supply. Their analysis of recent ETF flows suggests that every $1 billion inflow (approximately 0.1% of Bitcoin’s market cap) corresponds to price movements of 3-6%, with larger inflows showing greater price sensitivity.
The report predicts that this multiplier effect could be amplified if major institutional investors—including sovereign wealth funds, endowments, and pension funds—begin making allocations. Some U.S. state pension funds have already invested in crypto assets, and several states have introduced bills encouraging pension funds to consider cryptocurrency allocations. With the size of assets managed by these investors, even conservative estimates represent a larger wave of inflows than experienced in 2024 with the launch of spot cryptocurrency ETFs in the U.S.
“Many traditional institutional investors, those with the largest volumes of assets under management, are just beginning their foray into cryptocurrencies. Our analysis shows how even relatively modest allocations from this segment could fundamentally alter the crypto asset ecosystem. With greater regulatory clarity in the U.S. and the potential for Bitcoin to be recognized as a reserve asset for central banks, 2025 could mark a significant acceleration in institutional participation in crypto assets,” said Martin Burgherr, Chief Clients Officer of Sygnum Bank.
Stablecoin legislation, particularly the implementation of MiCA, will also play an important role by driving stablecoin adoption in the U.S. and Europe, expanding their use beyond emerging markets.
The repeal of SAB121, allowing U.S. banks to hold cryptocurrencies for their clients, is expected to enable banks and brokerages to expand their cryptocurrency trading and custody offerings, benefiting altcoins in particular. Additionally, new ETF launches under the new SEC chair are raising hopes for more approvals, including ETFs for indices and individual assets like Solana and XRP. Although uncertainty persists, the availability of new assets with ETFs as access points is highly positive.
Altcoin Use Cases
According to Kerbage, in addition to bitcoin evolving as an emerging digital store of value and smart contract platforms becoming a new way to exchange information, value, and ownership, three other altcoin use cases are expected to benefit over the next year:
DeFi: Projects aimed at creating an internet-based financial system, operating on smart contract platforms, will establish a new global capital markets infrastructure for payments. Stablecoins and tokenized money market funds are the first major use cases.
Web3: A new iteration of the internet that will enable users to own their data and make the web decentralized and more useful for innovations like AI agents and other advancements.
Digital Culture: An emerging digitally native generation will drive greater demand for owning digital assets and collectibles, with video games as the first natural application.
“If we compare cryptocurrencies to the internet, this industry is like the internet in the 1990s, and bitcoin could be compared to email—the only application most people have heard of. However, if we fast-forward 20 years, although email remains very useful, it has not been the internet application that has created the most value for society. We believe this perspective could apply to how bitcoin is currently perceived in relation to cryptocurrencies,” Kerbage concluded.
The investment world is defined by nuances that reflect local preferences, regulations, and the cultural characteristics of each region. Latin America is no exception, and operating in a market with such specific idiosyncrasies often means that clients of asset managers see the coordination between Iberia and Latam as an added value.
This brings significant advantages, as it allows for high-quality service with a strategic focus in the various countries where operations take place. Moreover, we hold a competitive edge over our European neighbors: a common language and a cultural connection that enable us to provide tailored service to meet each client’s needs.
However, when comparing the investment dynamics between Latin America and Iberia, clear differences emerge in both the nature of investors and the regulatory frameworks governing the markets.
Retail Preferences in Mexico, Brazil, and Beyond
In Mexico and Brazil, retail investors—including banks, independent advisors, and platforms—tend to favor local products with a conservative focus. In contrast, elsewhere in the region, as well as in Iberia, such investors predominantly opt for UCITs-compliant funds and ETFs.
Institutional Strength in Latin America
In the institutional segment, which includes insurers, pension plans, and family offices, Latin America stands out as one of the most advanced regions in the world. A prime example is the pension plans in countries like Chile and Mexico, where mandatory worker contributions have created a robust and sophisticated institutional ecosystem. In this ecosystem, pension funds play a fundamental role in asset management.
Regulation and Distribution: A Study in Contrasts
Regarding distribution, Latin America is characterized by the autonomy of its markets. Each country has its own regulations defining how financial products are distributed among investors. This heterogeneity contrasts with the uniformity in Spain and Portugal, where MiFID regulations unify financial market oversight across the European Union. While this facilitates cross-border operations, it may limit the personalization offered by the fragmented markets of Latin America.
Investment Preferences: Diverging Trends
Investor preferences, whether retail or institutional, also reflect these structural differences:
In US Offshore and South America, excluding Brazil, a significant portion of portfolios is allocated to U.S. assets, including fixed income, equities, mixed assets, and alternatives. There is also growing interest in diversifying beyond traditional funds into vehicles like ETFs or separately managed accounts (SMAs).
In Mexico and Brazil, the focus remains on local fixed income, supported by high interest rates, making this asset class a cornerstone of their portfolios.
Iberia’s Changing Landscape
In Iberia, the recent shift in European Central Bank monetary policy has influenced investor behavior. Investors are moving away from money market funds toward options offering greater added value, particularly in European fixed income, which now presents better prospects due to interest rate adjustments and inflation stabilization.
In equities, there is a trend toward diversification to reduce dependence on national indices often dominated by a few large companies. This strategy aims to mitigate risks associated with high concentration and improve returns by targeting sectors or regions less represented in traditional indices.
Investors are increasingly exploring active management strategies that prioritize companies with quality and value profiles. Simultaneously, thematic investments—such as technological transformation driven by digitalization and AI, or energy transition—are gaining traction. Additionally, emerging markets like India, often underrepresented in traditional portfolios, have captured the interest of Iberian investors due to their significant potential.
Shared Pathways and Future Opportunities
Despite their differences, Latin America and Iberia share a common path in fund management, as both regions lean toward products offering risk diversification and new sources of profitability. A shared vision can provide fertile ground for innovative investment strategies, supported by the commitment of global asset managers with strong local components. This approach enables the advancement of each country’s strategic plans.
Adapting to the specific characteristics of each market is crucial. Only in this way can asset managers in Spain deliver tailor-made services suited to the needs of clients on both sides of the Atlantic.
Authored by Javier Villegas, Head of Iberia & Latam at Franklin Templeton.
Photo courtesyRahul Bhushan, Managing Director in Europe at ARK Invest
Each month, Rahul Bhushan, Managing Director in Europe at ARK Invest, shares the standout data from the European thematic ETF market: key trends, changes in investor flows, and more. In his year-end 2024 edition, he chose to analyze November’s investment flows, uncovering several highly relevant insights.
The expert highlights three key areas of inflows:
1.- Artificial intelligence ETFs recorded inflows of $172 million in November, “highlighting investor enthusiasm as the AI boom shifts from hardware-driven infrastructure development to software applications that unlock real productivity gains,” says Bhushan.
2.- Uranium ETFs attracted $90 million, reflecting the anticipated growth of alternative energy sources. “Donald Trump’s reelection as U.S. president signals a return to pragmatic energy policies that position nuclear energy as a cornerstone of resilience and efficiency,” Bhushan explains.
3.- Infrastructure ETFs led inflows with $81 million in November, underscoring strong investor interest in domestic infrastructure. “Infrastructure stocks tend to perform well in election years and are bolstered by Trump’s plans to rebuild and reindustrialize America, signaling sustained growth in this sector,” the expert adds.
Bhushan also noted trends in the thematic ETFs that underperformed during the month:
1.- Clean energy ETFs recorded the largest outflows, with $152 million in redemptions. Investor appetite appears to be shifting beyond the capital-intensive renewable energy generation supply chain. “Instead, attention is increasingly focused on more profitable areas of the value chain, such as energy efficiency solutions and software-based grid infrastructure, where companies are better positioned to deliver short-term returns,” he notes.
2.- Cybersecurity ETFs saw outflows of $75 million, as investors took profits after a strong performance period. However, as cyber threats grow more sophisticated and AI transforms security environments, Bhushan explains that the need for robust digital defenses continues to drive long-term opportunities in the sector.
3.- China ETFs experienced redemptions of $64 million, “highlighting persistent investor concerns about geopolitical tensions and a shift toward more predictable growth opportunities in Western markets.”
Longer-Term Observations
The available data, covering nearly the entire year with only one month remaining, is sufficient to draw conclusions about investor preferences in 2024.
Among the highlights of the year are:
1.- Artificial intelligence ETFs, which have led investment inflows with $1.78 billion. AI continues to capture investor attention as a transformative force, with significant advancements and applications across all sectors bolstering confidence in this theme.
2.- Smart grid ETFs, with investment flows totaling $405 million, “highlighting the demand for infrastructure supporting energy efficiency and modernization of the power supply,” according to Bhushan, who adds that as digital infrastructure expands, “smart grids will be critical for managing energy effectively.”
3.- Uranium ETFs, which have accumulated $250 million in subscriptions, reflecting growing interest in nuclear energy within the broader energy transition. “Investors see nuclear energy as a reliable and scalable energy source for decarbonizing the energy mix.”
Key trends among the most lagging ETFs included:
1.- Robotics and automation ETFs have experienced the largest outflows, with a total of $996 million. As investors focus more on AI, interest in broader areas like pure industrial automation may be waning amid a shift in thematic preferences.
2.- Clean energy ETFs have recorded outflows of $834 million. This narrower focus within the energy transition theme appears to have seen cautious positioning, according to the expert, “especially ahead of the U.S. elections and potential regulatory changes.”
3.- Electric vehicle and battery technology ETFs have seen redemptions of $761 million, “likely reflecting caution in the lead-up to the U.S. elections.”
With trillions of dollars changing hands annually, the “Great Wealth Transfer” is in full swing. Amid the acceleration of wealth transfers, it is crucial for wealth managers, asset managers, and other industry participants to adopt best practices with their current relationships while also adjusting their service and product strategies to align with the future profile of the high-net-worth segment, according to the Cerulli report titled High-Net-Worth and Ultra-High-Net-Worth Markets in the U.S. 2024.
Cerulli estimates that wealth transferred by 2048 will reach $124 trillion, with $105 trillion expected to be inherited by descendants and $18 trillion directed to charitable causes. Specifically, nearly $100 trillion will be transferred by baby boomers and older generations, representing 81% of all transfers. More than 50% of the total transfer volume ($62 trillion) will come from high-net-worth and ultra-high-net-worth (HNW/UHNW) individuals, who collectively represent just 2% of all households.
“Projections for horizontal or intra-generational transfers indicate that $54 trillion will be transferred to spouses before eventually being inherited by descendants and charitable organizations. Nearly $40 trillion of these spousal transfers will go to widowed women from the baby boomer and older generations, creating a massive need and opportunity for providers in the wealth and asset management spaces,” the Cerulli report states.
Additionally, Millennials will inherit more than any other generation in the next 25 years ($46 trillion). However, Generation X will receive the majority of assets over the next 10 years, totaling $14 trillion compared to $8 trillion for Millennials. “Eventually, most of the wealth from older generations in the United States will be donated or transferred to Generation X or Millennial heirs. With $85 trillion earmarked for these generations collectively, providers who can establish relationships and adequately address the needs of these younger investors will be well-positioned for success,” explains Chayce Horton, senior analyst at Cerulli.
Considering these intergenerational and familial movements, Cerulli emphasizes that developing relationships with clients’ spouses or children is one of the primary long-term growth strategies among high-net-worth practices, as the urgency grows for wealth to transition from primary clients to their spouses and children. According to 89% of firms surveyed by Cerulli in 2024, holding family meetings and maintaining regular communication among family members is a key practice.
“Ultimately, there are notable differences in service and product preferences between women and next-generation clients compared to the current client demographic. As wealth transfers, these differences will likely shift market share in favor of firms best prepared to meet the needs of these recipients,” Horton concludes.
