Our weekly roundup of industry highlights
BlackRock to launch ETFs managed by bots
BlackRock is launching actively managed equity ETFs that are designed by robots, Bloomberg reports, citing SEC regulatory filings.
Branded as iShares Evolved, the funds will classify stocks using artificial intelligence. BlackRock has filed for approval to start at least seven such funds, covering sectors including health care, media and technology, according to the SEC's website.
The launches mark BlackRock's shift from passive indexing to active investment management. "They have increasingly been blurring the lines between the iShares passive business model and the BlackRock active business model," said CFRA Research Director Todd Rosenbluth.
Carillon adds $27B managers Scout and Reams
Carillon Tower Advisors has completed the acquisition of Scout Investments and its fixed-income division, Reams Asset Management, adding to a list of affiliate managers that includes ClariVest Asset Management, Cougar Global Investments and Eagle Asset Management. The agreement was first announced in April.
The deal brings Carillon's total AUM to $64 billion and rounds out its roster of specialist managers. Cooper Abbott, chairman and president of Carillon Tower, said the new additions share the firm's belief "that independent investment boutiques can lead to better ideas and active management can lead to better long-term outcomes."
RESEARCH
Thirty percent of retirees prefer to consolidate assets but haven't acted
Retirement investors holding assets at multiple providers prefer to consolidate them into one, but they need encouragement and assistance to act, according to a study.
On average 44% of investors prefer a single platform, but only 15% report doing so, meaning there's a consolidation opportunity among 30% of investors, Cerulli Associates reports.
The average retiring investor maintains 3.6 financial provider relationships due to reasons such as a lack of trust in advisors, maintaining privacy and diversification, said Cerulli director Scott Smith.
"An investor withholding the existence of $100,000 invested in certificates of deposit at a local bank could result in the advisor recommending an earlier start to receiving Social Security distributions," Smith said.
New entrants expected to diversify ETF market
Two-thirds of ETF market makers said they expect the majority of asset managers will have an ETF on offer by 2022, a recent survey from EY shows.
Attracted by large ETF inflows and seeking to replace lost mutual fund business, asset managers will need to innovate. ETFs focused on fixed income, smart beta and other subsets are expected to flourish, according to EY.
PRODUCTS
ProShares unveils Decline of the Retail Store ETF
ProShares launched Decline of the Retail Store ETF (EMTY), the first ETF specifically designed to benefit from the decline of brick and mortar retailers, the company said. The ETF aims to deliver the inverse of the daily performance of Solactive-ProShares Bricks and Mortar Retail Store index, which tracks 56 companies that include department stores, supermarkets and consumer electronics.
The firm also launched Long Online/Short Stores ETF (CLIX), which combines a 100% long portfolio of online and non-traditional retailers with 50% short positions in brick and mortar ones. Both ETFs have expense ratios of 0.65%.
Eaton Vance Oaktree to launch diversified credit fund
Eaton Vance announced its expected mid-November launch of Eaton Vance Oaktree Diversified Credit NextShares (OKDCC), an exchange-traded managed fund. Investors will gain exposure to global credit markets through high-yield bonds, senior loans, convertibles, real estate debt securities, corporate structured credit and emerging-market debt. The firm has filed a registration statement with the SEC.
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In price wars wars, the firm bolts ahead in the race to zero by nearly tripling its roster of commission-free funds.
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To encourage a budding relationship with younger clients, firms must provide new offerings and more guidance about how to invest, Schwab says.
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These funds can affordably provide clients with REIT exposure.
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Oaktree Capital Group will subadvise the fund, which offers "exclusive retail access to the Oaktree diversified credit strategy," said Eaton Vance Chairman and CEO Thomas E. Faust Jr.
Virtus Glovista Emerging Markets ETF begins trading
Virtus ETF Solutions has partnered with Glovista Investments to launch the Virtus Glovista Emerging Markets ETF (EMEM). The fund seeks to provide passive, diversified exposure to stocks in select "most favored" emerging markets, while seeking to avoid exposure to stocks from the weakest countries. It has an expense ratio of 0.68%.
The fund tracks Solactive Most Favored Nations Emerging Markets Index, which differs from traditional market-cap weighted emerging markets benchmarks by restricting single country allocations to a maximum of 10% of the portfolio, thus reducing single-country risks.
NextShares actively managed ETF rolls out to UBS advisors
It's been over a year since UBS announced that Eaton Vance's NextShares exchange-traded managed funds would be available to investment clients.
Now the funds have come online. Touted as a mutual fund-ETF mashup, NextShares funds aim to exploit an innovative structure to lower fees and taxes.
The average fund posted a 12.6% annual gain compared to 7.6% for the S&P 500.
Sam Descovich, head of capital markets solutions at UBS Wealth Management Americas, said NextShares "will enable UBS' financial advisors to take advantage of the benefits of active management and the latest advances in fund design, with the potential for lower expenses and the tax efficiencies of exchange trading."
Coinbase aims to be institutional crypto-custodian
Coinbase is targeting institutional investors that are eager to enter the cryptocurrency game. Coinbase Custody, a new service from the San Francisco startup, hopes to win over sovereign wealth funds, hedge funds and others that have abstained from digital currency plays due to lack of trust.
In a blog post, Coinbase CEO Brian Armstrong said the service aims "to help dramatically accelerate the flow of institutional money into digital currencies over the coming years."
For institutions, the goal is to ride the tidal wave of growth in cryptocurrency value. To use the service, clients must pay a $100,000 setup fee and commit a minimum of $10 million. Coinbase will charge a monthly management fee of 0.10%.
ARRIVALS
Highland Capital hires chief strategy officer
Highland Capital hired FBR Capital Markets Managing Director Andrew Parmentier as its chief strategy officer and head of thematic investing, expanding the firm's executive committee, the firm said.
Parmentier has over 20 years of experience working at the nexus of Washington and Wall Street. He started Height Securities, a privately held capital markets firm focusing on heavily regulated industries. Before that, he worked at FBR and co-founded Harvest Exchange, a fintech firm.
"In a world increasingly defined by ETFs and index funds, Andrew's ability to drive innovation amid complexity and uncertainty will be invaluable," said Highland co-founder and president James Dondero.
BMO lures ex-Wells Fargo exec to lead digital efforts
Wells Fargo has created a new position of chief digital officer and hired Wells Fargo's former head of digital, Brett Pitts, to lead it. Pitts will oversee the Montreal-based bank's efforts in the online space, the firm said.
Pitts spent the past 17 years at Wells Fargo and held several roles in its Digital Channels group, according to BMO. Pitts' charge is no small effort: BMO has $709 billion in total assets and serves more than 12 million banking, wealth management and investment clients.
