Investment Product and Service Launches

Art by Jackson Epstein

AllianceBernstein Expands Lifetime Income Strategy Multi-Insurer Platform

AllianceBernstein (AB) has added Jackson National Life Insurance Co., the main operating subsidiary of Jackson Financial Inc., to its platform of insurers that provides guaranteed income via its Lifetime Income Strategy (LIS) retirement solution for defined contribution (DC) plans.

With the selection of Jackson, AB has now added its fifth insurer on the LIS platform.

Designed to serve as a qualified default investment alternative (QDIA), LIS combines AB’s research in glide path design with a flexible guaranteed income option to offer plan participants control of their accounts, full access to their money and guaranteed income in retirement. LIS has been available to the DC market since 2012 and currently has more than $6 billion in strategy assets, including $2.1 billion in secured income.

AB says it has seen a significant increase in interest in its LIS due, in part, to the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, which provides a safe harbor to plan sponsors to include annuities in their plans. To assist them with this process, AB provides an Employee Retirement Income Security Act (ERISA) 3(38) fiduciary service for the selection and monitoring of the insurance providers within LIS.

AB’s multi-insurer design adds value for participants and plan fiduciaries by producing more competitive withdrawal rates and diversifying risk.  

“We’re excited to partner with AB to help ensure more hard-working Americans have access to reliable retirement income as they plan for their financial futures,” says Tim Munsie, Jackson National Life Distributors product strategy and development senior vice president. “As the burden of saving for retirement has shifted to individuals with the transition away from pensions, we will continue to find innovative ways to help workers generate a consistent, steady stream of lifetime income.”

The other insurers on the LIS platform are Equitable, Lincoln National Life Insurance Co., Nationwide Life Insurance Co. and Prudential Retirement Insurance and Annuity Co.

Voya Expands Suite of Target-Date Solutions for Retirement Plan Participants

Voya Financial has announced the launch of MyCompass American Funds, the latest addition to its suite of target-date fund (TDF) solutions for plan sponsors. Now available to all Voya retirement plan customers, MyCompass American Funds offers a collective investment trust (CIT) target-date series that includes management from Voya Investment Management, American Funds from Capital Group and Wilmington Trust Co. The new target-date series adds to Voya’s current suite of TDF solutions, including MyCompass Index and those offered through Voya Investment Management.

Based on increasing demand from retirement plan advisers, Voya says the solution was built to support a more active equity management approach, leveraging the success of Voya’s MyCompass Index solution, which was launched in 2019.

Specifically, Voya’s MyCompass American Funds CIT target-date series is designed to build and preserve the wealth of individuals by offering key features and benefits including a glide path that balances market risk and longevity risk.

“Professionally managed, age-appropriate portfolios that automatically rebalance to keep participants on target have long made TDFs an appealing investment decision,” says Jeff Cimini, Voya Financial retirement product management senior vice president. “At the same time, 2020 put a spotlight on the risk that uncertain markets can create for individuals when it comes to their overall investment strategy and decisions, including those within their retirement plan. For advisers, we also know that active management during periods of extreme volatility can allow for more efficient support. We’re thrilled to provide an innovative, new solution that features a ‘glide path within a glide path’ approach, balancing market and longevity risk to generate return and ultimately help provide greater retirement outcomes for plan participants.”

Vanguard Personal Advisor Services Introduces Five-Fund Active Equity Offer

Vanguard has announced the introduction of its new five-fund active equity offering, available exclusively to clients of Personal Advisor Services (PAS).

The offer is comprised of five single-manager funds, including two existing funds—Vanguard International Core Stock Fund and Vanguard Capital Opportunity Fund—and three funds launched this week: Vanguard Advice Select Dividend Growth Fund, Vanguard Advice Select Global Value Fund and Vanguard Advice Select International Growth Fund.

“Vanguard has thoughtfully crafted this new active equity offer for Personal Advisor Services to meet the evolving needs and preferences of our clients,” says Jon Cleborne, head of Vanguard Personal Advisor Services. “Featuring five funds managed by three of Vanguard’s longest-tenured external investment managers, this offering underscores our commitment to continuously enhancing our investment lineup, enabling more personalized portfolio construction and ultimately driving better outcomes for investors.”

PAS, Vanguard’s hybrid advice service, combines sophisticated technology and an online experience with the expertise and behavioral coaching of a human adviser. Since its inception in 2015, PAS has crafted client portfolios with both index and actively managed fixed-income and equity products. Vanguard believes actively inclined investors can be successful if they can gain access to top talent, exhibit patience and discipline, make effective asset allocation decisions, and invest at the right cost. PAS advisers assess their clients’ risk tolerance and objectives to ensure actively managed funds are appropriate for their personal circumstances. If deemed suitable, advisers will incorporate the new offering into their clients’ customized portfolios.

Notably, the new Advice Select funds employ a more concentrated approach, which enables optimal blending within advised portfolios as a complement to broadly diversified and low-cost index fund holdings.

Vanguard Advice Select Dividend Growth Fund seeks to outperform the broader U.S. market, focusing on financially sound, large-cap companies across a diverse range of sectors that have prospects for long-term total returns as a result of their ability to grow earnings and their willingness to increase dividends over time. Managed by Wellington Management Co., the fund employs a more concentrated version of the strategy used in Vanguard Dividend Growth Fund, and has an expense ratio of 0.45%.

Vanguard Advice Select Global Value Fund provides global, all-cap, contrarian-value exposure by investing in discounted companies that are being avoided or overlooked. The fund is managed by Wellington Management Co. and has an expense ratio of 0.4%.

Vanguard Advice Select International Growth Fund employs a bottom-up equity strategy—analyzing the fundamentals of specific companies instead of broad sectors or industries—focused on international companies considered to have above-average growth potential. The fund is managed by Baillie Gifford Overseas Ltd. as a more concentrated version of the strategy used in Vanguard International Growth Fund. The fund has an expense ratio of 0.42%.

Vanguard also announced it is removing Vanguard Capital Opportunity Fund’s $25,000 annual investment limit for PAS clients investing through their advised portfolios to ensure advisers can fully implement recommended allocations to the fund. The annual investment limit remains in place for other shareholders.

Hartford Funds Announces New Semi-Transparent ETF

Hartford Funds has announced the listing of its first actively managed, semi-transparent exchange-traded fund (ETF), which will be sub-advised by Wellington Management Co. Hartford Large Cap Growth ETF seeks capital appreciation and is designed to deliver consistent, high active share, large-cap growth exposure that seeks to identify growth companies ahead of the market consensus.

Unlike traditional ETFs that tell the public what assets they hold each day, this ETF will provide less information to traders, who tend to charge more for trades when they have less information, creating additional risks for investments. This may mean more money has to be paid to trade ETF shares and price differences may be greater for this ETF compared with other ETFs.

The ETF will publish on its website each day a “tracking basket” designed to help trading in shares of the ETF. While the tracking basket includes some of the ETF’s holdings, it is not the ETF’s actual portfolio. By keeping certain information about the ETF secret, Hartford Funds says this ETF may face less risk that other traders can predict or copy its investment strategy, which may improve the its performance.

The new fund will use the active equity ETF model created by Fidelity Investments, which employs an innovative tracking basket methodology. The methodology is designed to maintain the expected benefits of the ETF structure, provide appropriate information to market makers and authorized participants to promote efficient trading of shares while shielding the fund’s portfolio, and allow the fund portfolio managers to add value through active management while protecting the fund’s portfolio from disclosure.

Using a bottom-up stock selection process, the new fund seeks to achieve its investment objective by investing in a diversified portfolio of common stocks covering a broad range of industries, companies and market capitalizations that Wellington believes exhibit long-term growth potential. The fund defines large-cap securities as companies with market caps within the collective range of the Russell 1000 Index and S&P 500 Index, which was between $529.7 million and $2.34 trillion as of September 30.

ISS ESG Launches Net Zero Solutions

ISS ESG, the responsible investment arm of Institutional Shareholder Services Inc. (ISS), has announced the forthcoming launch of its suite of dedicated Net Zero Solutions with automated portfolio reporting, which will go live during the first quarter of 2022.

Ahead of COP26, a significant number of global institutional investors have pledged commitments to reduce their investment portfolios’ carbon dioxide emissions to net zero by 2050. Those investors will now need to track the alignment of their portfolios beyond the Paris Agreement’s aim of limiting global temperature rise to below 2°C, to a further science-based net zero target of limiting it to no more than 1.5°C. Investors are sharpening their focus on implementation and will need to monitor companies’ specific, substantive plans to reduce their carbon footprints with short, medium and long-term targets.

“ISS ESG Net Zero Solutions supports investors in identifying the most suitable KPIs, analysis, and data to transition portfolios and set relevant net zero targets in accordance with their net zero initiatives and will enable them to provide meaningful net zero statements through a data driven approach with automated portfolio reporting,” says ISS ESG head Maximilian Horster.

ISS ESG Net Zero Solutions enables investors to assess the extent to which their investments are aligned with a net zero scenario. Its issuer-level net zero alignment data can be used to identify positive and negative performing companies against a range of individual climate related metrics, while the net zero portfolio report creates an aggregated view of a portfolio’s readiness for net zero, considering current and potential future emissions disclosure performance, fossil fuel exposure, potential future performance, climate mitigating revenue and target setting.

When launched in Q1 2022, ISS ESG Net Zero Solutions coverage will include 29,000 issuers for climate data, 23,000 issuers for energy and extractives data, and 8,000 issuers for European Union taxonomy eligibility data, all powered by data and insights from a broad range of high-quality research products within the ISS ESG universe.

ISS is the owner of PLANADVISER and PLANSPONSOR Magazines.

Investics to Provide Suite of MSCI Indexes and ESG Data

Investics Data Services Company Inc. has reached an agreement with MSCI to provide a suite of index and ESG data through the Investics Cloud Ecosystem and Investics DARTS data delivery marketplace.

Subscribers to this new Investics service can receive MSCI Index constituents, performance, index and security master data for the family of global equity index modules including core, small cap, value, growth, Islamic, sector, ESG, thematic, factor and custom indexes for developing and/or emerging markets. ESG content includes ESG company, government, controversies, carbon metrics and business involvement screening research.

Subscribers will need an already existing agreement with MSCI for the respective MSCI data service. An Investics servicing representative will assist to confirm the required subscriptions with MSCI.

Investics focuses on, and works in partnership with, the global institutional investor community offering native cloud investment data and analytics capabilities, managed services and consulting. With representatives globally and headquartered in Weston, Massachusetts, Investics has serviced clients with assets that now total over $150 billion.