Investment Product and Service Launches

Art by Jackson Epstein

AssetMark Financial Holding Moves to Institutional Share Classes

AssetMark Financial Holdings Inc. will be transitioning the third-party mutual fund strategies on the AssetMark platform to institutional share classes to help financial advisers reduce the total cost of investment for their clients.

This initiative aligns with industry changes designed to reduce the cost of investing. AssetMark currently offers several third-party mutual fund investment strategies that use a retail share class and, beginning in May, advisers will have access to the same strategies using the institutional share class, which have lower operating expense ratios. To simplify the shift for advisers and investors, AssetMark will automatically transition existing client accounts to the institutional version of the strategy through a tax-free transition in early June.

“I have long been a proponent of transparency and creating value for advisers and investors. By transitioning third-party mutual fund strategies on our platform to lower-cost share classes, we are reducing the total cost of the investment strategies for investors,” says Charles Goldman, president and CEO. “This initiative helps financial advisers stay competitive while delivering value to their clients.”

Clients will be notified of the pricing structure changes, which will be consistent with other institutional mutual fund strategies already on the AssetMark platform.

AssetMark Adds Solutions to Investing Platform

AssetMark Inc. has launched three new products on the AssetMark platform: American Funds Retirement Income Portfolio Series, Dorsey Wright Tactical Fixed Income, and PIMCO Tactical Income Focus.

“At AssetMark, we strive to provide well-researched, innovative products for advisers on our platform,” says David McNatt, senior vice president, Product Strategy and Management at AssetMark. “We’re excited to offer the American Funds Retirement Income Portfolio Series that helps advisers serve their clients as they move into the income and distribution phase of life. Additionally, the Dorsey Wright and PIMCO fixed income strategies will help advisers diversify client fixed income portfolios, navigate challenging fixed income markets and remain focused on helping their clients achieve their long-term financial goals.”

The American Funds Retirement Income Portfolio Series complements the American Funds Model Portfolios Series currently on the AssetMark platform. The solutions seek to help advisers deliver both income and growth for their clients in retirement, supporting their clients’ retirement vison. They are designed to be part of a broadly diversified retirement portfolio and serve clients’ expectations for funding their retirement goals and lifestyle.

Dorsey Wright Tactical Fixed Income solution, based on the firm’s proprietary research and systematic process, helps advisers deliver risk-adjusted total returns with low-cost exchange-traded funds (ETFs). The solution helps advisers on the AssetMark platform diversify their clients’ portfolios with broad fixed income exposure, while preserving capital with consistent investment exposure to government bonds.

PIMCO Tactical Income Focus is designed to assist advisers in delivering both higher levels of income and capital preservation for clients.

iShares Expands ESG Initiatives

iShares announced it will expand its environmental, social and governance (ESG) ETF lineup and enhance its existing ESG funds.

“Sustainable investing has reached an inflection point as investors better understand the increasing impact that ESG-related risks have on asset pricing, and account for these risks in their portfolios,” says Armando Senra, head of Americas iShares at BlackRock. “That has translated into growing demand for iShares sustainable ETFs and the need to offer greater choice to make sustainability our standard for investing.” 

iShares plans to debut three fossil fuel-screened ETFs under a new “advanced” product range that seek to track indices with extensive screens, including palm oil, for-profit prisons, controversial weapons and increased controversy score requirements. These proposed funds will apply the most screens of any iShares ESG ETFs in the United States and will offer exposure to U.S., developed and emerging markets companies.

Additionally, iShares is rebranding its Sustainable Core ETFs as “aware.” Aware ETFs seek to track indices that include companies that exhibit favorable ESG characteristics and are then optimized to offer a similar risk and return profile to broad market indices. The aware range was introduced in October 2018 with seven ESG ETFs across equities and fixed income and was designed to offer low-cost building blocks for investors to construct broad, diversified and sustainable portfolios.

MSCI will also be implementing, to the indices of these funds, additional screens to exclude companies with thermal coal and oil sands revenue exposure, iShares says. The new screens will be effective on March 2.

T. Rowe Price Announces Enhancements to TDFs

T. Rowe Price will enhance its target-date portfolios to help improve retirement outcomes and address the headwinds investors face in achieving retirement security, including longevity risk, inflation risk and market risk.

Over a two-year period, T. Rowe Price will gradually increase equity exposure in the Retirement and Target portfolios’ glide paths early in the accumulation years and post-retirement and add emerging markets and U.S. large-cap core equity strategies to further diversify the underlying investments.

Based on T. Rowe Price’s research, the company will raise the equity allocation of the retirement glide path at the start of the investing lifecycle to 98% equity, from the current 90% equity. The 98% equity allocation will be held constant until 30 years from retirement and maintain a 55% equity allocation at retirement. Additionally, the company will raise the equity allocation after retirement, reaching a final 30% equity allocation 30 years past retirement, an increase from the current 20% allocation.

The target glide path will also see an increase to 98% and hold that equity allocation constant until 35 years from retirement. It will maintain a 42.5% equity allocation at retirement and then raise the allocation after, reaching a final 30% equity allocation 30 years past retirement.

The transition will occur over a two year period starting in April. Portfolios closest to retirement will not experience an increase in equity from their current levels, while other vintages/dates will adjust their equity allocations gradually each quarter. As a result, many investors will see no change to their current equity allocation.

T. Rowe Price has also announced the addition of two investment strategies to the underlying building blocks of several target-date products; Emerging Markets Discovery Stock will be added to all the firm’s target-date strategies and U.S. Large-Cap Core will be added primarily to actively managed strategies (Retirement Funds, Retirement I Class Funds, Retirement Income 2020 Fund, Retirement Trusts, Target Funds, and Target Trusts).

For its Retirement and Target mutual funds, T. Rowe Price is moving to a top-level fee structure in which expense ratios will no longer vary depending on the management fees and expenses of the underlying funds. The new fee structure will be implemented in April.

As a result of this change, none of the firm’s target-date portfolios will experience an increase in expense ratios, and some will see their expense ratios decrease.

Swan Global Investments Reduces CIT Fees

Swan Global Investments (Swan) has announced a reduction in fees for Class 1 & Class 2 of the collective investment trusts (CITs) within the Swan Defined Risk Collective Investment Trust, effective as of February 1.

The net management and trustee fee reductions are 47 basis points for Class 1 and 32 basis points for Class 2. That is approximately 49% savings and a 45% savings in trustee and management fees in Class 1 and Class 2, respectively.

The defined risk strategy (DRS) investment approach, behind the Swan Defined Risk Collective Investment Trust strategies, actively seeks to mitigate downside risk and create a gentler investor experience when markets are in turmoil. Swan Defined Risk CITs also seek to smooth returns over market cycles. Consistency of rolling returns helps to address timing risk associated with different enrollment and retirement dates, as well as limiting “statement shock,” encouraging participants to remain invested and on track to meet their goals.

“Loss aversion and protecting investors’ irreplaceable capital is really important for fiduciaries, plan sponsors and retirement advisers alike,” says Gib Watson, chief strategy officer at Swan. The company follows a three-pronged approach to the investment strategy, matching the different investment objectives of plan participants, then providing a defined risk strategy to enable protection and applying it to major equity asset classes, Watson adds.

Effective February 1, the following fees will be reduced as follows in Class 1:

Effective February 1, 2020 the following fees will be reduced as follows in Class 2: