Finance

10’000 Hours | DigitalVision | Getty ImagesTarget-date funds have ballooned in popularity over the past 15 years — yet many investors aren’t using them the way they were intended.The funds were designed as a one-stop shop that put retirement savings on autopilot. Investors are meant to park their nest egg in one fund, generally based on their retirement year, which automatically shifts from stocks to bonds over time.However, a third of investors aren’t limiting themselves to one target-date fund, according to 401(k) data from Vanguard. They’re piling other funds on top.More from Personal Finance: Are you prepared for tax impact of the $68 trillion great wealth transfer?’Inflation is the silent killer,’ as many retirees are feeling the stingPost-pandemic, the office will now have a whole new lookSpecifically, 27% use TDFs along with other 401(k) mutual funds (like an S&P 500 index fund, for example). Another 2% use more than one target-date fund; 4% use two or more TDFs as well as other funds.Those who use the funds this way may inadvertently assume more investment risk, according to financial advisors.”It’s not what you’re supposed to do,” according to Ellen Lander, the founder of Renaissance Benefit Advisors Group, based in Pearl River, New York. “Do I think it’s detrimental? Maybe and maybe not.”TDF popularityEmployers began adopting target-date funds with greater regularity after Congress passed the Pension Protection Act of 2006. The legislation gave legal protections for businesses who automatically enrolled workers into the company 401(k) plan and invested their money in TDFs.Now, 80% of 401(k) plans offer a target-date fund, according to the Plan Sponsor Council of America. The funds hold 24% of all assets in 401(k) plans, the most of any investment option, according to the trade group.Among plans that offered a TDF last year, six of every 10 dollars flowed into such a fund, according to Vanguard, which is the largest manager of target-date funds.Here’s how they work: Let’s say an investor aims to retire in 2040, at age 65. This investor would select the 2040 target-date fund. The fund starts with a large stock allocation and shifts toward cash and bonds over time.”They’ve done a lot to move things in a more positive direction for many investors,” Christine Benz, the director of personal finance at Morningstar, said of how TDFs have simplified the investment process.Asset allocationBut investing in additional funds may skew one’s asset allocation. Investors who don’t rebalance could end up with more risk than they’d like.For example, if an investor allocates half of 401(k) assets to a target-date fund and the rest to aggressive growth funds, the TDF would automatically adjust over time but the 50% stock holding would remain constant.”This is where it probably is detrimental,” said Lander. “I took a strategy designed for my age and risk level and made it hugely aggressive.”In some 401(k) plans, more than half of target-date investors use them in conjunction with other funds, according to Lander, who consults with employers about their retirement plans.”I think it’s probably not in the best interest,” Aaron Pottichen, a senior vice president at Alliant Retirement Consulting, based in Austin, said of using TDFs in this manner.The trend has likely emerged for a few reasons. For one, investment diversification is commonly preached to retirement savers. Owning multiple funds may therefore seem like a logical extension. But in this case, TDFs are already diversified.”Employees don’t quite understand that the TDF is made up of anywhere from five to 30 other funds,” Lander said. “If you look at your enrollment form, it’s listed there as a fund.”And investors shouldn’t necessarily shoulder all the blame, according to advisors. Retirement-plan portals may be confusing to investors, for example.Let’s say a 401(k) investor who’d been auto-enrolled into a target-date fund wants to take a do-it-yourself approach and hand-pick their stock and bond funds. This person may change their future allocation but forget to change how their current dollars are invested if the web portal isn’t clear.It seems the trend is improving, though. A decade ago, almost half of TDF investors used more than one fund, compared to 33% today, according to Vanguard.”Directionally, it’s a really great trend,” Benz said.  And there are defensible reasons for investors to have funds beyond just a lone TDF, advisors said.For example, a 62-year-old investor may hold some side savings in a money-market or stable-value fund, in addition to the target-date fund, as a more liquid bucket of safe money for a potential down payment on a condo, Benz said.Some may also want to tailor their asset allocation to a more specific degree than a 401(k) plan’s target-date funds are able to provide, advisors said.”There can be a reason for it,” Lander said. “I think it’s for a very small group of people who would even have the time, interest or knowledge to do that.””Do I believe that’s why this is occurring? No,” she added. More

In this articleGSBDGoldman Sachs on Tuesday reported second-quarter earnings that blew past Wall Street expectations, propelled by strong performance in investment banking amid a robust IPO market.Here are the numbers:Earnings: $15.02 per share vs. $10.24 expected by analysts polled by Refinitiv. A year earlier Goldman recorded earnings per share of $6.26 (53 cents per share if accounted for costs related to the 1MDB settlement.)Revenue: $15.39 billion vs. $12.17 billion expectedShares of Goldman rose 0.5% in premarket trading following the earnings release. The stock is already up 45% in 2021 as investors anticipated strong results amid the economic comeback from the pandemic.Goldman’s investment banking segment posted its second-highest revenue quarter ever, behind the first quarter of 2021, as a booming IPO market boosted its equity underwriting.Companies are rushing to go public this year to take advantage of a stock market at record highs. Capital raised via traditional IPOs in 2021 totaled a record-breaking $135 billion, far surpassing a five-year average of only $53 billion annually, according to FactSet.Goldman’s net revenues from investment banking totaled $3.61 billion, ahead of FactSet’s consensus estimate of $3 billion. The backlog increased significantly from the end of 2020, ending the second quarter at a record level, the bank said.Year to date, the New York-based bank ranked number one in mergers and acquisitions globally, worldwide equity and equity-related offerings, common stock offerings and initial public offerings.Goldman’s trading businesses saw an expected slowdown as the boom from pandemic-induced volatility started to fade. Net revenues totaled $4.90 billion in the last quarter, compared with $7.58 billion in the first quarter of 2021. The sum was split between $2.23 billion in equities trading and $2.58 billion in fixed income. Both figures came in slightly above FactSet estimates.Its asset management unit generated record revenues of $5.13 billion in the second quarter, boosted by record sales from equity investments.Goldman also announced that its board approved a planned 60% increase in the quarterly dividend to $2 per share beginning in the third quarter.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

In this articleVZMAMastercard and Verizon announced Tuesday a new partnership focused on 5G contactless payments for consumers as well as small- and medium-sized businesses.They hope to have some innovations from the partnership by 2023.The collaboration aims to enable businesses to use emerging payment technologies to turn smartphones in to cash registers, to turn wearables like watches as payment devices, and to facilitate touchless retail similar to Amazon Go stores.”A large retailer can easily do this. A small business, how are they going to do it? That’s exactly what this will bring; 5G allows us to deliver the full experience,” Mastercard CEO Michael Miebach first told CNBC, ahead of the announcement. “For example, I choose an item in a shop, but actually they don’t have the color I like. So I’m going to have it sent home, and it is going to be paid once it arrives, all of that is coming together and we with 5G will be enabling this.””5G will enable the small- and-medium business to handle transactions more quickly and focus on what they are really delivering to customers,” Verizon CEO Hans Vestberg told CNBC. “You can use 5G to create more frictionless ways of transacting with your customers and focus on your business. That’s of course what we see with touchless stores and coming out from Covid, I think we see much more touchless because it’s part of our society today.”The Mastercard-Verizon partnership looks to further digitize and disrupt global consumer spending at retailers and other merchants, which the payments giant estimates to be around $50 trillion annually. Teams from Mastercard and Verizon will be embedded at Mastercard’s New York City Tech Hub working on additional applications for the 5G alliance.The use of Internet of Things (IoT) and Mobile Edge Computing (MEC) in retail are two of the additional applications that will be explored by teams at Mastercard’s Tech Hub. MEC allows cloud computing and other online capabilities at the limits of an internet network.”We’re bringing the computing and storage of data closer to you as a consumer, that means that you can get hold of a service quicker, it’s going to be more secure because it’s closer to you. Some data has to be very close, some data can be very far away,” Vestberg said. “That can be in any industry, but a very good use is the financial industry, because transactions need to be very secure.”Miebach believes small- and medium-sized businesses will be the biggest growth area for 5G contactless payments and the increased computing power has to potential to grow their businesses.”As a small business owner, you have to compete in a more digital fashion than ever before. You might have been brick and mortar before,” Miebach said. “Let’s say you’re at restaurant, you tried out curbside pickup and now you want to run the business across both channels. That’s a better experience but at the same time, it will drive more turnover for the merchant, will drive more turnover for an issuing bank that issues a credit card as well as for us.””There’s also more reach into new types of payments,” he added. “In the end, the way I look at it from our businesses, we’re building a long term market for us to grow into.” More

In this articleBAJPMPEPCheck out the companies making headlines before the bell:PepsiCo (PEP) – The snack and beverage giant gained 1.3% in premarket trading, after beating estimates on the top and bottom lines and raising its full-year forecast. PepsiCo earned an adjusted $1.72 per share for the quarter, 19 cents above estimates, helped by increasing North American beverage sales.JPMorgan Chase (JPM) – The bank reported a quarterly profit of $3.78 per share for the second quarter, beating the $3.21 consensus estimate, with revenue also topping Street forecasts. Results got a boost from an increase in investment banking fees, but the stock fell 1.3% in premarket action.Boeing (BA) – Boeing shares fell 2.2% in the premarket, after saying it would cut the production rate for its 787 Dreamliner to deal with a new production-related issue. It now expects to deliver fewer than half of the roughly 100 787s in inventory this year, instead of the “vast majority” it had previously predicted.Goldman Sachs (GS) – Goldman reported a second-quarter profit of $15.02 per share, beating the $10.24 consensus estimate, while revenue also exceeded Wall Street forecasts. Goldman’s bottom line was helped by a surge in global deal fees.Conagra Brands (CAG) – The food producer beat estimates by 2 cents with adjusted quarterly earnings of 54 cents per share, with revenue topping analyst predictions as well. Conagra did cut its fiscal 2022 full-year forecast due to the impact of inflation, and its stock fell 3.7% in premarket action.Nokia (NOK) – Nokia said it would announce an improved outlook for the year on July 29, when it reports its second-quarter results. The telecom equipment maker cites a pickup in business during the quarter. Shares surged 8.4% in premarket trading.Hanesbrands (HBI) – The stock jumped 3.2% in the premarket after Wells Fargo upgraded the apparel producer to “overweight” from “equal weight”. Wells Fargo said it was impressed by the company’s new leadership team and the overall direction of the business.Walt Disney (DIS) – Disney is raising subscription prices for its ESPN+ sports streaming platform. The monthly price goes up by $1 to $6.99, while the annual plan will increase by $10 to $69.99.Johnson & Johnson (JNJ) – The FDA is adding a warning label to Johnson & Johnson’s Covid-19 vaccine, to warn of a very small incidence of the rare neurological disorder known as Guillain-Barre syndrome. Johnson & Johnson fell 1% in the premarket.Biogen (BIIB) – The U.S. government has begun the review process that will determine if Medicare will cover the cost of Biogen’s newly approved Alzheimer’s drug Aduhelm. A final decision is expected within 9 months.McDonald’s (MCD) – McDonald’s is backing franchisee efforts to attract more workers, making a multimillion investment in perks such as higher pay, more paid time off, college tuition aid and emergency child care. More

A pile of U.S. dollar banknotes.Chris Clor | Tetra images | Getty ImagesIn March last year, a top venture capital firm described Covid-19 as the “black swan of 2020.””Private financings could soften significantly, as happened in 2001 and 2009,” Sequoia Capital told portfolio company founders and CEOs in a memo reminiscent of its “R.I.P. Good Times” presentation in the 2008 crisis.Fast forward to July 2021, and tech investors are writing bigger checks than ever. According to CB Insights, start-ups have raised $292.4 billion globally so far this year, on track to beat the $302.6 billion raised throughout 2020.The number of so-called “mega rounds” — massive, $100 million-plus venture deals — has climbed to 751 in 2021 year-to-date, already beating the 665 mega rounds that were raised last year.”This feels a lot like 1999 to me,” Hussein Kanji, a partner at U.K. venture capital firm Hoxton Ventures, told CNBC. “You had so much supply, so much enthusiasm.””There was an era where if you put dot-com in your name, your public market stock would go up,” he added. “There was so much enthusiasm for catching the next big thing.”Dot-com companies were all the rage on Wall Street in the late 1990s, amid growing adoption of the internet. Speculative investing fueled a 400% climb in the Nasdaq Composite stock market index between 1995 and 2000. By October 2002, it had plunged almost 80% from its peak.In the past five years, the Nasdaq has nearly tripled, with the market values of several large-cap tech stocks, including Amazon, Google and Facebook, crossing the $1 trillion mark. Microsoft and Apple are currently worth more than $2 trillion.Now, skyrocketing valuations of private tech firms are causing concern for some investors. U.S. payments processor Stripe was valued at a whopping $95 billion in March, illustrating the growing trend of start-ups staying private for longer.A record 249 firms achieved $1 billion “unicorn” valuations in the first half of 2021, according to CB Insights, almost double the number of unicorns produced during the course of last year.”It’s a great time to fundraise as an entrepreneur,” Andrei Brasoveanu, partner at venture capital firm Accel, told CNBC. “The quality of companies and the speed at which these companies grow is just unprecedented.”The ‘FOMO’ factorTiger Global, a hedge fund known for its bets on pre-IPO tech companies, has gained a much larger presence in venture capital lately. Meanwhile, Japanese conglomerate SoftBank has shaken up the world of start-up investing in recent years with its massive Vision Fund.The increased competition in venture dealmaking hasn’t gone unnoticed by investors. Private tech valuations are getting “more and more distant from reality” due to a “fear of missing out,” Hoxton Ventures’ Kanji said.Iana Dimitrova, CEO of U.K. fintech start-up OpenPayd, said her firm is in the process of raising money. “We have investors saying, ‘You’re asking too small a ticket, we only write $100 million-plus tickets,'” Dimitrova told CNBC.Some investors have “very limited understanding” of OpenPayd’s software, which lets other companies offer financial services, but are making offers “simply because it’s now the space to be in.”Fintech companies represented 22% of global venture funding in the second quarter, according to CB Insights.”Investors are increasingly writing higher and higher checks,” Dimitrova continued. “Frankly, I see that as detrimental to the long-term sustainability of our industry because businesses are not focused on generating value, they’re focused on burning and deploying cash.”A low interest rate environment has led to a huge amount of “dry powder” being deployed in risky venture bets, she added.Europe’s tech boomThere are a number of differences between today and the dot-com bubble of 1999, according to Kanji. For one, the bubble of ’99 was driven far more by “hype” than fundamentals, he said, whereas now “the markets are there and the companies are there.”Another trend is “bootstrapped” firms which raised no external investment before announcing sizable first funding rounds. U.S. software firm Articulate, which was founded in 2002, announced a $1.5 billion Series A round at the start of July.Meanwhile, though Europe has long lagged behind America and China on tech, the continent has seen a significant increase in start-up investment. Europe saw huge growth in venture investment this year, whereas funding to China-based companies declined.”This whole remote work trend has accelerated digital transformation, and has also brought European companies access to global markets,” Brasoveanu said. “You can sell on Zoom just as well from Romania as you would in New York.”Start-ups in Europe raised nearly $50 billion in the first six months of 2021, surpassing the $38 billion raised by firms in the continent in all of 2020, according to Factset. A number of European tech companies have seen their valuations climb to the tens of billions, including Swedish battery maker Northvolt, buy-now-pay-later provider Klarna and German enterprise software start-up Celonis.A number of European start-ups hit unicorn valuation in record time over the past year. Earlier this year, online grocery app Gorillas became the fastest company in Europe to reach unicorn status, beating a record previously set by online events company Hopin in 2020.The frenzy of private capital raising in tech has led to a growing pipeline of companies that look set to go public. The U.S. saw a flurry of major tech listings over the past year, including Airbnb and Coinbase, while Britain last week hosted one of the biggest European floats of 2021 with the blockbuster direct listing of fintech firm Wise.And the special purpose acquisition company, or SPAC, phenomenon has provided another alternative for high-growth firms thinking of making their public market debut. U.K. health tech firm Babylon, for example, is set to list through a merger with a blank-check company later this year. More

In this articleSE22UA-DE700-HKBABAA signage for Temasek Holdings is displayed during a news conference following the company’s annual review in Singapore on July 9, 2019.Bryan van der Beek | Bloomberg | Getty ImagesSINGAPORE — Singapore’s state investment company Temasek said Tuesday the net value of its portfolio reached a record high in the financial year that ended March 31.In its annual report, the investor said its portfolio grew to 381 billion Singapore dollars (around $283 billion) as of end-March. That’s compared with 306 billion Singapore dollars a year ago, when the size of Temasek’s portfolio fell for the first time since 2016.The portfolio expansion came as Temasek’s one-year shareholder return jumped to 24.53% in Singapore dollar terms, the company said. Returns were 7% over a 10-year period and 8% over 20 years, it added. Those returns took into account all dividends paid to Temasek’s shareholder, minus any capital injections.Temasek is owned by the government of Singapore.During the financial year, Temasek invested 49 billion Singapore dollars and divested 39 billion Singapore dollars — record numbers on both counts.Stock picks and investing trends from CNBC Pro:Goldman says bet on these stocks with expanding profitability into earnings seasonTop JPMorgan strategist Kolanovic says it’s too early to ditch reopening stocksIf you think the global economy is about to expand, Morgan Stanley has some stocks for youTemasek is an active equity investor in both the public and private space. The company invested mainly in Singapore companies in its early days, but has turned into a major global investor in recent years.The company — a closely followed investor — has invested in major regional internet start-ups such as Singapore-based Sea and Indonesia’s GoTo Group. It also has a stake in German biotech firm BioNTech, which developed a Covid-19 vaccine with American pharmaceutical giant Pfizer.Regulatory risks in ChinaMore than 60% of the assets held by Temasek’s portfolio companies are in Asia, with Singapore and China as the top two markets in the region.Temasek’s exposure in China includes holdings in tech giants Tencent and Alibaba, which recently came under tighter regulatory scrutiny as Beijing moves to rein in monopolistic business practices.We remain very optimistic on China, we remain very bullish around the growth prospects of China and the technology opportunities.Mukul ChawlaJoint head for telecom, media and technology at TemasekMukul Chawla, Temasek’s joint head for telecommunications, media and technology, told CNBC that regulatory risks are not unique to China.”We remain very optimistic on China, we remain very bullish around the growth prospects of China and the technology opportunities,” said Chawla, who’s also joint head for North America.”The changing regulatory environment … is one of the risks we need to consider, we’re faced with regulations not just in China but other parts of the world as well. So it doesn’t change our stance in any meaningful way,” he told CNBC’s Sri Jegarajah after Temasek released its annual report.Digitization is a major focus for the Singapore state investor. Temasek said that financial services remained its portfolio’s largest segment, but its investments in the space has evolved over the last decade from mainly banks to include fintech and payments. More

The recent regulatory scrutiny on cryptocurrency is “very healthy” for the sector, crypto billionaire Wu Jihan told CNBC on Tuesday.”I think that such kind of crackdown may be a good thing for the industry in long term,” Wu said on the sidelines of the Asia Tech x Singapore conference.Wu, co-founder and chairman of digital asset financial services platform Matrixport, said regulatory action weeds out bad actors while improving the reputation of the industry.Still, the regulatory pressure is “stronger than before,” said Wu, who is also the former CEO and chairman of bitcoin mining giant Bitmain. Wu’s net worth was estimated to be $1.8 billion as of November, according to Forbes.Read more about cryptocurrencies from CNBC ProInvesting in Ethereum? What you need to know about it and why it’s not just another bitcoinBitcoin’s ‘mining difficulty’ is about to fall. Here’s what that means for the cryptocurrencyMost investors see bitcoin ending the year below $30,000, CNBC survey shows”It’s a fast growing financial sector,” Wu said. “It’s growing almost to like a trillion dollar market cap industry, and more than 10% of the United States’ citizen have already got some involvement with cryptocurrency.”Regulatory concerns have weighed heavily on investor sentiment, pressuring cryptocurrency prices. Bitcoin surged in the first part of 2021 and hit an all-time high, but closed out the first half of the year down about 47% from its record.In April, U.S. Federal Reserve Chair Jerome Powell called cryptocurrencies “vehicles for speculation.”Meanwhile, China’s crypto crackdown has been underway since at least 2017, but intensified this year. Energy-intensive crypto mining operations were shuttered while major payments services such as Alipay have been urged by the People’s Bank of China to not provide services related to cryptocurrency activities.Singapore’s acceptance of cryptoWhile regulators in the U.S. and China have stepped up their scrutiny of the crypto industry, Wu said Singapore, where Matrixport is headquartered, is a global financial center that is also relatively open to innovation in financial technology.”I think it’s a very good place to build a worldwide brand, financial service brand,” he said.Wu isn’t alone. The Financial Times reports that other cryptocurrency organizations are also seeking shelter in the island nation.”The government is reasonable, very high efficiency, and is approachable,” Wu added. “There are many good reasons for Singapore to be the hub of the crypto innovations.”— CNBC’s Arjun Kharpal contributed to this report. More

Signage for digital payment services Alipay by Ant Group, an affiliate of Alibaba, and WeChat Pay by Tencent are displayed outside a currency exchange in Hong Kong, China, on Tuesday, Sept. 1, 2020.Chan Long Hei | Bloomberg | Getty ImagesBEIJING — As China’s anti-monopoly and data security crackdown creeps into restrictions on U.S. IPOs, analysis shows that some of the country’s biggest tech companies are deeply invested in those overseas stock offerings.Gaming and social media giant Tencent is by far the dominating corporate shareholder, with significant stakes in half of the 25 largest fundraises by Chinese companies issuing American Depositary Receipts (ADRs) in the U.S. since 2017. That’s according to CNBC analysis of publicly available data accessed through Wind Information and S&P Capital IQ.Chinese e-commerce giant Alibaba has a few holdings in the list of 25 companies, while other major Chinese tech companies like Xiaomi, Meituan and Baidu each have stakes in one or two of the stocks, the analysis found. Also appearing frequently, typically with smaller stakes, were U.S. asset managers BlackRock and Vanguard.While Shenzhen-based Tencent is best known for its video games and WeChat messaging app that’s ubiquitous in China, the company has also grown into an investing giant.Tencent’s holdings in publicly listed companies last year rose by 785.11 billion yuan ($122.7 billion) — more than the 160 billion yuan ($25 billion) in profit reported for the year, according to the company’s annual report. That’s not including its subsidiaries.The company itself is the largest listed in Hong Kong by market valuation.Tencent said Saturday it was notified by the market regulator of “its decision to halt the merger of Huya and Douyu based on the results of its antitrust review.” Both companies are Tencent subsidiaries that listed in the U.S. in the last three years.However, on Tuesday China’s market regulator disclosed it approved Tencent’s deal to privatize U.S.-listed search engine and text-input company Sogou.Regulation intensifiesFor many start-ups in China, having a big tech company as a backer has often meant access to vast amounts of data on consumer preferences.But China’s internet industry has also been ruthless. In a 2018 book called “AI Superpowers, China, Silicon Valley and the New World Order,” Google’s former China head Kai-Fu Lee said the local tech world resembled gladiator fights where nothing was off limits, from copying innovations to launching smear campaigns.After years of loose regulation, China has intensified its crackdown on massive, homegrown tech giants in the last several months.Read more about China from CNBC ProDan Niles says he’s now tempted to buy Chinese tech stocks – here are 2 of his favoritesDelisting of Chinese stocks on U.S. exchanges appears inevitable, Cowen saysCramer questions why anyone would buy a Chinese IPO ever again after Didi debacleRide-hailing app Didi — in which Tencent invested — held a massive U.S. IPO on June 30. Within five days, China’s cybersecurity regulator, citing national security concerns, launched an investigation into the use of data by Didi and subsidiaries of two Chinese companies that recently listed in the U.S.The regulator, the Cyberspace Administration of China (CAC), also said new user registrations would be suspended in the interim.Over the weekend, CAC also announced that companies with data on more than 1 million users would likely need approval before they listed overseas.The increased scrutiny on data follows regulators’ crackdown on tech companies since last fall over monopolistic practices, which led to authorities fining Alibaba $2.8 billion. More