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Yahoo
10 hours ago
- Business
- Yahoo
The Debate Over Private Assets in ETFs Heats Up
Private assets have drawn investor dollars with their promise of a higher rate of return in exchange for illiquidity. Putting those assets in a daily, liquid vehicle has drawn skepticism from some in the exchange-traded fund industry. The other concern is transparency. Private assets can be opaque, and that lack of visibility also runs counter to the basic model of an ETF, which is being able to always look at the fund's holdings. With an increasing number of new ETFs being launched that hold securitized collateralized loan obligations (CLOs) and the SPDR SSGA IG Public & Private Credit ETF (PRIV), which owns direct loans, debate over these private-asset funds will continue. Dave Nadig, an independent ETF expert and a skeptic of putting private assets in ETFs, said that while investors can think about these private-credit-type ETFs as being run by experienced active bond managers, it comes down to trust that the managers understand these bonds. 'I'm not anti-private credit in these vehicles, but you are making an enormous trust bet,' he said. Nadig spoke at the Morningstar Investment Conference in Chicago on Thursday. Joanna Gallegos, co-founder and COO at BondBloxx, which issues the BondBloxx Private Credit CLO ETF (PCMM), said there's investor demand for private assets as public markets become more correlated. 'What we hear from clients is that they want access to the income-producing side of private assets,' she said. She added that, at the current stage of ETF innovation, CLOs are natural fits. In PCMM, each of the CLOs it holds have independent ratings and CUSIPs where investors can see the price. 'Here's a space … in private credit that should be very natural for you to understand how to assess what you're buying. It should be simple to see the risk characteristics of its return and its yield,' she said. Nadig concurred but said his concern is with funds such as PRIV, where Apollo Global Management is sourcing the direct loans for State Street. 'Ask yourself, why do you think you're getting the best of X, whether it's the triple-A-rated best of best or whether it's junk-bond equivalents. I think that's a real problem,' he said. Nadig added he's happy to see the conversation about how to structure private assets in ETFs. The challenge is going to be helping people understand how these funds fit into a portfolio. Gallegos said every ETF is an evolution of a new process, pointing to how people were concerned with emerging market ETFs were launched in the early | © Copyright 2025 All rights reserved Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
12 hours ago
- Business
- CNBC
Traders head into the second half of the year with stocks at all-time highs, jobs report pending
Next week kicks off a new trading month as well as the back-half of 2025, and Wall Street will be watching to see if stocks keep up their recent than momentum. Stocks have made a massive comeback after seeing steep declines in early April, when investor anxiety around President Donald Trump's sweeping tariff policy put the S & P 500 near bear market territory . On Friday, the S & P 500 rose to a fresh all-time intraday high , spurred by optimism that trade deals with China and other U.S. trading partners would be announced soon. The three leading indexes are on pace to close out the first half of the year with solid gains. The S & P 500 as well as the Nasdaq Composite are up more than 5% year to date, while the Dow Jones Industrial Average has advanced more than 3%. .SPX YTD mountain S & P 500, year-to-date Yet, some on the Street, such as BlackRock's Rick Rieder, are already projecting that the market could surge even higher in the year's second half. That's because the artificial intelligence revolution could bring down inflation , thereby sending the market higher, he said Wednesday during a keynote speech at the Morningstar Investment Conference. July 'fireworks'? Supporting a sustained rally, the market is also entering a historically strong month. July has been a positive one for the S & P 500 for the last 10 years straight and is the index's best month over the last 20 years, according to Ryan Detrick of the Carson Group. He also noted that July is the best month in a post-election year. "When you're higher in May and June like we're probably going to be with June, because we're up pretty good, July does better, and the final six months of the year have been higher 15 of the last 16 times," the firm's chief market strategist said Thursday on CNBC's " Worldwide Exchange ," noting that his word of the day is "fireworks." "When these weak months are strong, like we're doing right now, that could be a signal this bull market is alive and well." However, others are more skeptical that July will be smooth sailing for the market, seeing that Trump's 90-day tariff pause is set to expire on July 9. While the White House said Thursday that the deadline " is not critical " and that "perhaps it could be extended," the ensuing uncertainty around it could pose a risk. "Elevated macroeconomic and policy uncertainty suggests that equity volatility should remain high in H2, with multiple potential catalysts for volatility such as the July tariff deadlines," Goldman Sachs analyst Andrea Ferrario wrote in a Thursday note. On top of that, current valuation levels could signal the market may be getting ahead of itself. The S & P 500 currently trades at 23.3 times earnings, per FactSet. By comparison, the index's forward price-to-earnings ratio at the peak of the dot-com bubble was at 24.4 times earnings, as said by DataTrek co-founders Nick Colas and Jessica Rabe in a recent post on X . "A bullish call on U.S. large caps therefore requires believing that we can get to 1999-type valuations," they wrote. "The good news is that 2025 has a much more positive setup than 1999 (rate cuts, cheaper oil, greater S & P Tech exposure). Even still, current valuations reflect a full glass of optimism." Jobs on deck At this point, significantly more gains for stocks depend on the U.S. economic environment remaining rather stable, said Anthony Saglimbene, chief market strategist at Ameriprise. That will come especially into view next week. With U.S. markets closed Friday and a shortened trading day Thursday due to Independence Day, a slew of economic data is set to be released Thursday morning, including June's nonfarm payrolls reading. Economists polled by Dow Jones are expecting the report to show 115,000, per FactSet, down from the previous month's reported growth of 139,000 . "I think the most important kind of data to look at right now, and especially since next week we're going to get some of it, is employment," Saglimbene told CNBC. "The only time that consumers really pull back is when they fear they're going to lose their job or they've lost their job, and if we see employment data kind of remain firm, it's unlikely they're going to materially alter their spending, which is a positive for the economy, even with all of this uncertainty around trade and tariffs." Tuesday 9:45 a.m.: S & P Global manufacturing PMI (June) 10 a.m.: ISM Manufacturing (June) 10 a.m.: JOLTS (May) Wednesday 8:15 a.m.: ADP employment report (June) Thursday 8:30 a.m.: Nonfarm payrolls (June) 8:30 a.m.: Initial jobless claims (Week ended June 28) 8:30 a.m.: International trade (May) 9:45 a.m.: S & P Global services PMI (June) 10 a.m.: ISM services (June) 10 a.m.: Factory orders (May) U.S. stock market closes at 1 p.m. Friday U.S. markets closed for Fourth of July holiday
CNBC
16 hours ago
- Business
- CNBC
Ron Baron says he will never sell SpaceX in his lifetime
Billionaire investor Ron Baron said he's holding on to his position in Elon Musk's SpaceX for the rest of his life. "I think that we're going to hold that for another probably 10 years in SpaceX at least," Baron told attendees at the Morningstar Investment Conference in Chicago. "And I don't think, in SpaceX, I'll ever sell a share in my lifetime." The conviction of the Baron Capital chair and CEO in SpaceX comes largely from the extraordinary growth the privately-held space exploration company has seen since Baron's original investment in 2017. Baron, who's invested roughly $1 billion in SpaceX, said that the holding has since ballooned to roughly $4.5 billion. At the end of March, SpaceX was the second-largest holding in the Baron Partners Fund, roughly 18% of the portfolio, behind Tesla, at about 30%. "We've been one of the largest, if not the largest, purchaser on each one of these transactions since then. Invested a billion, now worth $4.5 billion. I think that in a company worth $350 billion, I think that in 10 years, we're going to make 10 times our money again," Baron said. "Elon thinks that's a ridiculous number. He thinks we're going to make 30 times." "Alpha is everywhere you're looking, if you're willing to buy something that you have to imagine what it will become," he added. TSLA 5Y mountain Tesla, over five years As a private investment, SpaceX is the exception for Baron, largely due to his admiration for Musk and his preference for what he's called "exceptional executives." Baron made his name by emphasizing public growth companies. In his keynote address in Chicago, Baron described first meeting Musk in 2010, saying he kept tabs on the unorthodox businessman for years before investing in one of his companies. "I met him in 2010. And he comes to my office ... he's wearing cargo pants, he's unshaven, his hair is all over the place. He's wearing a plaid sport jacket and a plaid shirt, and they don't match," Baron said. "And so, we're talking, and he's telling me how he's going to have 20 million cars a year." "That didn't seem very credible to me," Baron continued. "And so, I kept following him, kept studying him, and kept visiting him. Every few months, I call him out." Baron, 82, invested $400 million in Tesla between 2014 and 2016. Tesla is down more than 19% in 2025 after soaring 63% in 2024 and more than doubling in 2023. Earlier this year, Baron said he has no intention of selling any shares of Tesla.
CNBC
2 days ago
- Business
- CNBC
U.S. is still 'exceptional' despite rest of world outperformance this year, Apollo's Marc Rowan says
The U.S. stock market is underperforming the rest of the world this year but that doesn't mean American exceptionalism is dead, according to Apollo Global CEO Marc Rowan. The S & P 500 is a little more than 4% higher in 2025, underperforming other overseas markets that have surged this year as investors diversifed away from the U.S. The iShares MSCI ACWI ex US exchange-traded fund (ACWX) has rallied almost 17% year to date. Individual stock exchanges have performed even better. German stocks have soared more than 30% this year. China stocks are up more than 18%. But the U.S. is far from unattractive, Rowan said. Even with continued risks ranging from a ballooning fiscal deficit to geopolitical uncertainty, the U.S. stock market will continue to remain compelling to institutional investors, as it has for the last 15 years, the investor said. That's owing to the strength of the tech sector. "We were, as I sometimes say, hyper exceptional," Rowan told Morningstar CEO Kunal Kapoor on stage at the Morningstar Investment Conference in Chicago. "Ten stocks became 40% of the S & P, those 10 stocks were at a 60 P/E at one point. And one stock, Nvidia, that was greater than the market cap of every stock exchange other than Japan. That is hyper exceptional." "We are now moving to merely exceptional," Rowan added. "And so, on the margin, money will now flow to Europe and China, because the U.S. has made itself, on the margin, less attractive. That does not mean less attractive to Europe and China." .SPX YTD mountain S & P 500, year to date Indeed, on Thursday, the S & P 500 was on the cusp of an all-time high, less than 1% below its February peak, after clawing back all its losses following the tariff-induced April selloff. Tech stocks have led the way. Information technology and communication services are the top two S & P 500 sectors this quarter, rallying 21% and 15%, respectively. Within that universe, semiconductors have outperformed, with the VanEck Semiconductor ETF (SMH) up more than 30% over that time. Nvidia is up more than 40%. "You look at the world, the world has three big investment blocks. You can invest in China, you can invest in Europe. You can invest here," Rowan said. "I would rather be here." "We are just the cleanest dirty shirt," he said. "Every problem we have is worse in the other two regimes."
CNBC
3 days ago
- Business
- CNBC
Why BlackRock's Rick Rieder is confident in equities in the second half as S&P 500 nears high
CHICAGO — BlackRock's Rick Rieder is confident a stock market nearing all-time highs can go even higher in the second half of 2025, as inflation comes down because of artificial intelligence. "I think it's the greatest technology revolution ever. So, what does it mean? My personal view, inflation is coming way down," Rieder said Wednesday during a keynote speech at the Morningstar Investment Conference. The investment chief of global fixed income said he expects the productivity gains to be made from artificial intelligence will offset any hit to inflation from tariffs, which he said will be a one-time adjustment for the U.S. economy rather than a lingering challenge. He added that the U.S. economy is unlikely to fall into a recession, given its reliance on services for growth, rather than goods — which are more cyclical. Rieder's comments come as the S&P 500 trades less than 1% below its record high set in February. While the market still contends with several macroeconomic challenges, including a tenuous ceasefire in the Middle East, and higher tariffs that will likely pressure the U.S. dollar, he remains stocks will surmount those challenges. "The S&P 500 returned almost the entire market cap of the DAX in 2024," Rieder told investors. "When I talk to international investors ... they're going to diversify away from Treasurys to some extent, but they're not going to diversify away from U.S. equities because there's no other game in town." To be sure, Rieder thinks some investors will be disappointed with monetary policy in 2025, noting he expects the Federal Reserve to cut rate just twice this year starting in September — as it works through the temporary impact of higher tariffs.
