Products November 12, 2015

Investment Product and Service Launches for the Week

BPV Capital Management partners with AJO and SEI to launch large cap value CIT; Prudential Investment Management announces name change.
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BPV Reveals Large Cap Value Collective Investment Trust

BPV Capital Management announced a partnership with AJO and SEI Trust Company to launch the BPV Large Cap Value Collective Investment Trust (CIT).

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AJO is a Philadelphia-based institutional asset manager, and SEI Trust Company is a subsidiary of SEI, a Pennsylvania-based financial solutions group.

“We’ve loved working with AJO through our partnership on the BPV Large Cap Value Fund, and we are excited to continue building this partnership while expanding access to AJO’s decades of expertise and benchmark outperformance,” says Mike West, senior partner and CEO of BPV.

He says working with SEI Trust Company “is an added bonus,” citing the company’s “vast network of operations and distribution infrastructure” as a powerful new asset for BPV enterprise going forward.

Designed to deliver a “more affordable 60 basis point fee structure and zero investment minimum,” the BPV Large Cap Value CIT is specifically designed for tax-qualified retirement plans, the firm says. However, the underlying strategies have been developed and in play for over 20 years, BPV explains, leveraging the extensive experience of a five-person investment team led by AJO Founder and Managing Principal Ted Aronson.

The CIT is benchmarked against the Russell 1000 Value Index, and the strategy employs a bottom-up, value-oriented investment approach and “a sophisticated quantitative model with stock selection based on company value, management strength, momentum and sentiment.”

The BPV Large Cap Value Collective Investment Trust can be purchased through BPV’s institutional sales team, and will eventually be offered on a number of distribution platforms as well.

Next: Name Change at Prudential Financial 

Prudential Unveils PGIM Brand

Prudential Investment Management, the global investment management business of Prudential Financial, Inc., announced plans to change its name to PGIM.

Prudential says the name change is meant to “reflect its position as one of the world’s largest asset managers and its deep expertise across a broad set of asset classes.”

The new name will be effective January 4, 2016, matching Prudential’s objective of expanding the range of investment solutions and products “to address growing demand, especially among global clients, for strategies that help them balance long-term risk and return objectives across diversified portfolios.”

Prudential is the provider of the DayOne Target-Date Fund series. The firm tells PLANADVISER much of the focus in recent years has been on building talent and capabilities to better serve clients. At the Prudential Investment Management level, the firm created a Multi Asset Class Solutions group (called MACS) which is a consultative service for institutional clients “to work through issues they may face.”

“Our clients expect investment managers to simultaneously find the best investment opportunities around the world, while upholding the most rigorous standards of risk management,” adds David Hunt, CEO of Prudential Investment Management. “The PGIM name represents our scale, and our conviction to deliver time-tested, long-term solutions and outcomes for institutional and retail investors.”

Several Prudential Investment Management businesses will adopt the new name:

  • Prudential Fixed Income will use PGIM in markets outside of the United States where it currently uses the Pramerica name, beginning in January.
  • Prudential Mortgage Capital Company will be renamed PGIM Real Estate Finance globally in mid-2016.
  • Prudential Real Estate Investors will be renamed PGIM Real Estate globally in mid-2016.

The new identity also extends to Prudential Investment Management’s new headquarters in Newark, New Jersey.

Data & Research November 12, 2015

Gen Xers Skeptical About Social Security Stability

An RBC Wealth Management poll finds a majority of Americans don’t believe promised Social Security benefits will be there for them. 
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It’s a recipe for trouble, says RBC Wealth Management; while a majority of Americans say they will need to rely on Social Security benefits in retirement, most are not hopeful those benefits will be there.

The findings are from a survey commissioned by RBC and conducted by Ipsos in early October. The research shows more than seven in 10 (72%) Americans “think they will need to rely on Social Security in their retirement.” However, regardless of their need, more than half (55%) are not confident that promised benefits will be available when they need them.

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This opinion is especially prevalent among Americans falling into Generation X, or those ages 35 to 54. As explained by John Taft, CEO of RBC Wealth Management U.S., the news a few weeks back that two popular Social Security claiming tactics will be eliminated only increased peoples’ anxiety.  

Within Gen X, fully two-thirds of survey respondents said they “do not believe Social Security benefits will be there, regardless of whether they need them or not.” This compares to 55% of Millennials and 41% of Baby Boomers.

“It’s alarming that such a high percentage of the next generation of retirees has essentially given up hope that they will receive Social Security benefits,” adds Griffin Geisler, manager of the Internal Wealth Center at RBC Wealth Management—even more so because few are taking action today to cover the potential gap. Despite the significant changes made to the program under the federal budget deal, RBC is still stressing to clients that Social Security “should continue to be an important piece of their retirement income pie.”

RBC finds the recent changes to the Social Security program are expected to have the biggest impact on Baby Boomers—the group most likely (83%) to think they will need to rely on the benefits when they retire. Baby Boomers were also the group with greatest confidence that Social Security benefits will be available to them, highlighting their vulnerability.

“With no cost-of-living increase, and the elimination of popular tactics like ‘file and suspend’ and ‘restricted application,’ it’s more important than ever that retirees work with their advisers to plan the best course of action,” Geisler said. “While this survey echoes the concerns we hear from our clients, with the right strategy in place, Social Security will continue to play a significant role in assuring a comfortable retirement.”

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