For more stories like this, sign up for the PLANADVISERdash daily newsletter.
Art by Jackson Epstein
Vanguard Announces Plan to Launch New China Equity Fund
Vanguard has filed an initial registration statement with the U.S. Securities and Exchange Commission (SEC) to introduce the Vanguard China Select Stock Fund. The fund will invest in both onshore and offshore Chinese equities and is intended for clients seeking actively managed, high-alpha-target equity exposure to complement a broadly diversified portfolio. Vanguard expects to launch the fund in the first quarter of next year.
Vanguard says it believes exposure to China is an important part of both the equity and fixed-income allocations of a globally diversified portfolio. China is a significant and growing portion of the global equity market, representing the second largest nation by gross domestic product (GDP) output and the third largest country by market capitalization. With the China Select Stock Fund, Vanguard seeks to provide risk-tolerant investors with a targeted approach to exposure in the region.
The fund will seek to outperform the MSCI China All Shares Index and have estimated expense ratios of 0.83% for investor shares and 0.73% for admiral shares. The fund will be co-managed by long-tenured Vanguard fund advisers Wellington Management Co. and Baillie Gifford Overseas Ltd. Both firms have deep portfolio management experience and expertise in China and a track record of outperformance in Chinese equity markets.
While the fund may offer alpha potential and diversification benefits, Vanguard warns that the single-country focus may expose investors to more acute investment, geopolitical and regulatory risks. The fund’s country-specific concentration may drive higher tracking error and greater volatility relative to the broad market and therefore should be thoughtfully integrated into a globally diversified portfolio. An active approach to investing in China, coupled with the ability to invest in a wide range of both onshore and offshore Chinese equities, will provide the fund’s portfolio managers flexibility to help navigate the dynamics of potential market constraints and a rapidly shifting geopolitical landscape.
Two Sigma and eVestment to Partner Through Venn
Two Sigma, through its portfolio analytics platform Venn, and eVestment, a part of Nasdaq, have announced a strategic alliance under which eVestment data will be integrated into the Venn platform. The new alliance significantly enhances the scope of investment data available through Venn and will allow clients of both eVestment and Venn to complete more of their analysis on a single technology platform.
By integrating eVestment data into Venn, investment teams can uncover more robust insights to help drive decisions on investment evaluation, and portfolio construction and optimization.
“We’re excited to serve as strategic data partner to Two Sigma’s Venn to help power and expand the level of sophisticated investment data available to our mutual asset allocator clients,” says Lisa Terwilliger, eVestment head of strategic partnerships. “Nearly 1,000 institutional asset owners and intermediaries worldwide already rely on eVestment and Nasdaq Asset Owner Solutions as the backbone of their manager research and portfolio analytics. By integrating eVestment data into Venn, we can more effectively help our joint clients make data-driven decisions, deploy resources more productively and ultimately realize better outcomes.”
Fingage and OWL Analytics Announce Partnership
Fingage, a provider of personalized digital retirement solutions, and OWL Analytics, an alternative data company focused on environmental, social and governance (ESG) research, have announced a partnership to bring sustainable investing to the retirement space.
This comes on the heels of the Department of Labor (DOL)’s proposed rule that would remove barriers to plan fiduciaries’ ability to consider climate change and other ESG factors when selecting plan investments. Through the collaboration, advisers will be offered the tools necessary to assess retirement plan fund lineups based on ESG factors and create custom ESG portfolios for their clients.
“By integrating OWL’s ESG data into Fingage’s offering, plan advisers will have powerful tools to assess portfolios across a range of ESG issues and to create custom investment portfolios to meet the growing demand in the 401(k) space for sustainable investing,” says Benjamin Webster, OWL Analytics CEO and president. “As reinforced by the DOL’s recent proposed rule, ESG factors are material and, therefore, should be part of the complete investment analysis, which includes financial and non-financial factors.”
Equitable Releases New Registered Index-Linked Annuity
Equitable, a financial services organization and principal franchise of Equitable Holdings Inc., has announced a new registered index-linked annuity that combines lifetime income options with some protection from equity market volatility.
Structured Capital Strategies Income (SCS Income) allows investors nearing and beginning retirement to take advantage of equity market growth potential while maintaining partial protection against market declines. SCS Income also provides for a predictable stream of income.
“As retirement investors grapple with the idea that the bull market could falter while health care and other retirement costs appear likely to rise, coupling access to market growth potential with some level of protection against volatility and a predictable, sustainable income can help individuals achieve financial well-being in retirement,” says Steve Scanlon, Equitable head of individual retirement.
SCS Income will offer investors innovative ways to create guaranteed income in retirement, including the ability to start taking income immediately from a registered index-linked annuity. Other income options new to the industry include the level income option, which provides an income rate initially based on age at the time of purchase and that does not decrease, and the accelerated income option, which provides a higher rate of income in early retirement when individuals may have higher expenses. Income under this option is initially based on the age at which the product is purchased and only decreases if the account balance drops to zero by means other than excess withdrawal.
Both income options offer opportunities to increase income by 5% of contributions per year each year before beginning to receive income, if the contract holder has not yet taken a withdrawal. This extra growth will be credited for up to 20 years, or the contract maturity date, whichever is earlier.
Investors can choose to protect against up to the first 10% or 15% of market losses during the investment period and benefit from any gains up to a cap. Further, investors can choose to take advantage of the dual direction feature, which allows clients to realize potential for some upside returns even in down markets.
Pacific Life Launches Advisory Fixed Annuity
Pacific Life has announced the launch of Pacific Harbor, a new multiyear guaranteed fixed annuity with no withdrawal charges.
“Pacific Harbor is the first fixed annuity developed specifically for the registered investment adviser [RIA] market, with no commission or withdrawal charges,” says Ryan Stowe, assistant vice president, product strategy and innovation at Pacific Life. “It may be a good choice for clients who are close to retirement, have reached their 401(k) or IRA [individual retirement account] contribution limits, and want the certainty of a guaranteed rate of return. We’ve designed Pacific Harbor to offer a more competitive interest crediting rate for the RIA market than what may be available in other perceived safe money alternatives such as bonds and CDs [certificates of deposit].”
Highlights of the Pacific Harbor fixed annuity include a fixed rate with a three- or five-year guarantee term, no withdrawal charges, no exposure to market volatility, tax-deferred earnings and the elimination of annual contracts, mortality and expense, and administrative fees.
Pacific Harbor says it not only provides steady growth of assets but also includes the option to create a consistent flow of retirement income or leave a financial legacy.
DPL Financial Partners Announces Commission-Free MYGA Marketplace for RIAs
DPL Financial Partners, a turnkey insurance platform for registered investment advisers (RIAs), has announced an online marketplace for commission-free multiyear guaranteed annuities (MYGA).
DPL’s MYGA marketplace launches with products from four carriers, offering fee-only advisers a range of terms and annual rates for clients seeking a safe, higher-yielding alternative to cash or fixed income.
“We built this MYGA marketplace due to the overwhelming response from our members to a MYGA we added to the platform last year,” says David Lau, DPL founder and CEO. “MYGAs are strong short-term bond alternatives that can yield more than double what the three-year Treasury is currently yielding. And they can be a compelling option for clients with cash sitting in low yielding bank accounts and CDs [certificates of deposit]. These are extremely simple products, easy to use and understand, that can provide safety and yield in client portfolios. We will continue to add to the product lineup in the coming months.”
The MYGA marketplace offers products with durations from three to 10 years and rates ranging from 2.10% to 3.25%, depending on the amount invested and duration. The products are available now to DPL’s 1,300 direct member firms as well as another 2,000 firms that have access through adviser desktop platforms.