Investment Products and Service Launches

Fidelity Launches RMD-Focused Funds

This year, the first wave of Baby Boomers with tax-deferred retirement accounts will become required minimum distribution (RMD) age. Beginning in 2018, millions of Americans will be taking RMDs from these accounts each year.

To facilitate this process, Fidelity Investments has launched the Fidelity Simplicity RMD Funds. These mutual funds combine professionally-managed investment strategies with optional automated calculation and distribution methods to satisfy annual RMD requirements on the investor’s behalf. Each fund in the lineup carries a date in five-year intervals from 2005 to 2020 to help investors find an appropriate fund to reflect the time they turn 70. Initial RMDs are required to be taken once an investor turns 70-and-one-half.

These funds are designed for investors who are nearing this age or older, or will turn age 70 in or within a few years of the applicable fund, and plan to withdraw the value of their investment in the fund over time in accordance with Internal Revenue Service (IRS) rules. For example, a traditional IRA owner who turned 70 ½ in 2015 would select the Simplicity RMD 2015 Fund.

By signing up, Fidelity automatically calculates and distributes the investor’s RMD each year, while monitoring withdrawal activity and assisting with reinvesting or managing spending.

The Fidelity Simplicity RMD Funds with longer time horizons will invest in a greater percentage of equities, while the funds with shorter time horizons will emphasize fixed-income and short-term assets.  

“The foundation of the funds is the glide path, built to balance investment returns and risk in conjunction with an RMD,” says Andrew Dierdorf, portfolio manager on Fidelity’s target date team, including Fidelity Simplicity RMD Funds. “The glide path for the Simplicity RMD Funds has been designed to provide appropriate portfolio diversification over time, while recognizing the unique needs and time horizon for investors who begin taking RMDs at age 70 ½.”

Ken Hevert, senior vice president of Retirement at Fidelity Investments adds, “Retirees often struggle to understand when, which assets, what amount and how to take the annually mandated withdrawal from their tax-deferred retirement accounts. If not done correctly, investors may experience a 50% tax penalty on any amount not withdrawn by the annual deadline.”

“Further, once the RMD has been made, investors find themselves unsure of whether or not they are being too conservative or too aggressive with the remaining investments. The Fidelity Simplicity RMD Funds complement our suite of automatic RMD services, and will provide a simple and innovative solution for investors to help alleviate many of the concerns around taking annual RMDs.”

For more information, visit Fidelity.com.

NEXT: Nuveen Launches Equity ESG ETFs

Nuveen Launches Equity ESG ETFs

TIAA’s Nuveen adds to its line of NuShares ESG ETFs two new offerings focusing on international developed markets and emerging markets.

Nuveen has launched two new exchange-traded funds (ETFs) tracking indices based on environmental, social and governance (ESG) criteria. The NuShares ESG International Developed Markets Equity ETF, and NuShares ESG Emerging Markets Equity ETF seek to track the investment performance of the TIAA ESG International Developed Markets Equity Index and the TIAA ESG Emerging Markets Equity Index, respectively.

“As we designed our latest ETF offering, we wanted to squarely address investors’ desire to diversify their core equity portfolio with investment options that not only provide key benchmark exposure, but also align their international equity investments with their values,” says Martin Kremenstein, senior managing director and head of Exchange-Traded Funds at Nuveen. “To date, there have been limited ETF solutions for investors who value ESG principles, yet want to assemble a full equity asset allocation framework. When taken as a whole, our growing suite of ESG ETFs addresses this need.”

These funds add to Nuveen’s line of NuShares ESG ETfs. Like the NuShares domestic equity ESG ETF, these new funds will draw from investment expertise of TIAA Investments.

“We’ve certainly seen that investor motivations for adopting responsible investment approaches to managing their money are on the rise,” says Amy O’Brien, managing director and head of Responsible Investment at TIAA Investments. "Investors large and small are beginning to understand that the integration of environmental, social and governance factors within their investment portfolios actually has the potential to reduce risk and enhance long-term investment performance. Those advisers and consultants who can assist their clients in evaluating the significant differences among available ESG products and strategies in order to select those that are an appropriate fit, will prove themselves to be invaluable.”

NEXT: AI Insight Partners with ActiveAllocator Holdings 

AI Insight Partners with ActiveAllocator Holdings

AI Insight users will now have access to ActiveAllocator's proprietary asset allocation and portfolio optimization capabilities. Both firms are leading an effort to advance the use of alternative investments including real estate, private equity and hedge funds

The ActiveAllocator portal allows financial advisers to assess client portfolios and optimize expected portfolio return per unit of portfolio risk. It also enables financial advisers to assess independently the impact of more than fifty asset subclasses on portfolio optimization. It can generate personalized, customized and optimized recommended portfolios.   

"We are very excited to join with ActiveAllocator to provide AI Insight broker dealer and financial adviser clients with access to ActiveAllocator,” says AI Insight CEO Sherri Cooke. “AI Insight is dedicated to helping financial advisers make smarter decisions about alternative investments, values that are shared by ActiveAllocator."

Sameer Jain and Brian Jones, co-founders of ActiveAllocator add, "We are honored to partner with AI Insight, the leader in alternative investment research, education and compliance documentation. Together, AI Insight and ActiveAllocator provide financial firms and advisers with the most comprehensive set of tools to intelligently integrate alternative investments in optimized client portfolios." 

NEXT: Duetsche Launches U.S. Multi-Factor Fund

Duetsche Launches U.S. Multi-Factor Fund

Deutsche Asset Management has launched its new Deutsche US Multi-Factor Fund. This mutual fund tracks the Russell 1000 Comprehensive Factor Index, which is designed to capture exposure to large-cap U.S. equities using five factors: quality, value, momentum, low volatility and size. The fund seeks exposure to the universe of stocks in the U.S. equity market, while titling individual weights towards those proficient in all five factors.

“Our goal at Deutsche Asset Management is to provide clients with flexible access to products and solutions across a wide range of investment opportunities,” says Brian Binder, president of Deutsche Funds and head of US Product & Fund Administration. “Through deliberate, consistent and direct factor exposure, the Deutsche US Multi-Factor Fund’s objective is to potentially make a significant contribution to outperforming traditional market-capitalization weighted benchmark indices, while lowering risk possibilities and adding diversification to the portfolio.”

Fiona Bassett, head of Passive Asset Management, Americas, says, “In our view, factor investing straddles the intersection of active and passive asset management. The new fund complements Deutsche Asset Management’s existing suite of products and showcases our ability to deliver the unique factor-based approach via an index fund to a broader scope of investors.”

NEXT: Orion Offers Use of Moody’s Analytics

Orion Offers Use of Moody’s Analytics

Orion Advisor Services has integrated with Moody’s Analytics to provide advisers with automatically updated Moody’s Investors Service bond ratings through the Orion portal. These automatically-updated ratings can now be added to Orion fixed income reports.

Advisers can leverage these ratings to show clients the risk associated with their portfolios as well as the creditworthiness of their securities. 

“At Orion, our mission has always been increased transparency, and our integration with Moody’s provides advisers and their clients with a clear picture of their portfolios, enabling advisers to make better decisions on behalf of their clients,” says Orion CEO Eric Clarke. “Whenever we are able to automate processes for advisers, we consider that a huge value-add that enables them be the best possible fiduciaries.”

Todd Douds, director of Research and Operations at Fort Pitt Capital Group adds, “We are excited that Moody’s bond ratings have been automatically imported into Orion. Our Fixed Income Portfolio Manager is leveraging Moody’s bond ratings to support the investment process for our clients.”

Moody’s Investors Service bond ratings are available in the Orion Connect, reports and mobile app. It comes at no additional cost to all Orion clients.

NEXT: TFC Launches ESG Investment Strategy 

TFC Launches ESG Investment Strategy

TFC Financial Management has launched its Sustainable and Responsible Investment Strategy (SRI). 

The firm defines this method as an investment approach that considers environmental, social and governance (ESG) factors to achieve competitive long-term investment results and positive social impact.

Clients would typically have core holdings in sustainable mutual funds aiming for broad diversification and a low carbon footprint. These core holdings will focus on companies with favorable ESG attributes, while minimizing holdings with less favorable attributes. The firm may also supplement core investments with investments in which there are fewer sustainable options, and will incorporate impact investments that focus on mission-related social or environmental priorities. 

“We tailor the impact investment portion of the portfolio based on the priorities of our clients, so environmentally focused clients may have different impact investments than clients who are focused on issues such as affordable housing or diversity,” says TFC Chief Investment Officer Daniel Kern, CFA. 

TFC Chief Executive Officer Renée Kwok adds, “Our clients, their families and prospective clients are increasingly expressing interest in SRI and their desire to have investment portfolios be more aligned with their personal values and social impact priorities. We are pleased to be able to offer this strategy, designed to provide long term investment returns as well as positive social and environmental impact, as both dimensions are important to these clients.”