Our weekly roundup of industry highlights
Fund fees drop at record pace
The cost of investing in mutual funds and ETFs in the U.S. decreased from 0.56% in 2016 to 0.52 percentage points in 2017, the lowest since Morningstar began tracking fees 18 years ago, according to Bloomberg News.
The funds in the bottom 20%, in terms of their fees, received $949 billion of new money, while the rest of the industry lost $251 billion, Morningstar found.
"The message investors are sending is crystal clear," Morningstar analyst Patricia Oey said in a statement. "Cost counts."
Biggest gold ETF sees largest trade of the year
A single investor traded 1 million shares worth $124.5 million in the SPDR Gold Shares fund (GLD), the largest single intraday block trade since January, according to Bloomberg News.
With more than $36 billion in assets, GLD, which has an expense ratio of 0.40%, is the largest ETF tracking the commodity. The fund reported $1.1 billion of inflows in April. Investors have since pulled $236 million worth of bets, however.
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IBDs and regional firms are making the biggest changes, but RIAs have room for growth as well.
April 2 -
The WiseBanyan platform currently has $153 million in assets under management and 32,000 clients.
April 10 -
Though largely replaced by the 1% of AUM model, performance-based fee structures are cropping up again — and that’s cause for concern.
April 2
"The primary deterrents to a gold, silver and platinum rally would be sustained reversals of favorable trends in inflation, stock-market volatility and the weakening dollar," according to Bloomberg Intelligence strategist Mike McGlone. "Recent strength in the buck on the back of higher Treasury yields should be a short-lived headwind."
BlackRock invests in app for novice investors
BlackRock announced it will partner with Acorns, an investing app aimed at newcomers, Bloomberg News reports.
As part of the agreement, the companies will aim to create "technology and tools" for Acorns' roughly 3.3 million investment accounts.
The agreement also mandates that a BlackRock representative observes Acorns' board meetings. Chief Marketing Officer Frank Cooper will assume this role.
RESEARCH
Fixed-income industry faces high cost of fragmented operations
Sixty-six percent of professionals in the fixed-income industry list reducing operational costs as their top priority, according to a new report.
Historically, fixed-income desks have added interfaces and solutions to cope with new challenges. Between the systems are data disconnections resulting in higher operational risks, according to the survey from SimCorp, an investment management solutions provider.
In addition, managing these multiple systems increases maintenance cost.
"Fixed-income professionals must first confront the fragmented operations that burden their daily lives," says Terry Flynn, front office specialist at SimCorp. "Delayed and incomplete data, limited firm-wide exposure views, restrictive asset class coverage and Excel-driven manual reconciliation, have tied the hands of many fixed-income desks."
PRODUCTS
Morningstar launches measurement to gauge carbon exposure
Morningstar announced the initiation of its carbon risk score, an evaluation system aimed at determining the carbon emission-related risks in funds. The system will grade approximately 30,000 products globally across a wide spectrum of industries, among which, 6,000 funds will get Morningstar's low carbon designation.
For investors who have a growing interest in analyzing carbon risks, the scores can help indicate how much of the funds they hold are exposed to fossil fuels or highly polluted industries.
"The carbon risk score is really a way to assess how well-prepared the companies in a fund's portfolio are for the transition away from a fossil fuel-based economy to a lower carbon economy," says Jon Hale, Morningstar's director of sustainability research. "We have more and more investors globally who are interested in better understanding the implications of it on their portfolios."
Direxion’s new ETF triples down on new tech companies
Direxion announced a new ETF with exposure three times higher than that of the $2.4 billion Robo Global Robotics & Automation Index ETF (ROBO).
The Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 3X Shares (UBOT), which has a net expense ratio of 1.22%, will track the Indxx Global Robotics and Artificial Intelligence Thematic Index.
Are the recent declines in tech just some high-flying stocks coming back to earth, or a turning point for the sector?
"The robotics, artificial intelligence and automation industries are rapidly growing and evolving," says Sylvia Jablonski, managing director at Direxion. "The launch of UBOT allows traders to take a bold position in companies that are on the forefront of technology."
Broadridge to improve retirement plans with Morningstar data
Broadridge, a financial technology provider, has teamed up with Morningstar to expand the data provided to clients on sales opportunities in the retirement investment business. The platform, called RightPond, tracks performance and product mapping, and develops risk ratings that enable wholesalers to identify more than 10,000 advisors and offer more analysis into non-mutual fund assets in large retirement plans.
"The combination of Morningstar data and Broadridge's analytics solutions provides fund firms with the technology and precise information to pursue their best possible client opportunities," says Frank Polefrone, senior vice president of Broadridge's mutual funds data and analytics business.
BlackRock introduces tool to assist investors in analyzing funds
BlackRock has unveiled a free online tool that analyzes 2,400 mutual funds and ETFs for retail investors, according to Bloomberg News.
Factor Box enables investors to use a data-oriented method of gauging fund returns based on factors including volatility, size and value.
The firm estimates that by 2022 the factor industry's assets under management will expand to $3.4 trillion from $1.9 trillion in 2017.
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“I admit I’m nervous about how our clients will react,” AQR's Cliff Asness wrote following the worst run in global equities in six years.
November 8 -
"It's going to become increasingly more important for financial professionals to understand the potential benefits of sustainable investing," an exec says.
December 10 -
Asset managers who flocked to safety in utilities and dividend stocks at the end of 2018 have seen their pain compounded by the latest risk-on rally.
November 8
"This is a very fast-moving river," says Andrew Ang, BlackRock's head of factor-based strategies. He added that, while factors are far from a new investing phenomenon, "what's new is to democratize them."
XA Investment announces IPO of its first closed-end fund
XA Investments has launched its first closed-end fund. With most of its investments in the credit market, the XAI Octagon Floating Rate & Alternative Income Term Trust (XFLT), which has a total expense ratio of 5%, will seek returns with a focus on income generation.
The $16 billion asset manager, Octagon Credit Investors, will lend its expertise to the trust by sending one of its own to the trust's management team.
"XFLT is the first of a series of distinctive, demand-driven alternative investment opportunities designed by XAI to provide investors access to institutional quality investment strategies," said Ted Brombach, co-CEO of XA Investments.
OppenheimerFunds and Pictet launch new ESG fund
OppenheimerFunds launched the OFI Pictet Global Environmental Solutions Fund (OPEIX). The fund, which has an expense ratio of 0.85%, will be managed by Pictet Asset Management and focus on environment-oriented investment strategies, the firm says. OppenheimerFunds is responsible for structuring and finding proper distribution platforms to cater to high-net-worth clients.
The environmental strategies will target companies that have relatively low impact over critical natural resources and the firms that contribute to the cause of environmental protection.
"Because of this increasing awareness, we expect companies that contribute to environmental solutions should experience above-average growth over the long term," said Luciano Diana, head of environmental thematic investing at Pictet Asset Management.
ProShares issues new index bond fund
ProShares has launched the ProShares S&P Bond ETF (SPXB). The fund will focus on the top 1,000 bonds issued in the S&P 500 in terms of their liquidity, as fixed-income investments and index funds continue to deliver stronger-than-average performance.
Muni funds should become more attractive under the new tax laws, say market observers.
To ensure the fund selects the most liquid notes, it will only pick bonds that have a maturity of less than 2 1/2 years, and exclude those with a par value of less than $750 million. In particular, most of the bonds are issued by large banks such as Morgan Stanley and Goldman Sachs.
While broad market trends continue to push money into fixed-income ETFs, some investors still hesitate to trust debt instruments that trade like stocks, said Michael Sapir, CEO of ProShare Advisors.
ARRIVALS
J.P. Morgan hires advisor to boost beta strategies team
J.P. Morgan Asset Management appointed Alistair Lowe, a former independent consultant advising portfolio managers and advisors, as managing director. Lowe is responsible for the team's alternative beta and quantitative equity portfolio, the firm says.
Lowe previously served as a senior advisor for quantitative liquid alternatives strategies at AlphaSimplex. He also served as chief investment officer at State Street Global Advisors, leading a team of 30 analysts that specialize in quantitative research for various asset classes.
"We look forward to benefiting from Alistair's perspective and adding his unique skill set to our team of talented quant managers," said Michael Camacho, head of beta strategies at J.P. Morgan Asset Management.
Coinbase nabs Och-Ziff’s CFO amid firm expansion
Coinbase appointed Alesia Haas, formerly of the $32 billion hedge fun Och-Ziff, to chief financial officer amid the firm's expansion.
Haas' role will "accelerate our goal of building a world-class financial team that scales the company through this period of profound growth," said Coinbase Chief Operating Officer Asiff Hirji.
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The decentralized and unregulated nature of bitcoin makes it difficult to appoint an heir.
February 14 -
The regulator asked sponsors to hold off on registering funds investing in the currencies. Here’s why.
January 26 -
New digital currencies are subject to little or no regulation, the investor protection watchdog cautions.
January 5
Previously, Haas had a nine-month stint at the Colorado-based ANGI Homeservices, a tech company focused on connecting homeowners and home-service professionals, as one of its board members. She also served as the head of strategy for three years and CFO for the following six years at OneWest Bank, based out of California.
Allianz lures former Morgan Stanley managing director
Allianz Global Investor has recruited former Morgan Stanley Managing Director Aiden Redmond to head of the firm's institutional North America division.
This addition is part of the firm's effort to enhance its marketing and sales performance in the region, according to Allianz.
Redmond joined the firm on April 17 and directly reports to Allianz Global Investor CEO Doug Eu.
Redmond worked at Morgan Stanley Investment Management for four years. Before that, he was a senior vice president and head of institutional business at Delaware Investments/Macquarie Investments, where he oversaw businesses including sales, consultant relations and client service for three years. Eu was also a managing director at BlackRock for 16 years.
Private College 529 Plan appoints new president
Private College 529 Plan, a prepaid 529 plan owned by roughly 300 private colleges and universities, appointed former American Student Assistance Director Robert Cole to president of the firm. Cole succeeds Nancy Famer, who retired after 12 years leading the plan.
At American Student Assistance, Cole was responsible for helping families with financial challenges to pay college tuition and better manage student debt.
"I've gotten to know Bob well since his selection," Farmer said. "He has a great background for this position, and I'm convinced the Plan is in good hands."
Grayscale recruits finance team leader
Grayscale Investments announced the appointment of Samantha McDonald, the former chief financial offer and treasurer for the ETF SPDR Gold and SPDR Long Dollar Gold Trust (GLDW), to lead the firm's finance team as vice president.
In the new role, McDonald will supervise finance, accounting and legal responsibilities for the firm.
McDonald will report to Grayscale CEO Barry Silbert.
"Samantha is an outstanding addition to the Grayscale leadership team, bringing a wealth of knowledge and experience managing ETFs and other complex financial instruments," Silbert said.
McDonald previously worked at Roubini Global Economics, a financial firm that offers economic analysis.
There, she led the firm's financial and accounting functions.
Calvert hires new ESG director
Calvert Research and Management named Jessica Milano, the former deputy assistant secretary for small business at the U.S. Treasury, the firm's director of ESG research.
"Jessica's skills and experience will enable us to further develop the depth of our ESG research and scope of coverage," said John Streur, president and CEO of Calvert. "Her business, economic and lending background will enhance our expertise in critical areas. This will fortify our research program, positioning Calvert to continue to deliver investment results that meet client needs, and to drive positive change in corporate social responsibility."
In this role, Milano will oversee the firm's ESG research on global securities, identify and analyze ESG factors critical to firm performance and lead a team of ESG analysts.
Milano previously served as a senior policy advisor with the Treasury Department and the Small Business Administration.
Crypto Asset Management makes key hires
Crypto Asset Management appointed former executives from Altegris Companies and Deloitte to chief legal officer and CFO of the firm, respectively.
As CLO, David Matthews, previously the general counsel and chief compliance officer of the Altegris Companies, will oversee the firm's regulatory compliance programs, manage legal resources and activities, and advise on legal aspects of investment product, design and structure.
Kyle Chaykowski, a former auditor from Deloitte, is responsible for overseeing the firm's finances, including financial planning, management of financial risks, record-keeping and financial reporting.
They will be based out of the firm's La Jolla, California office.
