Products July 21, 2022

Investment Product and Service Launches

UBS launches U.S. version of Climate Aware Equity Index, and Vanguard makes Global Positive Impact Stock Fund available.

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UBS Launches U.S. Version of Climate Aware Equity Index

UBS announced the launch of the U.S. version of the UBS Climate Aware Equity Index, which is a rules-based strategy that aims to provide investment exposure to the long-term theme of transitioning to a low-carbon and climate-resilient economy.

The index aims to serve the increasing demand for investment and retirement products that not only help investors achieve their investment goals but also help mitigate climate-related risks in their portfolios and capture environmental objectives within the investment philosophy.

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Featured by Global Atlantic in a registered index-linked annuity, the UBS Climate Aware Equity Index is pioneering climate-focused indices in the U.S. RILA market. The index includes equity securities of large and midsize U.S. companies, while tilting the allocation toward companies that are expected to be successful in a low-carbon economy.

The index applies a systematic, rules-based approach to select and weight Index constituents based on climate scores. Current and forward-looking data is used to assess a company’s carbon footprint and gauge its forward-looking carbon emissions profile. UBS Climate Aware Equity Index scoring aims to consider key risks and opportunities related to climate change using six climate scores—carbon emission, coal energy, fossil fuel reserves, renewable energy, emissions trajectories and severe weather events. The index is maintained by a third-party benchmark administrator and uses ESG scoring information provided by a recognized market data provider.

“We are happy to offer retirement savers with a unique access to a tried and true investment strategy and hope this can help Global Atlantic clients build a retirement portfolio that is both well performing and climate conscious,” says Ghali El Boukfaoui, head of insurance solutions at UBS Investment Bank.

“Registered index-linked annuities are the fastest growing category of retirement products,” says Rob Arena, co-president and head of individual markets at Global Atlantic. “The inclusion of climate-focused index options within RILAs can be a meaningful way for environmentally-conscious clients to link their savings strategy with sustainability principles and values.”

Vanguard Makes Global Positive Impact Stock Fund Available

Vanguard announced that the Vanguard Baillie Gifford Global Positive Impact Stock Fund is available for investment. The fund consists of a global equity portfolio with the potential to outperform the broad market through active management and contribute positively to solving social and environmental challenges.

Vanguard introduced the fund via a tax-free reorganization of the Baillie Gifford Positive Change Equities Fund. The new Vanguard fund will continue to rely on Baillie Gifford’s expertise in fundamental equity research and impact analysis, as well as the firm’s framework for identifying high-quality growth companies that are driving solutions to global issues.

“We’ve taken a thoughtful and intentional approach to introducing ESG funds that help investors meet their long-term financial goals while also addressing their ESG investing preferences,” says Dan Reyes, head of Vanguard Portfolio Review Department. “We believe Baillie Gifford’s expertise positions them to build a portfolio with the potential to deliver excess return and positive impact for those investors seeking both.”

Vanguard says it believes that an active approach to impact investing enables skilled managers to better navigate the complexities of identifying companies driving positive change to build a portfolio with the potential to deliver on outperformance and impact objectives. The fund’s global mandate provides managers with the broadest opportunity set to identify companies that meet these objectives.

Vanguard selected Baillie Gifford for their differentiated approach to impact investing and long-term success in active management.

The Vanguard Baillie Gifford Global Positive Impact Stock Fund maintains the investment objectives and portfolio management team of its predecessor fund, ensuring consistency for shareholders. Baillie Gifford will also continue to produce an annual impact report using bottom-up research that complements its investment analysis. The fund has an investment minimum of $3,000 and expense ratio of 0.59%, compared with the average expense ratio of 1.26% for funds in its peer category.

Data & Research July 20, 2022

Resignation Stress Squeezes Governmental Employers, Too

Mirroring the private sector, employee separations are elevated across state and local government employers.

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Among the state and local government workers included in MissionSquare Research Institute’s State and Local Workforce Survey 2022, 53% are accelerating their retirement plans and 17% are postponing their retirement dates, the highest such numbers in over a decade.

In 2009, the first year of the survey, 44% of municipal workers hastened their retirements and 12% delayed, according to data presented in “Achieving Workforce Diversity, Equity, and Inclusion in Local Government,” an International City/County Management Association webinar covering MissionSquare’s research.

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From the pre-pandemic peak in staffing levels in February 2020, total state workforces are down 1.9% and local workforces have decreased 4.1%, the MissionSquare survey found.

Contributing factors include the available labor supply, fiscal uncertainty for coming years, compensation structures and the underlying demographics of the public-sector workforce, explained Joshua Franzel, managing director at MissionSquare Research Institute, during the webinar.

“There’s been an uneven recovery at the and local state level, by industry as well,” Franzel said, presenting the research that he coauthored. “For example, state education is more or less recovered, state hospitals have more or less recovered, but state general administration is well below pre-pandemic levels. On the local side, pretty much all major industry levels remain below peak February 2020 levels: education, utilities, transportation, hospitals [and] general administration all remained below where they were.”

The survey found that retirements were higher than in 2020 for 60% of respondents, while they were the same for 32% and lower for 8%. Among employers, layoffs—excluding terminations— were higher than in 2020 for 6% of respondents, and were the same for 52% and lower for 41%. The research also found that 59% of state and local government employers do not feel their employees are financially prepared for retirement. 

Employee separations are elevated across state and local government employees, as 69% of respondents said that quits—voluntary non-retirement separations—are higher than in 2020, while 26% said it is the same and 5% reported a lower figure.  

Among state and local governments, 81% have hired new employees, according to 2022 data. The next most prevalent change reported was broad-based pay increases, at 38%, followed by 37% of employers that hired temporary or contract workers and 31% that updated job specifications for minimum education and skills. Tied at 25% were changes to permanent or long-term telework options, travel or training restrictions and rehired staff that had retired, the survey found. 

Data from the MissionSquare Research Institute survey was gathered in collaboration with the International Public Management Association for Human Resources and the National Association of State Personnel Executives. The survey was conducted this year from March 3 to April 24. There were 319 state and local government human resources staff respondents.

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