Our monthly roundup of industry highlights
Vanguard veers away from annuities
Vanguard is cutting insurance-based options as it transitions its Vanguard Variable Annuity to Transamerica, along with its client service and account administration, the firm said. It will also discontinue its online platform, Vanguard Annuity Access.
"Annuity administration is not central to our long-term product and service plans," says Karin Risi, managing director of Vanguard's Retail Investor Group. "We're deepening our focus on our core priorities: delivering industry-leading funds and ETFs, enhancing the client experience and expanding our advice capabilities."
The transition will take place within the next 12 to 18 months, according to the firm. Vanguard will continue to manage Vanguard Variable Insurance Funds, which are the underlying investments in the annuity.
Schwab expands commission-free lineup
Schwab has added 25 new commission-free ETFs to its OneSource platform where clients now have access to 539 ETFs covering 83 Morningstar Categories with $0 online commission, representing 98.79% of ETF assets in the industry.
Of the recently added ETFs, the majority come from JPMorgan and investment company Direxion.
"From day one, our priority with the Schwab ETF OneSource program has been to provide a broad lineup of commission-free ETFs that spans a variety of asset classes and index weightings, to make it simple for investors and advisors to build highly diversified, commission-free ETF portfolios," says Kari Droller, Schwab's vice president of third-party mutual funds and ETFs.
RESEARCH
Fee pressure builds in Asia, report finds
Asset managers who deal with Asian markets will have to review their current strategies to maintain revenue streams in the region, new research shows.
Like here in the U.S., there is a downward trend in fees caused by launches of low-cost ETFs. The proliferation of robo advisors is also resulting in pressures in the Asian fund market, according to Cerulli Associates' report, Asian Distribution Dynamics 2019: Opportunities Amid Volatility. Market uncertainty is also expected to contribute to pain for asset managers.
"Optimizing cost efficiencies in some functional areas is one obvious answer for managers to combat fee pressures," says Cerulli's associate director Leena Dagade. "Apart from that, managers will likely need to come out with low-cost products or develop their capabilities in higher-fee-earning alternatives."
PRODUCTS
Alger launches 'best ideas' fund
Alger is launching the Alger Mid Cap Focus Fund, which will invest in roughly 50 growth equities based on the investment team's opinion, according to the firm.
"The fund is a focused, high-conviction portfolio of 'best ideas' generated by our team of talented analysts," says Amy Zhang, the fund's portfolio manager. "Common characteristics of the companies we invest in are both defensible competitive positions and high financial quality, such as solid balance sheets and strong cash flow generation."
Vanguard unveils commodity futures fund
Vanguard announced the launch of Vanguard Commodity Strategy Fund (VCMDX) to hedge against inflation, according to the firm.
The fund mixes Treasury bills and short-term TIPS, with the objective of broadening commodities exposure and capital appreciation. The fund will be offered in Admiral Shares, with an estimated expense ratio of 0.20%.
-
The bulk of the haul came from the bankrupt crypto company Terraform Labs. But Morgan Stanley, LPL Financial, Ameriprise and other big firms also came under scrutiny.
November 22 -
FINRA must let the SEC weigh in before it can cast out one of its members, a three-judge panel of the U.S. Court of Appeals for the District of Columbia found.
November 22 -
Experts say firms that seek to serve technology-savvy clients would do well to provide the digital tools they desire.
November 22
VCMDX gives investors low-cost exposure to commodities and provides additional inflation protection by holding longer futures contracts and collateralizing a portion of the portfolio in short-term TIPS, according to the firm.
State Street announces its first ESG money market fund
State Street Global Advisors announced the launch of the State Street ESG Liquid Reserves Fund, a first-of-its-kind product for the firm.
The firm's first ESG money market fund, will use R-Factor, a new ESG scoring system, to build a portfolio completely composed of holdings that meet the ESG criteria, as deemed by the Sustainability Account Standards Board's and country-specific corporate governance frameworks, the firm said.
American Century reduces corporate bond ETF fee
The fee associated with the American Century Diversified Corporate Bond ETF (KORP) was reduced to 0.29% from 0.45%, according to the firm. The fund focuses on investment-grade debt and allocates a portion of the portfolio to high yield.
"With KORP now exceeding $60 million and attracting steady flows, we decided to reduce the fees in order to provide better value to investors," says American Century's head of ETFs and senior vice president, Edward Rosenberg. "Our goal has always been to provide a lineup of ETFs that apply our unique insights to solve common investment problems."
Robo Global brings health tech ETF to NYSE
Following a successful debut of its robotics and automation ETF in 2013, Robo Global released another index that exposes investors to the technology shifting the healthcare industry, according to the firm.
The Robo Global Healthcare Technology and Innovation Index tracks companies in nine subsectors, including precision medicine and medical instruments.
The ETFs that bested the strategy “offer exposure to extremely narrow and volatile segments of the market,” an expert says.
"By and large, the health care industry appears to be primed for massive market growth, thanks to the implementation of advanced technologies like robotics and AI," says CEO of Robo Global U.S., Travis Briggs, adding that he expects the health care AI market will "grow at a compound annual growth rate between 47% and 50% by 2025, a value of $36 billion."
Fidelity's first ESG index debuts in Canada
Fidelity launched Sustainable World ETF (FCSW) at Canada's next-generation exchange NEO, making it the firm's first fund on the exchange and its first ETF to use ESG strategies.
FCSW leverages a quantitative multi-factor model and invests in global companies with favorable values regarding the environment and social issues.
"As sustainable investing continues to gain momentum, we are excited to offer our clients the opportunity to align their investments with their values," says Andrew Clee, vice president of ETFs at Fidelity Investments Canada. "The Fidelity Sustainable World ETF is a global multi-factor equity strategy that uses a best-in-class approach to invest in companies with favorable ESG characteristics."
New Fidelity model portfolios focus on factor ETF strategies
Fidelity Investments expanded its offerings of model portfolios, with an emphasis on ETFs and shifts in the business cycle.
"Model portfolios allow advisors to tap into the investment management expertise of asset managers, while also offering advisors the ability to customize solutions that help address their clients' specific needs," says Matt Goulet, senior vice president, Fidelity Institutional Asset Management.
The business cycles model portfolios are designed to enhance risk-adjusted returns, while the factor ETF model portfolios help reach specific results in the U.S. equity allocation, according to the firm.
Global X to liquidate two JPMorgan ETFs
Shareholders have until July 25 to sell their shares in the Global X ETF JPMorgan Efficiente Index ETF and JPMorgan U.S. Sector Rotator Index ETF.
The funds, which represent less than 1% of the provider's assets, will cease trading at the end of the trading day as a result of Global X ETFs ongoing review process of its product lineup to ensure it meets the needs of its clients.
Investors who hold shares in the funds, as of the liquidation date, will receive a cash distribution equal to the net asset value of their shares as of that date, the firm said.
-
A record 186 funds were shuttered last year. What does this mean for the future of the industry?
January 7 -
Brexit, worries about trade wars and rising interest rates have prompted a selloff in developed country stocks.
January 16 -
The funds include a wide range of offerings from emerging markets to precious metals, multi-strategy and REITs.
January 14
The advisor to the funds, meanwhile, will bear all fees and expenses that may be connected with the liquidation and the distribution of cash proceeds to investors, aside from brokerage fees and other related expenses.
DWS launches S&P 500 ETF Xtrackers
DWS is leading the continued expansion of its ESG product lineup with the launch of Xtrackers S&P 500 ESG ETF. The new fund is intended to provide exposure to ESG-adjusted core benchmarks that investors can use in their portfolios to invest in well-positioned companies.
The index was developed to support the growth of sustainable investing and helps investors align their investments with their values while still achieving a risk and return profile in line with the S&P 500, according to the firm.
"Our clients seek solutions that not only deliver on their investment strategy, but also help them achieve their sustainability goals," says Luke Oliver, head of index investing for the Americas at DWS.
ProShares joins Pershing's FundVest
ETF provider ProShares has joined BNY Mellon Pershing's no-transaction-fee ETF platform, FundVest ETF, according to ProShares.
Starting July 13, seven ProShares funds will be made available on Pershing's FundVest ETF platform, including Dividend Aristocrats (NOBL), Large Cap Core Plus (CSM) and Global Infrastructure (TOLZ) funds. As investors look to reduce costs within their investment portfolios, no-transaction-fee platforms are gaining popularity, according to the firm.
"Our inclusion in the Pershing no-transaction-fee platform will allow financial professionals and their clients to further leverage the ProShares ETF lineup in a cost-effective manner," says Steve Cohen, managing director at ProShares.
SoFi offers 'stock bits'
SoFi now offers investors the ability to buy and sell fractional shares in stocks and ETFs with as little as $1, according to the firm. Through its Stock Bits feature on the SoFi Invest platform, investors can purchase fractions of stocks including Amazon, Apple and Tesla, as well as ETFs.
The losers “offer exposure to extremely narrow and volatile segments of the market,” an expert says.
"People are told to 'buy what they like', but when what they like costs over $100 or $1,000 per share, first-time investors are priced out," says Anthony Noto, CEO at SoFi. "It is our focus to remove the barriers to getting started by providing features like Stock Bits."
ARRIVALS
Lazard expands quant platforms
Lazard Asset Management snagged a four-person team focused on capturing insights within a quantitative framework.
Oren Shiran, Phillip Summe, Stefen Tang and Seavan Sternheim join the firm from Baylight Capital. The team will identify and capture inefficiencies using a multi-model systematic investment process.
"We are pleased to welcome Oren, Philip, Stefan and Seavan to LAM. Their differentiated approach and unique perspectives will enhance our global investment platform and add value for our clients," says Nathan Paul, chief business officer at Lazard. "The team will bolster our quantitative equity, U.S. equity and alternative investment capabilities, providing our clients with additional investment solutions to meet their evolving needs."
American Century brings in new portfolio manager
American Century Investments appointed 17-year-veteran Jason Greenblath, previously of Aberdeen Standard Investments, to senior portfolio manager and director of corporate credit research, according to the firm.
Greenblath will co-lead the corporate markets team and also manage several-fixed income strategies such as Strategic Income, Short Duration Strategic Income and the Diversified Corporate Bond ETF.
"Jason has significant strength and expertise in the credit markets, and brings experience leading and managing credit teams," says Charles Tan, the co-CIO of American Century's global fixed income division.
Prior to American Century, Greenblath spent 11 years at Aberdeen Standard Investments as a senior portfolio manager and head of U.S. Investment Grade Credit. He also served as high-yield and distressed credit analyst at RBS Greenwich Capital.
DJ Costa partners makes senior hires
Di Costa Partners, a strategic advisory and proxy solicitation subsidiary of Morrow Sodali focused exclusively on mutual funds and ETFs, announced the addition of two senior level executives.
Steve Messinger, previously from BlackRock, where he most recently served as managing director and executive vice president of iShares, will serve as the firm's president, according to Di Costa.
"I can't think of anyone who understands better how '40 Act registered funds operate and are governed than [Messinger]," says Di Costa CEO Vincent Di Costa.
"He's lived the challenges faced by asset managers today in holding successful shareholder meetings on behalf of both the advisor and the funds," he adds.
John Bibas, most recently a managing director of corporate proxy for D.F. King in New York, will serve as senior managing director of the firm.
American Century hires execs to launch new fund suite
American Century Investments announced that it has appointed Dimensional Fund Advisors' Eduardo Repetto as chief investment officer and Patrick Keating as chief operating officer to develop a new suite of tax-efficient products, according to the firm.
The suite, touted by the firm as broadly diversified, tax-efficient and cost-effective, spans both equities and fixed income, and will carry the name Avantis Investors, the firm said.
The newly launched funds will be designed by Repetto, who previously served as CEO and CIO of DFA.
Keating previously worked at DFA for 15 years, most recently as its COO.
"[Repetto and Keating] are proven leaders who have delivered incredible growth and success by creating, honing and managing strategies informed by academic research and sound financial theories," says American Century Investments CEO Jonathan Thomas of Repetto and Keating.
"We plan to leverage their tremendous knowledge and expertise to build unique systematic investment processes at Avantis Investors that we believe will form a solid basis for long-term asset allocation solutions," he adds.
