Investment Products and Service Launches

Charles Schwab announced that beginning February 3, 2017, it will reduce its standard online equity and exchange-traded fund (ETF) trade commissions from $8.95 to $6.95. Effective March 1, 2017, Charles Schwab will lower expenses for Schwab market cap-weighted index mutual funds to align with their Schwab ETF equivalents. Moreover, all investment minimums will be eliminated for these mutual funds, which will utilize a single share class.

On March 1, Schwab will also minimize expenses on the Schwab U.S. TIPS ETF and Schwab Fundamental Index ETFs. Pending shareholder approval, the Schwab Fundamental Index mutual funds will follow suit effective May 1, 2017, by eliminating all investment minimums, employing a single share class, and aligning expenses with those in the comparable Schwab ETFs.

“Reducing online trade commissions as scale and technology lower our operating costs is a way to ensure our clients benefit from their commitment to us,” says Schwab President and CEO Walt Bettinger. “I am especially proud of our decision to eliminate investment minimums and employ a single share class in our market cap-weighted and Fundamental Index mutual funds—ensuring that every investor pays the lowest possible fees.”

Furthermore, Schwab is initiating a satisfaction guarantee policy. Simply put, clients dissatisfied with certain commissions, transaction fees or advisory program fees paid do the firm would be refunded for those expenses.

“Today’s consumers expect great value, a great experience, and a refund if they aren’t satisfied,” explains Bettinger. “We believe a modern investing experience should deliver on these expectations—period

Visit Schwab.com for more information, disclosures, and specific details.

NEXT:Symons Capital Releases Small Cap Equity Mutual Fund  

The Symons Concentrated Small Cap Value Institutional Fund (SCSVX) is an extension of the Symons Concentrated Small Cap Value composite. SCSVX will purchase stocks with market capitalizations of less than $3 billion and will hold fewer than 20 stocks across a broad sector allocation.

“As part of designing this strategy, and in an ever-changing environment where fees are being compressed, we wanted to create a fund whereby we believe there will be great demand in the small value asset class” says Michael P. Czajka, CEO of Symons Capital Management. “In particular, with the lack of available capacity in the small cap value space coupled with a good process and a clear differentiation from our peers, I truly believe this will be the strategy that makes Symons Capital Management a nationally known firm, side-by-side with some of the other great small cap value investment firms.”

Symons Capital Management’s portfolio manager and investment research team aims for long-term absolute returns and relative returns above benchmarks, with a focus on risk-management and downside protection over a full-market cycle.

“The small cap sector is an area where we believe our independent macro, quantitative and qualitative equity research can be used to good advantage to achieve long-term wealth accumulation,” says Czajka. “Typically, there is less published research available on such companies, which makes this a perfect strategy for us. I believe this strategy will be very successful not only with investment management consultants, but even more so with registered investment advisers who create asset allocation models utilizing mutual funds rather than ETF’s or index funds in this asset class.”

NEXT: Pantheon Targets DC Plans for Private Equity Strategies

Pantheon is introducing performance-based pricing to its private equity strategies targeting the defined contribution (DC) market.

The performance pricing option applies to the part of the portfolio invested in private equity and it’s accrued only when the performance of the private assets in the portfolio beats its benchmark, which is the S&P 500. Generally speaking, the firm says investors don’t pay for performance they did not experience.

“The innovative fee solution we are announcing today visibly aligns investors’ interests with Pantheon’s, addresses core plan sponsor concerns including costs and potential litigation, and it demonstrates the confidence we have in our ability to deliver strong returns to our investors,” says Kevin Albert, managing director at Pantheon.

For more information, visit Pantheon.com.

NEXT: John Hancock Overhauls TDF Suite

John Hancock Investments has revamped its target-date funds (TDF) for the defined contribution (DC) market with new names and lower fees.

The John Hancock Multimanager Lifetime Portfolios, formerly known as John Hancock Retirement Living Portfolios, are designed to help manage longevity risk by following a glide path that begins with 95% equity exposure before gradually decreasing to 50% at the target retirement date. It then continues scaling down through the first 20 years of retirement until stabilizing at 25%. The portfolio management team implements the asset allocation strategy with a combination of active open-end mutual funds and other investments, tapping nearly 20 specialized teams.

The John Hancock Multi-Index Lifetime Portfolios, formerly known as John Hancock Retirement Living II Portfolios, are also designed to help manage longevity risk and follow the same lifetime glide path. Managers implement the asset allocation strategy with a combination of index-tracking exchange-traded funds (ETFs) and other investments to minimize the impact of expenses on portfolio returns. 

John Hancock Multi-Index Preservation Portfolios are designed for investors who want to minimize risk in the years leading up to retirement. Glide paths begin at 82% equity exposure which decreases to and stabilizes at eight percent upon reaching the target retirement date. John Hancock Asset Management implements the asset allocation strategy with a combination of index-tracking ETFs and other investments to minimize the impact of expenses on portfolio returns.

For more information, visit jhinvestments.com/targetdate.

NEXT: Vanguard Lowers Expense Ratios on 21 Fund Shares

Vanguard Lowers Expense Ratios on 21 Fund Shares

The financial services firm Vanguard says its clients saved almost $25 million after it lowered expense ratios for 21 individual mutual fund shares including three quantitative equity funds and six target-date funds (TDF)s.  

Last month, the firm reported lower expense ratios for shares of 35 funds representing aggregate savings of $13 million.

The expense ratio of the $6.6 billion Vanguard Strategic Equity Fund dropped three basis points to 0.18%, that of the $1.5 billion Vanguard Strategic Small-Cap Equity Fund dropped five basis points to 0.29%, and that of the $1.5 billion Vanguard U.S. Value Fund dropped three basis points to 0.23%. These funds are managed by Vanguard’s Quantitative Equity Group (QEG).

The firm’s six Target Retirement Funds (TRFs) saw their expenses drop by 1 basis point each. The expense ratios fell to 0.13% for both the Target Retirement Income Fund and the Target Retirement 2010 Fund, and to 0.14% for the Target Retirement 2025 Fund. Three institutional target-date funds—the $2.2 billion Vanguard Institutional Target Retirement Income Fund, the $2 billion Vanguard Institutional Target Retirement 2010 Fund, and the $6.3 billion Vanguard Institutional Target Retirement 2015 Fund—reported lower expense ratios of 0.09%.

For more information, visit Vanguard.com.

NEXT: Long Dollar Gold Trust Begins Trading

The World Gold Council and State Street Global Markets, an affiliate of State Street Global Advisors, announced that the SPDR Long Dollar Gold Trust has begun trading on the New York Stock Exchange. GLDW seeks to track the performance of the Solactive GLD Long USD Gold Index, less fund expenses.

“The price of gold and the U.S. dollar have historically tended to move in opposite directions,” says Nick Good, co-head of the Global SPDR business at State Street Global Advisors. “By lessening the dollar’s potential impact on gold, GLDW seeks to provide investors the opportunity to realize the potential benefits of using gold as a strategic portfolio diversifier, while offering the ability to buffer against the potential adverse effects of a strong dollar on gold.”

The index combines a long position in physical gold and long dollar exposure against a basket of non-U.S. currencies. The organization notes that performance of the U.S. dollar against this currency basket is expected to increase or decrease the amount of gold held by GLDW. GLDW holds physical gold in the form of 400 ounce London Good Delivery bars stored in the custodian’s London vault, except when GLDW’s physical gold has been allocated in the vault of a subcustodian solely for temporary custody and safekeeping.

“GLDW is the first ETF listed in the U.S. backed by physical gold that is designed to hedge the movement of gold against the U.S. dollar,” says Joseph Cavatoni, principal executive officer of GLDW’s sponsor, and managing director USA and ETFs, World Gold Council.

NEXT: Cardinal Investment Advisors Adopts PFaroe Risk Management Platform

Cardinal Investment Advisors, a boutique consulting firm specializing in liability-driven investment experience, has adopted RiskFirst’s risk management platform, PFaroe.

This solution will allow the firm to optimize its clients’ portfolios in a liability-aware fashion, informing long-term strategies around glide paths, required cash contributions and the maintenance of credit balances.  

“Cardinal is committed to investing in tools and resources that help us to meet our key objective: optimizing the creation, implementation and monitoring of investment strategies,” says Scott Skornia, managing director, Cardinal Investment Advisors. “We have always looked at such strategies from a liability/risk perspective and PFaroe aligns perfectly with this view. The tool will be an asset to our offering; automating our reporting and allowing us to have all our data in one place—everything from the attribution of risk, all the way down to having access to underlying benchmark data. The system will bring greater levels of efficiency and streamlining to the business.”

Matthew Seymour, CEO, RiskFirst, adds: “Cardinal deals frequently with complex portfolios and equally complex liability structures, and is dedicated to delivering innovative LDI solutions and optimized portfolio strategies. Cardinal has historically created in-house the financial tools and analytics required to do this, with a reputation for developing best-in-class asset-liability models, so we are delighted that they have decided to bring in PFaroe to add value to their specialist offering for clients old and new.”

For more information, visit www.cia-llc.com/.