Products August 12, 2021

Investment Product and Service Launches

Hartford Funds builds ESG-focused ETF; MSCI acquires RCA; and Wilshire releases systematic cross premia index.

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Art by Jackson Epstein

Art by Jackson Epstein

Hartford Funds Builds ESG-Focused ETF

Hartford Funds has launched its first environmental, social and governance (ESG)-focused exchange-traded fund (ETF), Hartford Schroders ESG U.S. Equity ETF (CBOE: HEET), which will be sub-advised by Schroder Investment Management North America Inc. and Schroder Investment Management North America Ltd.

HEET seeks long-term capital appreciation by investing in a diversified portfolio of equities and equity-related securities of U.S. companies and in investments that are expected to meet environmental, social and/or governance criteria, as identified by the fund’s sub-advisers. The fund will seek to achieve a better ESG profile compared with its benchmark, the Russell 1000 Index.

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Using a systematic investment approach developed by Schroders, companies in the universe will be assessed quantitatively on their ESG criteria and factor characteristics, including value, profitability, momentum and low volatility. ESG measures include, but are not limited to, the strength of environmental practices, climate change impact and positive stakeholder relationships.

HEET will seek to hold a diversified portfolio of U.S. stocks with favorable combinations of ESG and factor exposures. Additionally, the fund is designed to have less than half the carbon footprint—which is measured by carbon emissions divided by sales—of its benchmark.

“The Hartford Schroders ESG U.S. Equity ETF enables us to offer a flexible, cost-effective strategy that is designed to help investors achieve their long-term investment goals, while also having a positive influence on our world,” says Vernon Meyer, chief investment officer (CIO) at Hartford Funds. “We believe that applying ESG principles to an ETF, and leveraging Schroders’ quantitative investing expertise and proprietary approach to ESG investing, can provide stronger returns and make for a better investor experience on multiple levels.”

HEET is listed on the CBOE BZX Exchange Inc., and its estimated expense ratio is 0.39%. Ashley Lester, head of systematic investments at Schroders, will serve as the portfolio manager of the ETF.

MSCI Acquires RCA

MSCI Inc. has entered into a definitive agreement to acquire Real Capital Analytics (RCA) for $950 million in cash.

Founded in 2000, Real Capital Analytics is a private company and provider of the properties, transactions and participants that drive the commercial real estate capital markets globally.

MSCI will leverage Real Capital Analytics’ database of more than $20 trillion of commercial property transactions linked to over 200,000 investor and lender profiles.

The transaction is expected to be funded with existing cash on hand and close at the end of the third quarter or early in the fourth quarter of 2021, subject to regulatory approvals and customary closing conditions. Real Capital Analytics’ financial results will be presented as part of MSCI’s All Other – Private Assets reportable segment. 

Wilshire Releases Systematic Cross Premia Index

Wilshire has launched its new Powered by Wilshire index, the Systematic Cross Premia Index. Created by Asset Management One USA Inc. (AMO USA) and calculated by Wilshire, the index aims to measure the performance of liquid risk premia across a broad cross-section of factors diversified over asset class and style and valued daily.

Asset classes include fixed income, credit, foreign exchange, equity indexes, commodities and a multi-asset group; styles include carry, value, momentum and defensive.

“In creating this index, we leveraged our long history of developing and analyzing risk premia strategies to construct a diverse representation of the investable risk premia universe. The index is designed to mimic an implementable portfolio with built-in risk controls, while pursuing diversification across asset classes and investment styles. As such, the index covers a wider variety of strategies beyond traditional carry, value and momentum strategies, reflecting the industry’s evolution,” says Kazuhiro Shimbo, chief investment officer (CIO), quantitative strategies, at AMO USA.

“Wilshire and AMO USA have partnered in the risk premia space since 2015, using bank risk premia strategies to create and complete portfolios for clients. As investors in the space, we recognize the importance of a relevant performance benchmark and we are pleased to extend the partnership with this index, which combines Wilshire’s calculation expertise and AMO USA’s quantitative approach to factor investing,” adds Jason Schwarz, president and chief operating officer (COO) of Wilshire.

Compliance August 11, 2021

Advocates Applaud New Elder Justice Bill

The Elder Justice Reauthorization and Modernization Act of 2021 dedicates funding to programs to address vulnerable seniors’ needs, and its advocates say the financial services industry has a critical role to play in protecting the public.

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A new bill recently filed in the U.S. House of Representatives seeks to ensure that the services and programs authorized under the Elder Justice Act (EJA) can continue to protect older and vulnerable Americans into the future. To achieve this goal, the bill seeks to authorize $4 billion in spending on the issue, including $1.4 billion to support state and local adult protective services (APS) agencies.

The legislation’s working title is “The Elder Justice Reauthorization and Modernization Act of 2021,” and it has been introduced by a group of Democratic House and Senate members. They include Representative Richard Neal, D-Massachusetts; Senator Ron Wyden, D-Oregon; Representative Suzanne Bonamici, D-Oregon; and Senator Robert Casey Jr., D-Pennsylvania. The lawmakers say state programs to investigate elder abuse, neglect and exploitation would get a much-needed increase in federal assistance under their proposed legislation.

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While other bills recently filed in the House and Senate are more directly focused on the retirement plan services industry—including, for example, the Securing a Strong Retirement Act—advocates for the EJA update say financial professionals should take it upon themselves to advocate for the bill. Indeed, the measure is one of several priority items advocated for by the Insured Retirement Institute (IRI).

Data shared with PLANADVISER by the IRI suggests addressing elder abuse and financial exploitation is a national imperative. It costs an estimated $2.9 billion annually, the IRI says, while impacting roughly one in 10 older workers and retirees. The average loss per financial abuse or exploitation incident is estimated to be $120,000, a figure that aligns with the average amount workers have saved for retirement.

As the IRI points out, basic demographic data shows the population of older Americans is expected to double in size to nearly 84 million citizens by 2050, and thus there needs to be a concerted effort to combat financial exploitation.

Another advocate for the EJA update is Katie Smith Sloan, president and CEO of LeadingAge, which is an association of nonprofit providers of aging services. She says the new bill would meaningfully support adult protective services and reauthorize effective programs addressing elder abuse, neglect and exploitation. She notes that the bill includes grants to address social isolation, as well as support for medical-legal partnerships and the long-term care workforce.

“The COVID-19 pandemic exacerbated conditions that can lead to abuse, including increased isolation, reliance on caregivers, and the fear and loss of independence,” Sloan warns. “At the same time, it created challenges for programs designed to prevent elder abuse. The Elder Justice Reauthorization and Modernization Act includes critical support that older Americans and their caregivers need to avoid and prevent financial exploitation, physical and psychological abuse, and other unacceptable forms of elder abuse.”

Sloan says her members are especially grateful that the legislation recognizes the challenge presented by an aging service care workforce, mainly by calling for $400 million of investments per year through 2025 for state grants to enhance education, training, career advancement and wages for direct care workers in long-term care settings.

Other advocates of the legislation include the American Health Care Association, the National Center for Assisted Living and the Elder Justice Coalition.

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