The
investment world is like the weather: constantly changing. Financial vehicles
are tweaked and improved upon, particularly when there are changes to tax law
or compliance rules. The world of finance is fluid, and so are we. As our lives
evolve, it’s important to review and sometimes make adjustments to our
investment and insurance goals and strategies.
The
difficult part can be keeping up with all the changes. We believe one of the best
ways to do that is to work with a financial advisor and meet with him or her regularly.
At least once a year, it’s good to review your current situation, find out what
changes or new products are available, and determine if you should make any
alterations to your financial portfolio. Contact us if you are interested in
such a consultation.
Following
is a roundup of news and timely reminders from the investment industry.
Impact
Investing
What
may have started as an environmentalist movement to effect change by tapping
invested assets, the sustainable investment industry has grown into a
mainstream strategy. The share of assets invested in funds focused on
environmental, social and governance (ESG) issues increased 40% from 2000 to
2017.1
This
is no longer simply a “do-gooder” motivation. Studies have revealed that
companies focused on environmental efficiency — meaning they minimize the use
of natural resources and generate less production waste — tend to enjoy economic
advantages over less environmentally sensitive competitors. These advantages can
include lower costs; higher flexibility and efficiency in their supply chains;
increased productivity; reduced regulatory risk; and fewer costly fines,
recalls or mitigation requirements. As a result, recent studies found, the
stocks of these companies tended to be less volatile — particularly in
manufacturing and other resource-intensive industries.2
E-Commerce
Update
Online
sales are starting to have a more profound effect in some sectors of the investment
market. For example, in 2018, Amazon surpassed Walmart as the top apparel
retailer in the United States, claiming more than 9% of the market. But not all
traditional retailers have been hit as hard by e-commerce; for example, some
investment analysts say retailers like QVC and those in the
business‑to‑business e-commerce market — notably in the home improvement and
auto parts industries — remain competitive because they are more insulated
from Amazon or other online competitors. 3
And
there’s another angle to consider with e-commerce. While we normally associate
online retailers with low overhead, overall the industry requires three times
the warehouse space of primarily brick‑and‑mortar retailers. In turn, this has
created opportunities in the Real Estate Investment Trust (REIT) market that
focuses on commercial properties.4
Investment
trends
According
to Bank of America, some of the economic and societal changes to watch over the
next 10 years include:5
- More
disruptions in the global flow of goods, ultimately leading to a rebalancing
that will increase productivity and lead to a more sustainable global economy - A
focus on high-quality companies in sectors with low political risk, such as
utilities, national defense, waste management, data processing and payments,
and global beverages - Markets
responding to demographic shifts, such as the rise of the middle class in
emerging market countries and millennials’ preference for tech compatibility
and sustainability - Continued
growth of energy-efficient, renewable, sustainable and green initiatives
Content prepared by Kara Stefan
Communications.
1 Merrill Lynch. Sept. 10, 2019. “Can You Do
Well by Investing in What’s Good for the World?” https://www.ml.com/bulletin/can-you-do-well-by-investing-in-whats-good-for-the-world.recent.html. Accessed Nov. 13,
2019.
2 Merrill Lynch. June 2019. “Investing in a
Low Carbon Economy.” https://mlaem.fs.ml.com/content/dam/ML/bulletin/can-you-do-well-by-investing-in-whats-good-for-the-world/ml_investing-in-a-low-carbon-economy.pdf. Accessed Nov. 13,
2019.
3 T. Rowe Price. Oct. 4, 2019. “E-commerce
Disrupts Retail-Related Bonds.” https://www.troweprice.com/personal-investing/planning-and-research/t-rowe-price-insights/investments/fixed-income/e-commerce-disrupts-retail-related-bonds.html. Accessed Nov. 13,
2019.
4
Ibid.
5
Pippa Stevens. CNBC. Nov. 11, 2019.
“Here are Bank of America’s top 10 investing themes to watch over the next
decade.” https://www.cnbc.com/2019/11/11/bofa-says-these-are-the-10-biggest-investing-themes-for-the-next-decade.html. Accessed Nov. 13,
2019.
We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
values.
The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
reference.
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