Products November 10, 2022

Investment Product and Service Launches

Voya adds private equity investment option to NQDC offering; MSCI expands Implied Temperature Rise Metrics to funds and indexes; John Hancock Investment Management adds tax-free income options for investors; and more.

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Voya Adds Private Equity Investment Option to its NQDC Offering

Voya Financial, Inc., has announced that the company has added the Pomona Investment Fund as a new option to Voya’s nonqualified deferred compensation executive-benefit solution. PIF, a registered investment vehicle providing access to private equity investing to accredited investors, is part of the Voya Investment Management product line and managed by Pomona Capital, an international private equity firm affiliated with Voya IM. PIF seeks long-term capital appreciation primarily through the purchase of secondary interests in seasoned private equity funds, by making primary commitments to private equity funds and through direct investments in opportunities alongside private equity managers.

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An alternative investment, private equity is an asset class that is an alternative to stocks and bonds. It generally consists of equity and debt investments in companies, infrastructure, real estate and other assets. Traditionally dominated by large institutions, private equity has gained popularity in recent years in retirement programs outside of the U.S. What’s more, according to recent industry data, the number of public companies listed in the U.S. has declined over the past 20 years, dropping from about 5,500 in 2000 to about 4,000 in 2020, limiting the investment opportunities for long-term savers who, in the past, may have relied on public equity markets to generate returns to help them achieve their retirement goals.

Participants in Voya’s NQDC executive benefit solution who choose to direct part of their investments in PIF will gain access to the professionally managed long-term multi-asset solution, including:

  • Private equity exposure for accredited investors exposure that can complement and potentially improve the risk and reward characteristics of an investment portfolio.
  • Professional support through an experienced firm with more 20 years of private equity experience navigating through multiple economic cycles.
  • Value-oriented approaches that seek long-term capital appreciation and attractive risk-adjusted returns.
  • A transparent structure that is also user-friendly, including 1099 tax reporting and independent trustee oversight.

DWS Expands Xtrackers ESG Suite

DWS, an asset management firm, has announced the listing of three new exchange-traded funds that provide exposure to U.S. equity investment styles with environmental, social and governance screened U.S. dividend, growth and value-oriented equities.

The products, which listed on the CBOE, BZX Exchange today are:

  • Xtrackers S&P ESG Dividend Aristocrats ETF (CBOE: SNPD)
  • Xtrackers S&P 500 Growth ESG ETF (CBOE: SNPG)
  • Xtrackers S&P 500 Value ESG ETF (CBOE: SNPV)

Xtrackers S&P ESG Dividend Aristocrats ETF seeks investment results that correspond generally to the performance, before fees and expenses, of the S&P ESG High Yield Dividend Aristocrats Index. The S&P ESG High Yield Dividend Aristocrats Index measures the performance of the index’s constituents that meet certain ESG criteria. The index also measures the performance of companies within the S&P Composite 1500 Index that have followed a policy of consistently increasing dividends every year for at least 20 years.

Xtrackers S&P 500 Growth ESG ETF and Xtrackers S&P 500 Value ESG ETF seek investment results that correspond generally to the performances, before fees and expenses, of the S&P 500 Growth ESG Index and the S&P 500 Value ESG Index, respectively. The S&P 500 Growth ESG Index and the S&P 500 Value ESG Index are broad-based, market capitalization weighted indices that provide exposure to companies with high ESG performance relative to their sector peers, while maintaining similar overall industry group weights as the S&P 500 Growth Index and the S&P 500 Value Index, respectively.

S&P’s assessment of a company’s growth characteristics is generally based on the company’s three-year net change in earnings per share over current price, the three-year sales per share growth rate, and a 12-month percentage price change measure of momentum. Value characteristics are generally based on the company’s book value to price ratio, earnings to price ratio, and sales to price ratio. A scoring system is used to rank companies on a growth and value basis, with the top third or so of companies selected for each category.

MSCI Expands Implied Temperature Rise Metrics to Funds and Indexes 

MSCI, a provider of critical decision support tools and services for the global investment community, has announced the expansion of its Implied Temperature Rise solution to cover funds and indexes, equipping equity and fixed income investors with consistent and comparable metrics to align their investment portfolios with global temperature targets.

Expanding the tool to the fund and index level gives investors access to ITR data for more than 56,000 equity and fixed income funds through the Fund Ratings Tool, as well as index level ITRs in the MSCI Index Profile Tool.

The Implied Temperature Rise solution translates the alignment of a company’s current and projected emissions, within its net zero emissions budget, to an estimated rise in global temperature. By comparing an intuitive metric against crucial benchmarks, such as the 1.5°C objective of the Paris Agreement, the Implied Temperature Rise helps investors assess how their fund portfolios measure up to decarbonization targets and strengthen their engagement activity on the transition.

This analytical solution has been built to measure and disclose alignment of portfolios as well as target-setting frameworks as prescribed by both the Glasgow Financial Alliance for Net Zero and the Task Force on Climate-Related Financial Disclosures for all financial institutions.

John Hancock Investment Management Adds Tax-Free Income Options for Investors

John Hancock Investment Management, a company of Manulife Investment Management, has announced recent enhancements to its municipal fund suite bringing additional flexibility to advisers and their clients seeking tax-free income opportunities and potential cost savings to shareholders.

Effective October 1, as a result of reductions to the management fees and contractual expense caps affecting John Hancock Municipal Opportunities Fund and John Hancock California Municipal Bond Fund, shareholders will see an immediate reduction in the funds’ overall expense ratios. John Hancock High Yield Municipal Bond Fund is also affected by a contractual expense cap reduction.

Effective August 1, reductions were made to the eligibility requirement for investments in Class A shares with no front-end sales charge for its municipal bond funds from $1 million to $250,000. This includes John Hancock Municipal Opportunities Fund, John Hancock California Municipal Bond Fund, and John Hancock High Yield Municipal Bond Fund. John Hancock Short Duration Municipal Opportunities Fund was launched with a similar $250,000 eligibility. These opportunities are available at all firms where the funds are approved or available.

Effective June 9, John Hancock Investment Management announced the launch of John Hancock Short Duration Municipal Opportunities Fund. The objective of the fund is to seek total return exempt from federal income tax as is consistent with preservation of capital.

The municipal suite is subadvised by Manulife Investment Management (U.S.) LLC, John Hancock Investment Management’s affiliated asset manager. The managers of the municipal suite of funds are Adam Weigold, senior portfolio manager, head of municipal bonds and Dennis DiCicco, portfolio manager, municipal bonds.

Data & Research November 10, 2022

Smaller Asset Managers Lag Behind in Adviser Digital Experience

Gap in website satisfaction between large and small asset managers could lead to less investment.

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Most advisers strongly consider the digital experience when making investment decisions, and smaller asset managers are struggling in a digital-first environment, according to new findings from J.D. Power’s 2022 U.S. Advisor Online Experience Study, which examines the relationship advisers have with asset manager websites and was released last week.

Among financial advisers who use asset manager websites, 91% say they are extremely likely to increase investment during the next three months with firms whose sites rate an overall satisfaction score of at least 801 (on a 1,000-point scale), the study says. However, only 13% of asset manager websites scored in that top tier. When advisers consider asset managers whose websites earned satisfaction scores of 800 or lower, just 40% of advisers say they intend to increase investment with those brands.

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Most advisers interacting with asset management firms are doing so digitally, says Mike Foy, J.D. Power senior director and head of wealth intelligence. Meanwhile, many are going through the process of reducing the number of asset managers they work with.

“For advisers who are identifying brands that have not only products, but have information and content that they value, those are brands that they’re going to engage with more and recommend more,” Foy says. “Being able to improve the digital experience and create a more engaging, digital touchpoint for advisers clearly has benefits when it comes to any number of metrics we looked at.”

The average overall satisfaction score among large asset managers with $1 trillion or more in U.S. non-institutional assets under management is 657. That number falls to 617 among small asset managers with less than $400 billion under management, the study says. The gap in website satisfaction between small and large asset managers is widest in the areas of research information and content, availability of client-specific information and material, as well as researching product offerings and information, according to the report.

Foy says the reasons smaller asset managers scored lower was because they had fewer tools and resources.

“The ability to get to the most critical tools and information from the homepage or being able to easily access behind-the-password content—the user experience was just not as easy to navigate as what we saw from the leading players,” Foy says.

Websites that scored higher typically had a more modern design and had been through a relatively recent redesign, Foy says. They tend to provide easy navigation to the highest value content, and they have a rich set of tools that go beyond just product information.

“That adds value to clients, keeps them coming back, and keep them engaged with the brand,” Foy says.

Areas in which smaller asset managers have an opportunity to differentiate include increased tool offerings (such as investment comparison tools), more prominent placement of those tools on website homepage and navigation bars and more immediate access to client information, the study says.

According to the study, one area in which nearly all asset managers are falling short on their websites is providing information on environmental, social and governance issues. Just 29% of asset managers are currently meeting advisers’ needs when it comes to ESG reporting.

No brand is currently standing out as excelling or differentiating themselves when it comes to helping advisers understand and communicate ESG strategies more effectively to their clients, Foy says. Part of the challenge is that there is a lack of clarity around the appropriate metrics for evaluation.

“I think for advisers, it’s difficult to really understand what these ESG strategies are in a way that’s easy and clear to articulate to their clients, who, in many cases, are very interested in understanding more about this topic,” Foy says. “There’s really a big opportunity to do more to help advisers.”

Individual scores and rankings were not provided in the benchmarking study. Firms included in the study were (in alphabetical order): AllianceBernstein, BlackRock, Capital Group, Charles Schwab, Columbia Threadneedle Investments, Fidelity Investments, Franklin Templeton, Invesco, J.P. Morgan, MetLife Investment Management, MFS Investment Management, Morgan Stanley, Nuveen, PIMCO, Prudential Financial, State Street Global Advisors, T. Rowe Price and Vanguard.

The study evaluated adviser interaction with asset manager websites based on four factors: speed, information/content, visual appeal and navigation. The study was based on 2,320 total evaluations and was conducted from June through August 2022.

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