Our weekly roundup of industry highlights
Vanguard to liquidate $962M fund
Vanguard has closed the Vanguard Convertible Securities Fund to new investors with plans to liquidate in late March, according to the firm.
The fund, which currently has $962.5 million in assets, is on the chopping block as the firm says clients can achieve similar risk-return exposures and long-term returns with a well-diversified portfolio.
"We are adding new products that have investment merit and investor demand, changing advisors and mandates to improve investor outcomes, and eliminating funds that lack a distinct role or strong investment case," said Matthew Brancato, head of Vanguard's portfolio review department. He added that the company recently introduced two ESG ETFs and announced the merger of two equity funds.
Vanguard previously liquidated the Ohio Tax-Exempt Money Market Fund in 2017 and the U.K.-domiciled Ultra- Short-Term Bond Fund last year.
RESEARCH
Active to passive shift reaches tipping point
Passively managed products now account for 48% of industry assets and will top 50% in 2019 if the growth persists, according to Bloomberg News.
The divide escalated in November amid market volatility as investors pulled more than $50 billion from active funds, while index funds took in a similar amount, according to estimates from Morningstar.
"I'd expect the trend from active to passive to continue," said Benjamin Phillips, a consultant with Casey Quirk. "It's not simply investors grabbing the tail of the bull — it's a secular shift in how advisers are building portfolios."
PRODUCTS
Invesco to close nearly 20 ETFs
Invesco announced it will close and liquidate 19 ETFs following a vote at the firm's final board meeting of 2018.
The funds, including a range of offerings from emerging markets to precious metals, multi-strategy and REITs, will be officially unavailable for trading on Feb. 20, the firm said. The final distribution will finalize on or around Feb. 27 and the last creation orders for the affected funds is on Feb. 12.
Sierra launches new muni fund
Sierra Mutual Funds announced it has launched a new actively managed muni bond mutual fund.
The Sierra Tactical Municipal Fund (STMKX), which is available in three share classes (STMNX, STMEX and STMYX), is available to retail investors and financial advisors alike at a minimum investment of $10,000, the firm said. The fund seeks total return, including tax-exempt dividends and interest, while also aiming to limit downside risk.
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A long-term approach to owning individual bonds is rewarded with both greater yield and safety.
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Forget bond ladders. Laddering defined-maturity exchange traded funds may be a safer fixed-income strategy for clients.
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Portfolio managers say taxable alternatives have appeared cheaper lately when compared to the short end of the tax-exempt yield curve.
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“Investors and financial advisors will recognize the same focus on low volatility and risk-mitigation in the Sierra Tactical Municipal Fund that they have experienced with Sierra’s other funds,” said David C. Wright, Sierra principal and co-founder of the firm.
FPA introduces income fund
First Pacific Advisors has launched its first new bond fund since 1984, the firm said.
The FPA Flexible Fixed Income Fund (FPFIX), which has an expense ratio of 0.50%, will be managed by portfolio managers Thomas Atteberry and Abhijeet (Abhi) Patwardhan, according to the firm.
“We believe the fund is attractive to fixed income investors who want an offering that has greater flexibility to take advantage of high-yield credit cycles while remaining focused on seeking attractive risk-adjusted returns and capital preservation,” said Atteberry and Patwardhan said in a statement. “Our intent is to capitalize on our team’s experience investing across the credit quality, sector and maturity spectrum.”
Global X expands international ETF lineup
Global X Funds will launch six China-focused ETFs — five China sector funds and one large-cap ETF, according to the firm.
The new offerings track MSCI indexes that consider China A, B and H shares, Red chips, P chips and foreign listings, according to Global X.
Fees were nearly half the price of the top-performing active funds.
"As the world's most populous nation and second largest economy continues to expand, investors will need tools for accessing specific segments of its markets," said Jay Jacobs, the firm's head of research and strategy.
BNY Mellon adds to ETF order capabilities
BNY Mellon has expanded its ETF ordering capabilities to international clients through its newly developed electronic messaging service, the firm said.
"We are excited to advance our suite of order management solutions and better service the rapidly growing ETF industry by offering a global standard for electronic ETF order placement," said Jeff McCarthy, BNY Mellon's CEO of exchange traded products. "Our infrastructure supports primary market dealing automation and [straight-through processing] through the ability to interact with both liquidity providers and third-party primary market dealer platforms."
Skybridge, EJF Capital launch REIT
Skybridge Capital and EJF Capital have jointly launched the SkyBridge-EJF Opportunity Zone REIT.
The fund, a private, non-exchange-traded REIT, is available to accredited investors at a minimum investment of $100,000 with 1099 tax reporting and quarterly distributions, the firm said. It will invest in U.S. Treasury-certified opportunity zones, which are low-income communities where recycled capital gains can receive favorable tax treatment, according to SkyBridge.
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These funds can affordably provide clients with REIT exposure.
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He confessed months after he was caught with 136 pounds of marijuana, investigators say.
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These trusts are holding their value and merit an allocation.
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The fund is expected to be diversified by geography, property type and developer, and will focus on both new developments and redeveloped real estate projects.
GQG cuts emerging markets fund fees
GQG Partners announced management fee and expense ratio reductions to all share classes of its GQG Partners Emerging Markets Equity Fund for U.S. investors.
In addition to reducing fees to 0.90% from 0.95%, the firm also cut annual operating expenses for its institutional (GQGIX), retail (GQGPX) and R6 (GQGRX) share classes, the firm said.
“I have always believed that we must strive to be a leader in both our commitment to investment excellence and fostering alignment with our clients,” said Rajiv Jain, chief investment officer at GQG Partners. “With this fee reduction to our already competitive fees, we hope to reward our loyal Fund shareholders by sharing the economies of scale that the Funds and the company have achieved.”
Aberdeen reduces ETF fee
Aberdeen Standard Investments announced it will reduce the management fee for the Aberdeen Standard Bloomberg All Commodity Strategy K-1 Free ETF (BCI) four basis points to 0.25%.
"Our goal in the commodities ETF space has always been to disrupt the market by offering strategies with better structures than our competitors and which are competitively priced,” said Steven Dunn, head of ETFs at Aberdeen Standard Investments. “We understand that performance and value go hand in hand for our clients, which is why we have lowered the fee on this strategy."
ARRIVALS
RBC Global Asset Management expands responsible investing
RBC Global Asset Management has appointed Ron Homer, portfolio manager and president of access capital strategies, to chief strategist of impact investing for the U.S., and Catherine Banat, institutional portfolio manager, to the new role of director of responsible investing in the U.S.
In his new role, Homer will oversee investor education and portfolio development for the firm's access capital strategies division, as well as support the firm's fixed-income investment teams from its office in Boston. Banat will lead the firm's responsible investing distribution platform in the U.S.
"These new roles will align the expertise within our organization with the evolving needs of our clients and investment consultants," said Mike Lee, global head of institutional business at RBC GAM.
Eagle Asset Management names new managing director
Eagle Asset Management's managing director of fixed income, James Camp, has been appointed to managing director of strategic income, the firm said.
In his new role at Eagle, an affiliate of Carillon Tower Advisers and global provider of equity and fixed-income products for institutional and individual investors, Camp will take on the added duties of heading the firm's initiative of expanding its line of specialized income products, according to the firm. Camp will maintain his role of managing director of fixed income, per the firm.
"My team is excited for the opportunity to expand our current responsibilities and work to meet clients' evolving needs," Camp said. "As demographic changes increase the demand for conservative income options, the ability to offer a suite of income solutions to address specific goals and adjust to a changing rate environment will be an important differentiator for Eagle."
Advisors Asset Management hires new executive
Advisors Asset Management has named Marilee Ferone, the former head of advisory solutions and consulting at UBS Global Wealth Management, to managing director and head of the firm's strategic partnership group, according to the firm.
In her new role, Ferone is responsible for maintenance and expansion of the firm's relationships with "strategically important clients," per AAM.
"I've spent years cultivating key relationships across client segments in domestic and global markets, leading teams focused on new product development and platform transformation," Ferone said. "AAM is an ideal next step for me as it holds tremendous growth potential, and I look forward to telling the full AAM story to our client firms."
