Home Adviser Fund Update Barron’s Names Adviser Investments a Top Independent Wealth Adviser Published September 24, 2018 Barron’s Names Adviser Investments a Top Independent Wealth Adviser For the sixth year in a row, Adviser Investments has been recognized on Barron’s list of “Top 100 Independent Wealth Advisors .” Our Top-30 ranking (which appeared in the September 14, 2018 issue) is based on the quality of our practice, as well as our size and financial health as determined by Barron’s editors. It’s gratifying for our team to see our hard work spotlighted like this and a credit to the consistent quality of service we strive to provide to every client. But we wouldn’t be in the national lens without our clients’ trustA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process. and business. The lasting relationships we have built with them are far more rewarding than media mentions. Here’s to our continued mutual success! New Podcast: Lessons From a Market Collapse (and Recovery) We’re excited to bring you the latest episode of The Adviser You Can Talk To podcast, “Ten Years Later—Lessons From a Market Collapse (and Recovery),” which features Chairman Dan Wiener and Director of Research Jeff DeMaso. In this installment, Dan and Jeff discuss the markets’ reaction to the 2008–2009 financial crisis, how far we’ve come in the 10 years since and the rewards of staying invested in good times and bad. Click here to check out “Lessons from a Market Collapse (and Recovery).” You can listen to all of our podcasts on our dedicated The Adviser You Can Talk To website as well as on other popular podcast and streaming sites (Apple Podcasts, Google Play, iHeartRadio and Spotify among them). Enjoy them at your convenience and subscribe for instant access to new episodes as soon as they become available. We hope you find them entertaining and informative, and would welcome your feedback and ideas for future episodes. Vanguard ESG U.S. StockA financial instrument giving the holder a proportion of the ownership and earnings of a company. and ESG International Stock ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index. Hit the Market There’s a new game in town for conscience-driven investors. On Thursday, September 20, Vanguard launched its ESG U.S. Stock ETFA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index. and ESG International Stock ETF. We took a deep dive into Vanguard’s history of “socially responsible” investment (SRI) products when the firm announced plans to bring these new ETFs to market. We also explored some of the potential drawbacks that ESG investors should consider before putting their money into these kinds of funds. Vanguard’s been offering an SRI option to its shareholders since the inception of its FTSE Social Index fund in May 2000. While the results haven’t been particularly compelling, the firm is reading the writing on the wall and is doubling down, as ESG (environmental, governance, social) investing has become increasingly popular worldwide. According to Vanguard, global ESG assets under management rose from $13.3 trillion in 2012 to $22.9 trillion in 2016, a 73% increase. At their launch, Vanguard ESG U.S. Stock ETF (Ticker: ESGV) and Vanguard ESG International Stock ETF (VSGX) had expense ratios of 0.12% and 0.15%, respectively. Vanguard will use an index sampling approach (which means they will own a representative subset of stocksA financial instrument giving the holder a proportion of the ownership and earnings of a company. instead of replicating the entire index) for the ETFs’ portfolios based upon their FTSE U.S. All Cap Choice Index (ESGV) and FTSE Global All Cap ex.-U.S. Choice Index (VSGX) benchmarks. These indexes include companies of all sizes, but exclude companies in the adult entertainment, alcohol, tobacco, weapons, fossil fuels, gambling and nuclear power industries. The remaining companies are screened using the U.N. Global Compact Principles and must have at least one woman on their boards of directors. Other diversity and equal opportunity screens are also employed. Even after all of these filters, the indexes hold 1,551 stocks (U.S. All Cap Choice Index) and 4,449 stocks (Global All Cap ex.-U.S. Choice Index) each. We’d caution that investors in ESG or SRI funds—whether offered by Vanguard or not—need to understand that returns may be impacted by limiting your investment choices with screens that don’t necessarily take financial standing, future earnings or other traditional factors into account. And one investor’s ESG company may not be another’s. The criteria for inclusion (or exclusion) in funds like this can be highly subjective. Still, if the knowledge that you own an ESG fundESG stands for Environmental, Social and Governance, an alternative set of criteria used to evaluate a company’s impact on society. In addition to traditional metrics such a profitability, risk, and sector weighting, the managers of ESG funds may also weigh a company’s contribution to global warming, the labor conditions of its workers, or whether its board is exercising adequate oversight over a company’s executives. or strategy will help you feel good about how your money is invested (and make it more likely that you’ll stay invested for the long-term), the tradeoffs could be worth the benefits. For those who are interested in ESG investing, we recommend they carefully consider their options and employ a disciplined, diversified approach when building their portfolio. The good news is that, with these two new ETFs from Vanguard and those launched from other providers, there are many more options today than there were just a few years ago. That said, as within the greater universe of funds out there, quality and performance can vary greatly in the ESG space. Fidelity Shuttering Series 100 Index Fund Is Fidelity taking a hard look at its actively managed target-date funds? Lodged in an announcement about the closure of a fund that was only available as a component of other Fidelity funds was a hint that they may be doing just that. In an uncommon move for the Boston fund giant, last week we learned that Fidelity has been winding down its Series 100 Index fund, which was a $3.7 billion dollar mega-cap index fund as of January 31. Why close down a relatively substantial fund? Too much portfolio overlap with the other funds held by its target-date funds. As a refresher, target-date, or “lifecycle,” funds usually own baskets of other mutual funds (in Schwab’s case, the underlying investments are ETFs), and the fund name will include a year that corresponds with the shareholder’s planned (or actual) retirement date. The funds periodically rebalance along a “glide path,” slowly shifting allocations from stocks to bondsA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. as the date nears. Once the date passes, the glide path generally continues to slide down to a bond-heavy portfolio focused on preserving assets and providing income. In recent months, Fidelity had been gradually selling off assets of the Fidelity Series 100 Index fund, and it is no longer listed on Fidelity’s platform. As mentioned above, this internal-only fund appeared solely as a holding of other Fidelity fund portfolios and was not available to direct investments from individuals. Fidelity seems to be acknowledging one of our criticisms of Fidelity’s Freedom target-date funds (funds composed of other actively managed and index funds). There are just too many funds and managers delivered in an “active” wrapper, and too many of the funds own the same stocks. Take, for example, the Fidelity Freedom 2060 fund, which owns 29 other Fidelity funds in a 90/10 stockA financial instrument giving the holder a proportion of the ownership and earnings of a company./bond allocation, including nine different funds with shares of tech titan Apple Inc. One of them is Series 100 Index, which had 6.1% of its assets in Apple as of July 31. “The management team felt that the combination of other series funds would achieve the desired portfolio characteristics, and have been reducing exposure to Series 100 Index,” Fidelity spokesman Adam Banker told Reuters earlier this month. Fidelity’s been tinkering with its target-date-fund strategy in search of the right mix of active and passive investing as more and more investors are paying attention to costs. In July, we looked at Fidelity’s move to blend its target-date funds that use active managers with those in its product suite that take an index-fund-only approach. Our view on target-date funds has remained consistent even as they’ve grown in popularity. Yes, a quick and easy single-fund solution could hold appeal for less sophisticated investors. And any saving and investing for retirement is good saving and investing for retirement. But while target-date funds make for a good first step, people with more at stake have better options out there. Simply put, one-size-fits-all doesn’t work in investing. Rather, a diversified portfolio of select actively managed funds—with managers who complement each other rather than overlapping and canceling out their best ideas—customized to individuals’ personal needs and goals is our preferred approach. Please contact us at (800) 492-6868 or firstname.lastname@example.org if you’d like to discover what Adviser Investments can do for you! About Adviser Investments Adviser Investments is a full service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trustsA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process., institutions and foundations since 1994, and have more than 3,500 clients across the country and over $6 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, with particular expertise in Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. Our minimum account size is $350,000. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868. This material is distributed for informational purposes only. The investment ideas and expressions of opinion may contain certain forward-looking statements and should not be viewed as recommendations, personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. Past performance is not an indication of future returns. The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. We do not provide legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. The Barron’s rankings consider factors such as assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. This award does not consider client experience and is not indicative of future performance. Editors at the Financial Times bestowed “elite” status on 300 firms in the U.S., as determined by assets under management, asset growth, longevity, compliance record, industry certifications and online accessibility. © 2018 Adviser Investments, LLC. All Rights Reserved.