Art by Jackson Epstein

Fidelity Partners with Ethic to Offer Tailored Portfolios

Fidelity Investments has partnered with Ethic, on a solution to create personalized portfolios for adviser clients, based on their values and issues important to them.

This approach, which will be available to a limited number of firms initially, also provides a client engagement strategy that will help advisers connect with the next generation of investors.

“We see a significant growth opportunity for advisers who incorporate an ESG investing approach because it drives more meaningful conversations with clients. That leads to advisers better understanding their clients’ life goals and how they can help them feel more fulfilled,” says Bob Litle of Fidelity Institutional Asset Management. “Not only do we believe this will help advisers and their firms differentiate themselves, but it will also accelerate our industry’s move toward sustainable investing and further Fidelity’s goal to offer investment options that align with investors’ values.”

“The role of the adviser has evolved in recent years, first extending beyond portfolio creation and now outgrowing financial planning. Increasingly, clients require guidance in all areas of their financial life — including how best to align their portfolios with their unique values,” says Jay Lipman, co-founder at Ethic. “Ethic empowers advisers to seamlessly become sustainability experts and take ownership of that conversation, engaging and retaining existing clients while simultaneously attracting new ones.”

Advisers often note the challenges with ESG investing, primarily around investment performance and the concern with how to broach the topic with clients. Many investors have questioned whether ESG strategies require them to settle for lower returns or higher fees when they choose to invest with their values, but research continues to show that ESG investors do not necessarily need to sacrifice performance or pay higher fees. Ethic offers actionable insights and education to help advisers enter those client discussions with confidence, regardless of whether or not they have prior expertise in the area. In addition, Ethic’s offering also provides specific reporting on how those investments translate into real-world impact related to things like carbon emissions saved, shrinking the gender wage gap, and governance incidents avoided.

Ethic’s solution draws from several data sources to aggregate, analyze and predict sustainability issues, and uses quantitative portfolio construction to tightly track underlying benchmarks. Advisers can use Ethic’s technology platform to either select existing ESG models built around certain themes, or to create a custom allocation using direct indexing. Ethic aggregates several data sources to analyze and predict sustainability issues, and to build “clean” portfolios.

Global X Launches Cannabis ETF

Global X ETFs, the New York-based provider of exchange-traded funds (ETFs), has launched the 15th fund in its Thematic Growth suite.

The Global X Cannabis ETF tracking the Cannabis Index, POTX, aims to provide investors with an efficient tool to access leading companies across the cannabis industry.

By tracking an index that specifically targets companies that attribute at least 50% of their revenue, operating income, or assets from the cannabis industry, POTX aims to offer investors a focused approach to investing in an industry that may benefit from further legalization efforts across North America and the rest of the world. Potential holdings include companies that are involved in the legal production, growth, and distribution of cannabis including industrial hemp, as well as companies operating legally in other areas of the cannabis industry, such as those involved in pharmaceutical applications, extracts, and derivative products, cannabidiol (CBD), and additional areas. Eligible holdings may only supply products and/or perform activities related to the cannabis industry in a manner that is legal under applicable national and local laws, including U.S. federal, state, and local laws.

The fund makes additional efforts to prioritize quality and appeal to discerning investors, including utilizing topflight service providers, and incorporating thorough screens of the potential universe of holdings for adherence to applicable regulatory and legal environments. POTX will charge a management fee of 0.50%.

“The cannabis industry is growing rapidly, with wide-ranging potential applications,” says Pedro Palandrani, research analyst at Global X. “With our Thematic Growth ETFs, we are hyper-focused on providing high quality, targeted access to investable emerging trends to accurately capture their future growth potential. Cannabis provides a unique opportunity to access a trend in its nascent stages, driven by advancements in medicinal and industrial uses, but with further upside potential given increasing efforts to legalize recreational use. As regulations evolve, we may see the emergence of enormous regulated markets, and we are thrilled to help a broad range of investors navigate this theme in a rigorous and compliant way.”

SSGA Rebrands ETFs to Portfolio Suite

State Street Global Advisors (SSGA) has added seven rebranded SPDR exchange-traded funds (ETFs) to the SPDR Portfolio suite. Introduced in 2017, the SPDR portfolio offering comprises 22 low-cost ETFs that provide access to a range of domestic and international equity and fixed income asset classes.

The seven rebranded funds added to the SPDR Portfolio suite comprise five fixed income and two international equity ETFs, representing $4.4 billion in assets. All seven have new names and ticker symbols to align with the SPDR Portfolio ETF suite and three funds have reduced net expense ratios, while the other four were reduced earlier.

“The SPDR Portfolio suite was initially launched to give investors greater choice in low-cost ETFs. With today’s additions to the lineup, we’re offering investors more fixed income and international equity ETF options to help investors refine their asset allocations,” says Noel Archard, global head of SPDR Product at State Street Global Advisors. “To meet the needs of a client base that is well-diversified across institutions, intermediaries and retail investors, we remain committed to offering products with a broad range of attributes.” 

Wilmington Trust Announces Asset Management Brand

Wilmington Trust has revealed a new brand, Wilmington Investment Management (WIM), to help expand access to its proprietary suite of asset management solutions, including alternative funds, separately managed accounts, and mutual funds, to retail and institutional investors. The new channel builds on the firm’s economics-led investment approach and addresses a market need for opportunities for growth with downside protection amid heightened market volatility.

Findings from the inaugural Wilmington Investment Management Investor Confidence Survey revealed consumer sentiment for strategies that offer the opportunity for growth with enhanced downside protection and low fees.

“We’re in a different economic environment than just a few years ago. We’re seeing now that the upside on many investments is limited and the yield environment is challenged,” says Tony Roth, chief investment officer. “As a result, we know investors need differentiated strategies that are risk-adjusted and fee sensitive in order to meet their specific needs. Our deeper understanding of global opportunities means we can offer a wider range of investors solutions and access to institutional-quality separate account managers around the world.”

Columbia Threadneedle Launches Strategic-Beta ETFs

Columbia Threadneedle Investments has expanded its exchange-traded fund (ETF) suite with the launch of Columbia Research Enhanced Core ETF and Columbia Research Enhanced Value ETF. These strategic beta portfolios are said to offer investors and advisers access to the firm’s quantitative investment research strength in a cost-efficient manner.

“Today, many investors recognize the limitations of traditional benchmark investing and are looking for a more thoughtful approach to passive investing,” says Marc Zeitoun, head of Strategic Beta at Columbia Threadneedle Investments. “RECS and REVS were designed with the benchmark investor in mind. They are built on the strength of our quantitative research and the active insights that underlie our strategic beta solutions.”

RECS and REVS are designed to outperform the Russell 1000 Index and Russell 1000 Value Index, respectively, by marrying proprietary investment research with market-capitalization weighting. The ETFs aim to optimize equity exposure by eliminating stocks from the benchmark that are rated unfavorably by the Columbia Threadneedle quantitative research team.

RECS seeks to track the firm’s Beta Advantage Research Enhanced US Equity Index, which typically consists of 325 to 400 stocks of large-cap U.S. growth and value companies. REVS seeks to track the firm’s newly created Beta Advantage Research Enhanced US Value Index, which typically consists of 250 to 290 stocks of large-cap U.S. value companies. RECS and REVS are sector-neutral relative to their respective Russell index. The indices the ETFs seek to track are rebalanced semi-annually.

RECS and REVS are managed by Christopher Lo, senior portfolio manager, and Jason Wang, head of Quantitative Research.

“We are offering optimized equity exposure, with the potential for enhanced returns, at a price comparable to funds that track broader benchmarks,” says Zeitoun. “With the launch of these two ETFs, we continue to enhance our strategic beta offering with strategies powered by our expertise and insight.”

RECS and REVS have total expenses of 15 and 19 basis points, respectively.

Avantis Investors Creates First ETFs

Avantis Investors by American Century Investments has launched its five-inaugural low-cost, broadly diversified exchange-traded funds (ETFs): Avantis International Small Cap Value ETF (AVDV), Avantis International Equity ETF (AVDE), Avantis Emerging Markets Equity ETF (AVEM), Avantis U.S. Equity ETF (AVUS) and Avantis U.S. Small Cap Value ETF (AVUV). Listed on the NYSE ARCA, the new ETFs are designed to fit seamlessly into investors’ asset allocations.

“While we know investors have a lot of choices available to them in the marketplace, we believe there is still considerable demand for broadly diversified solutions that seek low rebalancing costs, capital gains and fees,” says Avantis Investors Chief Investment Officer Eduardo Repetto, PhD. “We are excited to speak with clients about these capabilities and learn what else we can do to help them meet their financial goals.”

Avantis Investors’ ETFs share a common approach built upon an academically supported, market-tested framework that aims to identify securities with higher expected returns, based on their current market prices and other company financial information. As part of its portfolio management and trading processes, the team analyzes whether the perceived benefits of a trade overcome its associated costs and risk. This approach aims to harness return premiums while seeking to control implementation costs and mitigate portfolio risk to generate enhanced returns over time.