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Genius Act: This Is How the U.S. Innovates in the Field of Stablecoins

The new U.S. legislation—particularly the Genius Act passed in July—is consolidating the role of stablecoins as a method of payment in the future of finance, one of the five megatrends that experts believe will enhance profitability. At BlackRock, they emphasize that stablecoins are linked to major currencies, mainly the U.S. dollar, and could consolidate the greenback’s dominance in global markets, although other countries are exploring alternatives.

Specifically, they are digital tokens tied to a fiat currency and backed by reserve assets. They combine the frictionless transfer inherent to cryptocurrencies with the perceived stability of a traditional currency. Although stablecoins represent only 7% of the crypto universe, their adoption has grown rapidly since 2020, reaching a volume close to 250 billion dollars.

“We believe that the growing demand for stablecoins will have little impact on short-term Treasury yields. We continue to view Bitcoin as a prominent catalyst for profitability,” argues BlackRock in its latest report. In this regard, 2025 has been an exceptional year for Bitcoin, which has risen 25% so far, while the U.S. advances in approving several key laws aimed at integrating digital payments and assets into the traditional financial system—and turning the country into the world capital of cryptocurrencies.

Implications of the Genius Act

In BlackRock’s analysis, there are two main implications of the Genius Act for the U.S. dollar and Treasury bonds. The first is that the law defines stablecoins as a method of payment, not as an investment product; prohibits issuers from paying interest; and restricts their issuance to federally regulated banks, certain registered non-bank entities, and state-licensed companies.

“This regulation could reinforce the dollar’s dominance by facilitating a tokenized digital ecosystem based on the dollar for international payments. In emerging markets, this could provide easier access to the dollar compared to volatile local currencies. However, in advanced economies, adoption could be limited by the prohibition on interest payments, designed to prevent competition with bank deposits and protect the traditional credit system,” they note.

Secondly, they consider that the law also establishes which assets stablecoin issuers can hold as reserves: primarily repurchase agreements (repos), money market funds, and U.S. Treasury bonds with maturities of 93 days or less. “The main issuers — Tether and Circle — together hold at least 120 billion dollars in Treasury bills, representing only about 2% of the total approximately 6 trillion in circulation. This demand could grow as the stablecoin market expands and drive further purchases of short-term bonds. But the impact on yields is likely to be limited,” they qualify.

The U.S. is not the only country taking action. Hong Kong has launched new regulations to attract innovation in stablecoins, and Europe is exploring the digital euro, although its use would be limited to avoid impacting the banking system. “If other countries allow interest-paying stablecoins, or promote central bank digital currencies (CBDCs), this could weaken the dollar’s role in international trade. Nevertheless, the U.S. could respond by also allowing interest on stablecoins,” the report states.

According to experts, this wave of digital asset adoption by governments — through regulatory frameworks and support from the U.S. administration — foretells greater future adoption, which strengthens the investment thesis on Bitcoin as a differentiated driver of risk and returns in portfolios. “Despite this, stablecoins still represent a relatively small part of the crypto universe, and as this ecosystem evolves, it remains unclear how they will compete against other digital assets,” concludes BlackRock.

Inflation and Negotiations: Two Key Focus Areas to Monitor in the Tariff Game

| By Amaya Uriarte | 0 Comentarios

International Asset Managers’ Experts Believe That Trade Uncertainty May Be Easing as the United States Reaches Agreements With Its Main Partners; However, They Caution That It Remains to Be Seen What Impact All These Tariffs Will Have on Inflation and, Above All, on the U.S. and Global Economy. While We Wait to See This Impact Materialize, All Attention Is Focused on Negotiations and Agreements.

In the opinion of Chris Iggo, Chief Investment Officer (CIO) at AXA IM, U.S. trade agreements are “a naive idea.” According to his argument, these will not force a redirection of U.S. spending from foreign goods to domestically produced goods. “If successful, the U.S. trade deficit should decrease, and there would be inflows into the capital account of the balance of payments in the form of direct and portfolio investments. In such a scenario, a strong dollar would be expected, not only due to a lower trade deficit and higher investment flows but also from a sentiment perspective: America is winning and is exceptional,” he states.

Monitoring Inflation

The Chief Investment Officer at AXA IM warns that “instead, import prices will rise, and that will mean lower profit margins for companies that import intermediate or final goods to distribute in the U.S. market. And it will probably mean higher prices for U.S. consumers and, therefore, more inflation.”

In this context, Iggo indicates that “foreign suppliers could see some decline in demand and might reduce their selling prices, taking a hit to their profits.” From his perspective, for European markets, the outlook is less clear: “There will be an impact from U.S. tariffs on European profitability. That’s a headwind for growth and may have contributed to the Eurozone’s quarterly GDP growth rate falling to 0.11% in the second quarter, from 0.57% in the fourth quarter. However, lower interest rates in Europe and potential fiscal stimulus from Germany should allow for a slight improvement in the coming quarters.”

According to Patrick Artus, Senior Economic Advisor at Ossiam (an affiliate of Natixis IM), some U.S. economists and investors believe that exporters to the United States will resort to their profit margins, and as a result, there will be no inflationary effect in the U.S. from the higher tariffs. However, Artus warns that it is “impossible for exporters to the United States to offset higher tariffs through their profit margins,” explaining that “it is impossible for exporters to reduce their prices by 15% to 30% to fully compensate for the tariff increase.”

Given this scenario, the Ossiam expert warns that “we can expect a significant increase in U.S. inflation. This will be transitory inflation, not permanent […] Thus, the most likely scenario is that U.S. core inflation will be around 3.4% by year-end.”

The Case of Switzerland

As investment firms point out, while monitoring potential inflation dynamics, the other focus is on negotiations and agreements between countries and the U.S. A notable case is Switzerland. According to the Trump Administration’s argument, it is worth noting that in 2024, the U.S. goods deficit with Switzerland reached approximately $38.5 billion, representing an increase of 56.9% compared to 2023. In fact, U.S. exports to Switzerland totaled $25 billion, while imports from Switzerland amounted to $63.4 billion during that year. These figures, within Trump’s rhetoric, would justify a 39% tariff.

In the opinion of Christian Gattiker, Head of Research at Julius Baer, this level of taxation is “dramatic” and “unexpected.” However, he acknowledges that there is ample room to reach an agreement. “Both parties remain in contact, and it is still possible to reach a negotiated solution similar to the framework between the U.S. and the EU. For investors in Swiss assets, this is a time to stay calm, not to act. The market impact will likely be initial and concentrated, with a spike in volatility as implications are digested. It is advisable to avoid deploying liquidity prematurely: wait for clear signs of extreme dislocation or capitulation on one hand, or immediate resolution on the other, before repositioning,” Gattiker highlights.

For Nannette Hechler-Fayd’herbe, Head of Investment Strategy, Sustainability and Research and EMEA CIO at Lombard Odier, Filippo Palloti, Economist, and Serge Rotzer, Equity Analyst at Lombard Odier, the forecast is similar: “We expect negotiations will bring the 39% tariff for Switzerland closer to the 15% agreed with the EU and Japan, albeit with potentially complex concessions and a possible increase in U.S. investments.”

In this regard, they acknowledge that although the pharmaceutical sector is excluded and high value-added products such as watches, precision machinery, and medical devices could pass on part of the cost, if the 39% is confirmed, margins could be affected or there could even be a sharp drop in sales to the U.S. “In the unlikely event that this trade dispute is not resolved, we will revise our Swiss real GDP forecast for 2025, as well as our expectation that interest rates will not fall below 0%,” they comment.

Regarding the implications for investors, Lombard Odier experts point out that while Swiss equities are likely to suffer during this period of uncertainty, Swiss corporate bonds and the real estate sector may continue to offer attractive sources of income. “Our 12-month forecast for the USD/CHF exchange rate is 0.79,” they conclude.

The Democratization of Alternative Investments as a Tool to Build a New World

| By Amaya Uriarte | 0 Comentarios

The Democratization of Alternative Investments Has Become a Key Factor in Restructuring the Portfolios of Individual Asset Owners. In just under twenty years, alternative investment assets under management have quintupled, driven mainly by institutional allocations.

In this analysis, Sandy Kaul – Senior Vice President, Head of Industry Advisory Services at Franklin Templeton – writes in CAIA’s study “Crossing the Threshold – Mapping a Journey Towards Alternative Investments in Wealth Management” about the current state of the industry and its possible future.

Understanding the democratization of alternative investments is not just about analyzing figures; it is also about “understanding how this transformative trend alters capital raising norms, changes corporate DNA, and fundamentally redefines who can participate in the broad range of investment opportunities,” the expert argues.

The importance – she continues – lies not only in the figures but also in the empowerment of investors, the evolution of market dynamics, and the new frontiers of financial accessibility that drive innovation and change.

The growth of alternative investments has been one of the defining trends of recent years: between 2005 and 2023, alternative investment assets under management increased from $4 trillion to $22 trillion, representing 15% of global assets under management during that period.

One impact of the record growth in alternative investments, particularly private equity, has been a shift in capital raising patterns, according to Kaul. “Historically, most companies needed to access public markets to obtain the capital necessary to maintain their growth trajectory. With the abundant availability of venture capital and private equity funds, that pattern has changed,” she states.

Between 2000 and the end of 2020, the number of publicly listed companies decreased by 38%, from 7,810 to 4,8145. Meanwhile, the number of unicorns – private companies valued at over $1 billion – has increased: the first unicorn appeared in 2005 (Alibaba); twenty years later, there are more than 900.

The expert argues that the impact of this trend is that, proportionally, fewer small- or mid-cap companies are available in the public markets. “Whereas previously all investors could access these growth opportunities through the public markets, now only those investors who meet the requirements to invest in private funds have the opportunity to access them,” she states.

New Ways to Facilitate Access for Retail Investors

Now, finding ways to access a more democratized group of investors has become a new goal for alternative asset managers. Key firms have launched private wealth divisions and have added staff dedicated to working with advisor networks and creating new products that offer innovative structures with lower minimums, no deductions, simplified tax reporting, and regular liquidity windows.

However, the expert specifies that only a limited number of alternative firms have the resources or willingness to directly address the wealth management channel. To address this, many have opted to affiliate with broader asset management platforms and allow organizations that are already well established in the wealth channel to handle the logistics, regulatory compliance, and product creation necessary to reach these investors.

For their part – Kaul continues – many of the largest asset management platforms are open to these arrangements, as they see opportunities to better serve their clients and add new products that can help mitigate margin compression.

There have also been acquisitions among the main fund providers. For example, BlackRock announced in June 2023 the acquisition of European private debt firm Kreos, and in early 2024, Global Infrastructure Partners. Franklin Resources announced multiple acquisitions in the alternatives sector, including European private credit firm Alcentra (2022), secondary markets firm Lexington Partners (2021), private real estate manager Clarion Partners, and alternative credit manager Benefit Street Partners (2019). T. Rowe Price announced plans to acquire Oak Hill Advisors in 2021, and in that same year, Vanguard announced a strategic alliance with HarbourVest.

New Types of Alternative Products

In this context, the expert notes that various product structures are being explored to drive greater sales of alternative exposures to the wealth management channel. These include:

Feeder Funds. The most common approach in recent years has been to work with a technology intermediary to help create feeder funds capable of pooling an advisor’s clients to reach the minimum investment threshold required to subscribe to a private fund.
Interval Funds. Closed-end, illiquid alternative funds offered directly to investors and not publicly traded. Their price is calculated daily based on net asset value (NAV). Investors have the periodic opportunity to resell shares directly to the fund at NAV at specific intervals (e.g., monthly or quarterly).
Business Development Companies (BDCs). These closed-end capital structures are vehicles used to raise capital that will be allocated to lending to U.S. companies, public or private, with a market value below $250 million. These are generally small, emerging, or distressed companies overcoming financial obstacles. BDCs must distribute 90% of their income to shareholders to avoid corporate income tax. There are both listed and non-listed versions of BDCs.
European Long-Term Investment Funds (ELTIFs). Specifically designed to allow anyone to invest in unlisted European companies and long-term assets such as infrastructure. The original regulation came into effect in 2015 but was considered too restrictive, a situation that the ELTIF 2.0 regulation, activated in January 2024, could address.
Tokenized LP Shares. Tokenization is a new approach being used to explore the possibility of making alternative exposures more accessible to investors.

New Classes of Individually Focused Alternative Assets Are Also Emerging

In addition to the democratization of traditional alternatives, a new set of digital alternatives has also emerged, which “includes peer-to-peer lending platforms, equity, debt, real estate crowdfunding, fractional investments in collectibles, and cultural assets such as wine, art, and cryptocurrencies.”

What unites these offerings, according to the expert, is their go-to-market approach. “Instead of relying on a broker or wealth advisor, individuals can access the information they need to make their own investment decisions and execute them at will,” she explains, adding that while the types of products are very diverse, the platforms that enable access to all of them have several features in common:

Accessibility and Ease of Use. Individual investors can directly access each offering in this category via the internet or their mobile phones. Registration and account activation are done online and are usually completed within minutes.
Reduced Minimum Investment. Investment minimums are low so that individuals can participate.
Multiple Liquidity Options. Both liquid and illiquid assets are offered, from cryptocurrencies accessible 24/7, 365 days a year, to platforms like Moonfare, with $2.2 billion in assets under management, allowing individuals and their advisors to invest in selected private equity funds.

“In a sense, these new types of digital frontier offerings are becoming alternative markets. While retail versions of more traditional alternatives may be preferred by higher-net-worth individuals in advised portfolios, digital frontier assets offer almost all retail investors a way to diversify their portfolios,” Kaul states.

The expert concludes that managing these trends becomes “fundamental for investors,” as the rapid growth of alternative investments evolves and is reshaped by changes in global capital markets.

Furthermore, as changes in capital formation and value creation continue to test the significant relationship between public and private markets, “it is likely that the asset management industry will continue creating innovative ways to expand access for retail investors.”

Are We in the Early Stages of a Major Stock Market Rotation?

| By Amaya Uriarte | 0 Comentarios

The S&P 500, the most representative index of the U.S. economy, has accumulated a return of around 7.5% so far this year (data as of July 23, 2025). In the same period, the MSCI Emerging Markets has gained nearly 18%, the EuroStoxx 55 has advanced 8.5%, and the Topix has added more than 6%. This is a somewhat novel situation after the strong dominance of the U.S. stock market in recent years. These returns are accompanied by positive flows, particularly towards Europe, raising the question: Are we at the beginning of a major rotation?

Small Changes, Big Changes

“It is too early to talk about a major rotation, but smaller ones should occur,” says Benjamin Melman, Chief Investment Officer at Edmond de Rothschild AM. The expert cites several reasons that are holding back this major rotation, starting with the fact that “international diversification from the U.S. investor’s perspective has not been rewarded, as foreign assets have shown lower Sharpe ratios from a historical standpoint.” Melman also points out that “there is no recession in sight in the U.S.” and that the monetization of AI is not yet a market topic, “so U.S. investors are not in a hurry to invest abroad.”

That said, the expert does believe that U.S. investors “could slightly reduce their underexposure to some international assets” towards markets like Japan, Europe, or emerging markets. “Likewise, international investors overweighted in U.S. assets could also reduce their exposure to the U.S., as the American giant’s supremacy that prevailed at the beginning of the year has lost significant momentum,” he concludes.

The Moment for European Equities

Other experts consulted for this report are more categorical. For example, Sabrina Denis, Senior Portfolio Strategist at Janus Henderson, highlights that one of the “most notable surprises” of 2025 has been the strong rebound of non-U.S. stocks, evidenced by the 16% rise of the MSCI All Country World Index (ACWI) ex-USA (as of June 2025), compared to just over a 2% increase of the S&P 500 in that time, which for the expert “clearly indicates that a significant rotation towards developed markets outside the U.S. is already underway.” “This performance is not just a short-term anomaly but is supported by deeper structural changes and attractive valuations in non-U.S. markets,” she adds.

Víctor de la Morena, Chief Investment Officer at Amundi Iberia, summarizes the sentiment of many investors these days: “There is no doubt that the American economy remains the most important in the world; however, the European economy has gained relevance or ‘momentum’ recently thanks to economic recovery and European stimulus plans that are being increased and will serve as a major catalyst for the coming years, especially in infrastructure and defense.”

From Jupiter AM, European equity managers Niall Gallagher, Chris Legg, and Chris Sellers state that they see the possibility of “a shift in the economic order that could benefit European equities.” Specifically, the trio of experts believes that “structural changes in trade, capital allocation, and government policies are contributing to a long-awaited shift towards Europe.”

In particular, the managers point to the attractiveness of Southern European countries, a region they consider “is approaching the end of nearly two decades of deleveraging.” This implies that “consumer debt is low, the banking sector is healthy and capable of supporting expansion, and even immigration patterns are positive.” Additionally, as they indicate: “These countries have abundant and cheap energy, such as Spain, which has significant solar and onshore wind resources.”

This positive outlook on European equities is also shared by Andrew Heiskell, Equity Strategist at Wellington Management, and Nicolas Wylenzek, Macroeconomic Strategist at the firm: “European equities have entered a regime change that has recently accelerated, which could lead to the largest rotation since the global financial crisis.”

While the strategists warn that “this transition is not without challenges,” they also highlight Value segment stocks as the main beneficiaries, such as banks, telecoms, defense companies, or European small caps. They also believe that companies key to the energy transition with high entry barriers, such as network operators, as well as companies they refer to as “quality stable compounders”—that is, “resilient companies with consistent growth and strong balance sheets, whether Growth or Value style”—will benefit.

Conversely, they state that “the main losers could be those that benefited from globalization and a low-interest-rate environment.”

New Arguments

Mario González, Head of Capital Group’s business in Spain, Portugal, and US Offshore, points out that since “Liberation Day” on April 2, U.S. equities have shown a strong correlation with non-U.S. equities—something expected in a period of high volatility—but adds that “once things settle, the situation for non-U.S. stocks looks favorable.”

The expert indicates that the starting valuations of non-U.S. markets remain “much lower than in the United States.” He provides some data: on one hand, the MSCI ACWI ex-USA trades at 13 times forward 12-month earnings, while the MSCI EAFE (international developed) trades at 14 times, both near their 10-year averages and at a significant discount compared to the S&P 500, which trades at 20 times earnings.

Non-U.S. stocks are trading near their lowest level in 20 years relative to U.S. stocks.

That said, the expert from Capital Group recalls that the argument of low valuations has been brought up in recent years without any impact on the market, as those valuations have often been justified by the anemic earnings growth compared to the U.S. For González, what is different this time is the presence of new catalysts that “are changing the narrative for the first time in years”: fiscal stimuli in Germany, corporate reforms in Japan and South Korea, weakness of the U.S. dollar, signs of stabilization in China, and an improved political environment in Europe. “Additionally, in an environment of increased infrastructure spending, non-U.S. markets display greater diversity and have a higher weighting in heavy industry, energy, materials, and chemicals compared to the S&P 500,” he concludes.

Semiannual Balance and Forecast Review: Focus on Active ETFs, Crypto ETFs, and ETFs With Private Assets as Underlying

| By Amaya Uriarte | 0 Comentarios

Exchange-traded funds (ETFs) are not slowing down. Zachary Evens, manager research analyst at Morningstar, is clear about this. And for good reason, as firms are launching new ETFs every day; investment flows continue to pour into these vehicles, and both investors and providers “are beginning to venture into previously unexplored territories.”

ETFs attracted $540 billion in new investment during the first six months of 2025, surpassing the total subscriptions of the first half of 2024, as the expert recalls.

Regarding products, by June of this year, 464 new ETFs had already been launched, quickly approaching the annual record of 726 launches. Among the most notable are the first public-private credit ETF, countless new buffer ETFs, covered call and active options ETFs, cryptocurrency ETFs, and even money market ETFs.

Faced with this dizzying array of figures in the industry, Evens takes stock: reviewing some of these developments and revisiting his predictions about ETFs made earlier this year. “So far, so good, but there’s surely much more to come in what has already been a hectic 2025 for ETFs,” he asserts.

Prediction 1: Active ETFs Outnumber Passive ETFs

This was inevitable. And it didn’t take long to happen. By the end of June, there were 2,226 active ETFs and 2,157 passive ETFs available to U.S. investors. Asset managers have fully embraced this tax-efficient instrument, meeting the demand of investors who continue to pour money into this sector.

However, there are nuances in the active ETF story: some of the most popular active ETFs are not so popular, Evens points out. Most of those that have taken off so far follow a quantitative or rules-based strategy. They are labeled “active” because they do not track an index. Examples include options-based strategies, such as defined outcome or covered call ETFs, or diversified quantitative strategies.

“Active ETFs are booming, but for now, most of the growth and interest have been centered on these types of strategies. It is likely that rules-based ETFs will continue to lead the charge in active ETFs,” the expert states.

Story 1: Private Assets ETFs

A significant trend in ETFs, according to the expert, is investment in private markets. Apollo has partnered with State Street to bring private credit to the retail market, and Vanguard is working with Wellington and Blackstone on the same—though Vanguard currently lacks a widely available public-private offering.

State Street‘s ETF, SPDR SSGA IG Public & Private Credit ETF (PRIV), was the first to hit the market in February this year. The launch was not entirely smooth, and doubts remain about the viability of illiquid assets in a liquid wrapper. But according to industry opinions, “more public-private products are clearly on the horizon.”

Investment inflows into the SPDR SSGA IG Public & Private Credit ETF have been moderate so far, but picked up in early July, “so it will be interesting to see how quickly competitors enter the market and how investors respond to this nascent segment.”

Prediction 2: Vanguard’s VOO Surpasses State Street’s SPY as the World’s Largest ETF

In 2025, the Vanguard S&P 500 (VOO) took only seven weeks to surpass SPDR S&P 500 Trust (SPY) as the world’s largest ETF. Vanguard’s fund started the year $40 billion behind SPDR’s, but now holds a $46 billion lead.

The expert believes the next question is whether the iShares Core S&P 500 (IVV) will surpass the SPDR S&P 500 Trust by the end of the year: it’s a very low-cost fund that isn’t structured as a trust. “After starting 2025 with a $38 billion gap compared to SPDR S&P 500 ETF Trust, the iShares Core S&P 500 ETF narrowed the gap to $14 billion by mid-year. This could be the tight race to watch,” he argues.

Story 2: Cryptocurrency ETFs

The fastest-growing ETF in history is the iShares Bitcoin Trust ETF (IBIT). Its assets have grown to over $75 billion after just a year and a half on the market. Its strong performance, crypto-friendly regulation, and adoption in model portfolios have helped this ETF reach its current level, the expert explains. But other cryptocurrency ETFs are also making headlines.

The Morningstar digital assets category has grown from $28 billion and 43 ETFs just two years ago to over $150 billion in 106 ETFs by the end of June 2025. However, this rapid growth “comes with froth,” and recent cryptocurrency ETF filings are drawing attention. Among the applications are several memecoin ETFs, including one that tracks the price of Pudgy Penguin NFTs.

“Bitcoin ETFs are here to stay, but time will test the resilience of the newcomers to the digital assets category,” concludes Evens.

Prediction 3: ETF Share Classes Become Reality

ETF share classes are on the verge of becoming a reality. They haven’t been approved yet, but Evens predicts this situation should change in the second half of this year. At the time of writing, 70 firms have applied for a Vanguard-style hybrid share class.

Firms are eager to offer this share class. However, Lan Anh Tran, manager research analyst at Morningstar, noted in her prediction that “once approved, they might not be the lifeline many expected” and that the share class “could create more problems than it solves.” Tran cites capacity constraints, SEC best interest regulation concerns, and capital gains complexities as reasons.

Nonetheless, ETF share classes could be a positive development for investors under the right circumstances. And until they are approved and launched, we won’t know their impact on each fund.

Story 3: Outcome ETFs Gain Ground

Following several proprietary launches in this area, BlackRock predicted in March that assets in outcome ETFs would grow to $650 billion by 2030. Outcome ETFs, as defined by BlackRock, include covered call ETFs, buffer ETFs, and some others. All of them use options to deliver a specific outcome.

Covered call ETFs fall under the derivative income category. These vehicles typically sell call options against a long position in an underlying asset, such as the S&P 500 index, to generate income. The largest ETF in the category—and currently the largest active ETF—is the JPMorgan Equity Premium Income ETF (JEPI), which contributed to the category’s boom and demonstrates that the prudent use of options can be an effective way to restructure risk and generate income, as Evens points out. By the end of June, there were 155 ETFs with $130 billion in the derivative income category.

Regarding covered call ETFs on individual stocks, Evens explains that their sky-high yields attracted billions in inflows, “but funds like these often end up on our list of ‘worst new ETFs of the year’ for sacrificing total returns in favor of income while increasing risk and costs.”

Buffer ETFs are the most explicit outcome-based strategy, offering investors a defined range of both losses and gains. Several firms even offer ETFs with 100% downside protection: they should not lose money before fees, but only gain up to a maximum cap, usually between 8% and 10% annually.

The defined outcome category, which houses buffer ETFs, has evolved from a simple buffering strategy to much more complex products in just a few years. This new category now holds nearly $70 billion in assets spread across 408 ETFs, “the largest of all categories.”

Defined outcome and derivative income are among the fastest-growing categories, thanks to ETFs. “It is clear there is investor interest, and issuers have been more than willing to offer new products. However, ETFs in these fastest-growing categories remain quite expensive compared to traditional index funds and even many actively managed ETFs. There is room for costs to come down as the sector matures,” Evens asserts.

The New World Order of International Trade Shaped by Trump Arrives

| By Amaya Uriarte | 0 Comentarios

The President of the United States has made a final plot twist in his tariff game. Trump has signed the executive order that reconfigures international trade through the imposition of new tariffs, which will take effect on August 7, six days later than expected. In general terms, the new minimum rate for nations with which the United States maintains a negative trade balance has been set at 15%, according to the White House.

In this regard, about 40 countries are subject to the 15% rate, including Costa Rica, Ecuador, Venezuela, and Bolivia. Meanwhile, in the case of those with which the United States maintains a positive balance, the tariff will be 10%. However, there are also levies above 30% for some countries that have not reached trade agreements with the U.S., including Canada (35%), Switzerland (39%), Algeria, Bosnia, Syria, South Africa, Serbia, Myanmar, Libya, Laos, and Iraq. In the case of Brazil, Trump confirmed a 50% tariff, accompanied by sanctions against the Brazilian Supreme Federal Court, in retaliation for the trial against former president Jair Bolsonaro. As for Mexico, he has granted another 90-day extension to prolong their negotiations.

According to Yves Bonzon, CIO of Julius Baer, Donald Trump is determined to increase public revenues through higher tariffs, and this is a critical aspect of his economic agenda to achieve a rebalancing of the U.S. economy and move away from chronic deficits. “Part of the U.S. master plan to rebalance global trade has China as an implicit target. Beijing has made it very clear that any sovereign state is free to conclude a bilateral trade agreement with Washington, but it cannot do so at the expense of China‘s interests. If other states end up exempting U.S. imports from tariffs, it will be hard for the U.S. administration to argue that it does not benefit from a most-favored-nation clause,” Bonzon notes.

From the perspective of Mark Dowding, BlueBay CIO of RBC BlueBay Asset Management, Trump has obtained virtually all the concessions he expected in the trade negotiations held so far. “Our analysis leads us to conclude that the U.S. has increased its average global tariff rate to approximately 18%. Based on this premise, we project annual tariff revenues of around $450 billion, compared to $77 billion in 2024; an increase equivalent to 1.25% of GDP. This revenue volume should help slightly reduce the U.S. fiscal deficit, bringing it below 7% of GDP next year,” Dowding explains.

Asia and Europe: Market Openings

Following the official announcement, Trump celebrated his new trade policy on the social network Truth with a clear message: “A year ago, the U.S. was a dead country, now it is the most attractive in the world.” For their part, both Asian and European markets opened slightly lower, showing that uncertainty remains entrenched in the investor community. In Asia, the MSC Asia-Pacific fell 0.4%, the Kospi 1.6%, and the Nikkei 225 0.6%. According to experts, these declines reflect the announcement of new tariffs ranging from 10% to 41% on imports from India, Taiwan, Korea, and other countries.

In Europe, the main indices also reacted with “moderate negativity”: the DAX and CAC fell 1.6%, and the FTSE 100 dropped 0.7%. It is worth recalling that the trade agreement between the U.S. and the European Union had boosted the STOXX 600 by 0.7% on July 28, but the August 1 decision reversed that slight optimism.

“Although the agreement between the U.S. and the EU avoided a harmful trade war, its real effects remain to be seen. While progress was made in strategic sectors and energy cooperation was strengthened, the pact leaves several structural issues unresolved. Still, in a world marked by geopolitical fragmentation and economic risks, this understanding represents a diplomatic reprieve. It will be crucial for both parties to continue working on a joint agenda that prioritizes stability, fair trade, and shared innovation,” says Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS.

In Bonzon’s view, the markets have been pricing in the trade war for some time. “Collective wisdom is probably right in asserting that the trade war will not occur. Nevertheless, the rest of the world has an opportunity here to move forward and continue fostering a friendly trade framework,” he comments.

Investors Prepare

The new direction of U.S. trade policy is a clear example of how the world is transforming at an unprecedented speed. “While the global economy moves toward decarbonization to achieve the goal of net-zero emissions, trade wars are slowing globalization, demographic change is causing a shrinking labor force, and digitalization is advancing at a dizzying pace. We are now living in the era of geoeconomics. Although the idea of using economic tools for political purposes is not new, it is hard to find another moment in history when foreign policy, security, and the economy have been so intertwined and acting simultaneously with such intensity. And, logically, this has a direct impact on both economies and markets,” argues Hans-Jörg Naumer, Global Head of Capital Markets & Thematic Research at Allianz Global Investors.

According to the asset manager, for investors, this means ensuring that their investments are well diversified in this constantly changing “multiverse” of opportunities and being prepared to adjust their portfolios. “The challenge is not only to rebalance a portfolio to reflect these changes but also not to lose sight of diversification. In fact, a well-known saying, deeply rooted in portfolio theory, makes perfect sense here: don’t put all your eggs in one basket,” says Allianz GI.

In their view, multi-asset solutions could play a determining role here. “The logic is simple: why not design a portfolio tailored to the investor’s individual risk appetite that combines different asset classes? And it doesn’t have to be limited to just stocks and bonds,” they argue.

Why Customization is Becoming a Must-Have in Wealth Advisory

| By Romina López | 0 Comentarios

Photo courtesyPablo Méndez, Chief Investment Strategist at LarrainVial

FlexFunds and Funds Society, through their Key Trends Watch initiative, share the perspective of Pablo Méndez, Chief Investment Strategist at LarrainVial, one of the leading financial advisory firms in Latin America. With a 90-year track record, the firm operates in Chile, Colombia, Peru, Panama, Mexico, Bolivia, and the United States, and holds key partnerships with investment managers in Europe.

Pablo Méndez has been part of this financial institution for over a decade. Today, he leads the Investment Strategy team and stands as a key figure in the evolution of high-level wealth advisory. A business engineer from Universidad Diego Portales with a master’s degree in Global Finance from NYU, Méndez represents a new generation of leaders in wealth management: one that combines strong academic background, strategic vision, and a deep commitment to personalized service.

Designing strategic solutions

The LarrainVial Strategy team develops both liquid and alternative investment solutions for high-net-worth clients. “Our model is similar to the Portfolio Solutions model in the U.S.: the banker manages the client relationship, but we design and coordinate the investment strategy,” he explains. In a context where financial margins are tightening and services are becoming more standardized, Méndez highlights that “the real differentiator remains the service.” Despite technological advances, he insists that “people are looking for a face, a relationship, and professional support. Technology doesn’t replace that.”

Fixed income and alternatives: Current portfolio pillars

Asked about current portfolio composition, Méndez identifies two key pillars: “In the liquid space, fixed income has regained prominence, with higher rates offering an attractive risk-return profile. In alternatives, we’ve developed programs aimed at generating decorrelation (hedge funds), stable cash flow (credit alternatives), and capital appreciation (private equity).”

Today, 28% of LarrainVial’s wealth management assets are allocated to alternative investments. Still, Méndez acknowledges an excessive concentration in local private debt and real estate, and sees expanding exposure to global and diversified assets as a major challenge.

When asked about the biggest obstacle to capital raising or client acquisition, he notes the industry is reaching maturity: “There’s no longer a large mass of underserved clients—what’s left are specific segments that are more sophisticated and demanding. Also, services tend to become standardized, which makes it even harder to stand out.”

Another relevant challenge is scaling the service without losing personalization: “It’s almost a paradox because scaling usually implies some standardization, and that can go against the individualized experience clients value. Striking that balance is a top priority.”

What do clients prioritize when investing today?

Institutional reputation and experience come first. Then, depending on their profile, clients value either technical expertise or the ability to translate that knowledge into an accessible language. In both cases, service quality is key.

For Méndez, personalization is more important than the product itself: “Closeness, real understanding of the client, and delivering tailor-made solutions are the elements that create a sustainable competitive advantage.”

The advisor as strategist: Skills that will make the difference

In his view, the financial advisor of the future won’t just be a technical analyst, but a strategic interpreter able to turn data into decisions aligned with the client’s real goals.

“The industry is moving toward a new talent configuration. On one hand, we need profiles with technical mastery—data science, automation, software management—especially in operational areas. But what will make the difference is the ability to abstract,” he says. “The key is to be able to step out of the party and look at it from above: see the big picture, understand the environment, and make informed decisions.”

This approach translates into deeply personalized wealth advice: “Before discussing markets or products, we need to understand what that person or institution wants to achieve. From that objective, we build a portfolio that aligns with their actual needs and constraints,” Méndez explains.

Although there are standardized solutions by profile—whether including alternatives or not, in local currency or dollars, conservative or aggressive—the real value lies in adaptation: “Advising a foundation with high real estate exposure in Latin America is not the same as working with a globally focused family office. Our job is to design strategies that consider that starting point and evolve over time.”

Technology: Embracing efficiency without losing human focus

On the impact of technology in the industry, Méndez is clear: “Artificial intelligence plays a fundamental role in processes and back office, but its usefulness in investment decision-making is limited by the efficiency of financial markets.”

He also points out a transformation in team structures: “The pyramid is being inverted. We used to have many data processing profiles; now we need more people who can think abstractly and make strategic decisions.”

According to Méndez, one of the clearest trends set to transform portfolio management in the next 5 to 10 years is the growing importance of alternative investments. These assets will continue to grow, as long as they remain well-aligned with clients’ goals. There is increasing demand for solutions that offer real diversification, decorrelation, and long-term investment horizons.

“On the other hand, we’ll see a significant evolution in how financial institutions integrate technology. Automation and artificial intelligence are freeing up resources previously tied to operational tasks, allowing that human capital to be redirected toward higher value-added areas like client service and strategic decision-making.”

In asset management, this doesn’t mean replacing the advisor—it means redefining teams. The human role remains central, especially in wealth advisory, but the required profiles are changing: more analytical capacity, strategic thinking, and tech-savvy professionals. It’s a reconfiguration process that is already underway.

What sets LarrainVial apart from its competitors?

“Being a non-bank firm gives us the freedom to innovate,” Méndez notes. “We can pursue internal ventures, create independent solutions, and report directly to senior management. Our only mandate is to generate returns and value for the client.”

This approach has already earned recognition. In December 2024, The Banker and PWM awarded LarrainVial as Best Private Bank in Chile, and its Strategy team as Best Chief Investment Office in Latin America.

Interview conducted by Emilio Veiga Gil, Executive Vice President of FlexFunds, in the context of the Key Trends Watch by FlexFunds and Funds Society.

Serge Weyland: “We Must Think of Regulation as a Way to Empower Investors”

| By Amaya Uriarte | 0 Comentarios

Photo courtesySerge Weyland, CEO of the Luxembourg Investment Fund Association (ALFI)

Assets in Luxembourg-domiciled investment funds — including UCITS and AIFs — reached €7.2 trillion at the end of April 2025, according to the latest figures published by the Luxembourg Investment Fund Association (ALFI). “We are witnessing strong inflows into both UCITS and alternative funds, but above all we are observing growth in the active ETF industry, an area where many managers have started to launch and market products,” highlights Serge Weyland, CEO of ALFI, when asked about the health of the industry.

In his view, the two major trends currently shaping the European fund sector are precisely active ETFs and alternative funds. In both cases, he acknowledges that Luxembourg is playing an increasingly prominent role. “I believe Luxembourg is the home of actively managed funds, whether liquid or illiquid, and whether we’re talking about traditional fund structures or ETFs. The regulation and transparency that characterize the country have been key to its leadership,” Weyland emphasizes.

ETFs and Alternatives: Growth Trends

In addition to this reflection on the country’s relevance, Weyland believes both trends will continue to grow. “It’s an emerging trend. We expect more and more asset managers to view ETFs as a distribution channel for actively managed strategies and to use platforms to bring them to investors. We already saw this with smart beta or beta-plus strategies, as well as systematic index-based strategies, which also opted for the ETF format,” he notes based on his experience.

Regarding private investments, Weyland points to the strong growth seen in the Luxembourg industry, which has grown from €2.5 trillion to €7.5 trillion in alternative fund assets. “This is the area where we’ve seen the most growth, and we expect it to continue. Of course, the interest rate hikes in the eurozone over the past two years made these assets less attractive, but the current rate-cutting cycle has turned the outlook around. After a dip in which the number of fund launches fell, ELTIFs are gaining strength in response to growing investor demand,” he comments.

Regulation: A Maze to Simplify

In this growth context comes the European Commission’s message on the need to simplify regulation to move toward a more unified, efficient, and competitive market — and to mobilize European investors. Given Weyland’s professional background, the question is inevitable: is this really what the industry needs? His response is direct: “Yes, I believe there are several areas where simplification is important — not only for the industry but also for investors.”

According to his assessment, one of the main challenges facing the European Commission is that European households are not investing — in part because legislation makes it difficult for them to invest and receive advice. “I think we must understand regulation not as an obstacle for investors or as excessive protection, but as a way to empower investors. I believe all regulatory developments around cost transparency are good, but I think we’ve gone too far, restricting their freedom to take risks,” he argues. He also points out that European regulation tends to view risk negatively: “We need a holistic view of risk that takes into account timing and investment horizon for decision-making.”

Another area where regulatory simplification could be very beneficial is the work of advisors. “There’s a lot of complexity in the investment offering process. Other countries, such as the United Kingdom, are already addressing these challenges, and we could take inspiration from them.”

In his view, this simplification will benefit the European investment product — the best example being UCITS funds — and the European industry, which has reached €23 trillion in Europe-domiciled funds, of which €5 trillion come from non-European investors. “We export far more funds than the United States, and regulation should be a catalyst for greater competitiveness — not the opposite.”

The best example is the recent revision proposed by ESMA on UCITS eligible for advisors. It suggests a systematic review of UCITS exposure, which would allow, for example, investments in real asset funds or commodity indices via total return swaps. “If this were to be implemented, it would be very unfortunate, because these are precisely the solutions that retail and institutional investors have used for many years to diversify their exposure,” argues the CEO of ALFI.

CMU and RIS: Are They Aligned?

In this regard, one of the debates heard in the industry is whether the Capital Markets Union (CMU) and Retail Investment Strategy (RIS) proposals are compatible. ALFI believes both should be aligned and, in Weyland’s words, “the CMU should consider pension systems as key components of the new European financial model,” given the major sustainability challenge faced by pension systems in countries such as Spain, Luxembourg, France, Germany, and Italy — and the opportunity presented by the so-called second pillar.

ALFI advocates for occupational pension plans — under the second pillar — with automatic enrollment, transparency, efficiency, broad availability, and choice among multiple providers. It also recommends a European tool to track first, second, and third-pillar pensions, providing citizens with a clear view of their future retirement.

“In many pension systems, this second pillar is completely outdated and ineffective due to poor design. I believe the European Commission can truly help Member States redesign this second pillar of their pension systems. Some countries have successfully implemented a second pillar that works and encourages investor participation, such as Sweden, Denmark, Canada, or Australia,” Weyland concludes, offering another perspective on the debate.

The SEC Gives New Boost to the Crypto Market by Approving In-Kind Redemptions for ETPs

| By Amaya Uriarte | 0 Comentarios

The U.S. Securities and Exchange Commission (SEC) voted in favor of approving orders that allow authorized participants to create and redeem shares of cryptoasset exchange-traded products (ETPs) in kind, according to a statement from the institution.

According to the SEC, this represents a shift from the recently approved spot bitcoin and ether ETPs, which were limited to cash creation and redemption. Now, bitcoin and ether ETPs, like other commodity-based ETPs approved by the Commission, will be able to create and redeem shares in kind.

“It is a new day at the SEC, and a key priority of my chairmanship is to develop an appropriate regulatory framework for the cryptoasset markets,” declared SEC chairman Paul S. Atkins.

“I am pleased that the Commission has approved these orders allowing in-kind creation and redemption of a range of cryptoasset ETPs. Investors will benefit from these approvals, as they will make these products less expensive and more efficient,” he added.

For the SEC, these changes “continue building a rational regulatory framework for cryptocurrencies, leading to a deeper and more dynamic market that will benefit all U.S. investors. This decision aligns with standard practices for similar ETPs.”

Jamie Selway, Director of the Division of Trading and Markets, stated: “Today’s decision by the Commission marks a significant step forward for the growing market of cryptocurrency-based ETPs. In-kind creation and redemption provide flexibility and cost savings to ETP issuers, authorized participants, and investors, resulting in a more efficient market.”

The Commission also voted to approve other orders promoting a merit-neutral approach to cryptocurrency-based products, including exchange applications seeking to list and trade an ETP containing a combination of spot bitcoin and ether, options on certain spot bitcoin ETPs, Flexible Exchange (FLEX) options on shares of certain BTC-based ETPs, and an increase in position limits up to the generic limits for options (up to 250,000 contracts) for listed options on certain BTC ETPs.

In addition, the Commission issued two scheduling orders requesting comments for or against approval by the Division of Trading and Markets, under delegated authority, of proposals by a national securities exchange to list and trade two large-cap cryptocurrency-based ETPs.

Pressure Is Mounting, but the Data Still Support the Fed’s Cautious Approach

| By Amaya Uriarte | 0 Comentarios

SEC trade-through ban debate — Photo courtesyJerome Powell, Chair of the Fed

Although no new rate cuts are expected to be announced by the monetary authority, this meeting is marked by somewhat weaker preliminary data, pressure from the Trump administration making headlines, and the market watching closely.

“While no change to the benchmark interest rate is expected, recent comments from some voting members of the Federal Open Market Committee have shown support for a possible cut. Furthermore, the trade agreement between the EU and the U.S. could further reduce the need for short-term stimulus,” note analysts at Muzinich & Co.

The forecast is that the interest rate will remain in the range of 4.25% to 4.5%, as there have been no clear signs either in the last meeting or since then that a rate cut is being considered. Instead, what will matter most are Powell’s remarks, as the goal is to temper market expectations, which currently assign a 60% probability to a rate cut in September.

“The market’s reaction to the press conference will be interesting. A week before the FOMC meeting, the market was pricing in a 65% chance of a cut in September. That probability will approach either 0% or 100% as we get closer to September 17. Will we see signs of such a move after the July meeting?” asks Erik Weisman, Chief Economist at MFS Investment Management.

For Vincent Reinhart, Chief Economist at BNY Investment, Fed officials will have to work hard to do nothing at this FOMC meeting. “This isn’t chess or tic-tac-toe. For the Fed to cut rates, three conditions must align: some concern about employment, signs that inflation will return to target, and enough clarity about the economy to be confident in those two premises. For now, we anticipate a 25-basis-point cut in December, and less than a 50% chance of anything happening before then. Essentially, the Fed would correct course if economic data worsens, acknowledging they may have misjudged the economy’s strength and the impact of tariffs on inflation,” notes Reinhart.

The Data the Fed Watches

Growth and inflation outlooks support the central bank’s more cautious approach. It’s worth recalling that in terms of inflation, the Fed’s preferred indicator (core PCE inflation) remains above target, at 2.7% year-over-year, and there are signs that tariffs are beginning to pass through to core goods prices. “Consumer expectations have declined from multi-decade highs, but remain high enough for the Fed to be hesitant about rate cuts in July,” says Michael Krautzberger, CIO of Public Markets at Allianz Global Investors.

In this context, Kevin Thozet, a member of the investment committee at Carmignac, notes that the Fed does not expect inflation to return to its 2% target before 2027, representing a six-year “deviation.” “And the latest inflation data are not particularly encouraging. We’re starting to see signs of import cost pass-through due to tariffs. Core goods inflation has already ticked up modestly, and the FIFO model that dominates the U.S. retail sector indicates that more price increases will come once tariffs are more broadly applied,” explains Thozet.

According to David Kohl, Chief Economist at Julius Baer, the weakening of the U.S. economic outlook suggests that a more accommodative monetary policy is likely in the second half of the year. However, he warns that “uncertainty around inflation following the rise in tariffs prevents a rate cut in July, as does the political pressure from President Trump to lower rates.”

The Pressure Mounts

Even though the data still support the Fed’s “wait-and-see” stance, the pressure to cut rates is increasing, both from the Trump administration and from within the Fed itself. On the political front, Fed Chair Jerome Powell has faced growing pressure to cut rates immediately, with President Trump even suggesting the possibility of replacing him before his term expires in May 2026. According to Thozet’s analysis, Powell has been under increasing political pressure, but any speculation about his replacement should be treated cautiously. “President Trump has little to gain from reshuffling Fed leadership just six months before Powell’s term ends. Moreover, the risks of undermining the Fed’s credibility on the dollar, inflation expectations, and long-term bond yields are too great. The central bank’s credibility has played a key role in anchoring long-term inflation expectations since their sharp rebound in 2022. Any move toward fiscal dominance or premature easing could jeopardize that hard-won stability, with significant negative ripple effects,” he comments.

The pressure doesn’t come only from the White House—it also comes from within the institution itself. “The minutes from the June meeting showed that most committee members believe monetary policy is ‘well positioned’ as they wait for more clarity on growth and inflation outlooks. However, they also acknowledged the risk that tariffs could have more persistent effects. Still, internal divisions are starting to emerge within the Fed,” comments Krautzberger.

In recent weeks, Governor Waller called for a 25-basis-point cut in July, based on the following rationale: tariffs will cause an exceptional increase in prices; the economy has already been operating below potential during the first half of the year; and labor market risks are increasing. “Other Fed members, however, have expressed a desire not to cut rates preemptively, and Powell himself has suggested that it remains prudent to wait and see how macroeconomic conditions evolve,” adds the Public Markets CIO at Allianz GI.

Beyond July

Looking beyond July, the market anticipates no more than two rate cuts before year-end, depending on upcoming inflation data. However, heading into the Fed’s September meeting, political pressure to reduce rates could intensify, especially if consumer demand and the labor market weaken more than expected. “We believe current data support the Fed maintaining its monetary policy stance in July. However, unless there’s a significant inflation surprise, the September meeting could become an active turning point for resuming cuts, particularly if economic indicators weaken and political pressure reaches a level that forces the Fed to act,” says Krautzberger.

According to Julius Baer’s chief economist, the stagnation of private consumption and lower investment intentions, which point to reduced demand, would justify a less restrictive policy stance, even though inflation rates remain above target. “Political pressure makes it harder for the Fed to communicate rate cuts in upcoming meetings. We expect the Fed to resume its rate-cutting cycle at its September FOMC meeting,” states Kohl.

Experts agree that the overall data suggest the economy remains in good health, and there is a risk of an upward trend in inflation due to tariffs. According to Mauro Valle, Head of Fixed Income at Generali AM (part of Generali Investments), “the market expects the Fed to cut again between September and October, but no longer anticipates two cuts by year-end. Uncertainty about the economic outlook and the impact of tariffs is high, and the Fed will likely continue to take its time.”

In the view of Tiffany Wilding, Economist at PIMCO, interest rates could reach neutral next year. “Many investors are wondering about the direction of Fed policy, particularly in light of public dissatisfaction from Trump with recent decisions under Powell and the expiration next year of key Fed appointments. In our view, economic fundamentals and institutional dynamics point to a baseline policy outlook that is not significantly different from what would be expected under the current composition of FOMC participants—perhaps with a marginally faster return to a more neutral policy stance,” she concludes.