Investment Products and Services Launches

State Street has enhanced its portfolio of environmental, social and governance (ESG) offerings with the launch of ESGX, a new analytics tool designed to provide information to help clients bring transparency and standardization to their ESG investing.

State Street also announced agreements with new data providers, including Arabesque, to complement its existing agreement with TruValue Labs, announced earlier this year. ESGX offers clients the ability to receive their ESG data sets from any or all of the data providers State Street is collaborating with.

Developed by State Street Global Exchange, State Street’s data and analytics business, ESGX will provide clients with a web platform through which they can assess ESG factor exposure in their portfolios, such as a company’s carbon footprint, the type of labor used in a supply chain, and board diversity statistics. Clients will also have the ability to review reports, which can be updated daily, that show how the ESG profile of a portfolio has evolved over time.

“Having a view into a company’s non-financial profile is increasingly important to the growing number of investors and regulators who understand the impact of ESG factors on risk and returns,” says John Plansky, global head of State Street Global Exchange. “The root of firm valuation is the disclosure of relevant information, and it’s critical that we bring new technologies to market that can provide added transparency for clients looking to better understand their investment portfolios through an ESG lens.”

Global ESG assets under management climbed to almost $23 trillion in 2016, a 25% increase from 2014 Global Sustainable Investment Alliance. Yet, according to a recent State Street study, while traditional obstacles to ESG investing are fading, the one significant barrier that remains is the lack of transparent, standardized and quality data.

Included in the new ESGX analytics platform, State Street’s ESG Solutions business will offer Arabesque S-Ray, an algorithm-based technology that analyzes the sustainability performance of the world’s largest listed corporations, using self-learning quantitative models and data scores as a risk management and compliance measure.

“We believe ESG data provides a new dimension to investing, giving investors more information than ever before about the DNA of a company,” says Andreas Feiner, head of ESG Research at Arabesque. “We are delighted to be collaborating with State Street to offer our proprietary analytics tool.”

“Investors want to perform well while being responsible, and they need access to ESG data to do that effectively,” says Mark McDivitt, head of ESG Solutions at State Street Global Exchange. “We’re consistently hearing from clients that they need reliable ways to measure exposure to non-financial ESG factors. The combination of our ESGX analytic tool and these ESG data options will give them access to data and a range of insights that hasn’t previously existed.”

More information about State Street’s ESGX analytics platform and ESG Solutions can be found here.

TCA Adds an Extra 18 ETFs to Advising Platform

Trust Company of America (TCA) has partnered with J.P. Morgan, KraneShares and Main Management to offer TCA advisers with an additional 18 exchange-traded funds (ETFs) on its ETF Custody Advantage platform. The platform enables advisers to provide their clients with a higher level of transparency and greater investment flexibility through intraday trading on a regulated exchange.

To help manage costs, TCA will provide a custody fee offset on all participating ETFs, automatically applied to assets held in the products on the trading platform. The nine ETFs offered from J.P. Morgan will leverage its research, insight and portfolio management expertise, using a strategic beta approach. These funds aim to offer high-risk adjusted returns and sit at the intersection of both passive and active strategies.

Additionally, KraneShares, a U.S. asset management firm known for its China focused funds, will offer eight ETFs on the platform, and Main Management, a California based retirement investment adviser (RIA) recognized for its ETF portfolio management has added a Sector Rotation ETF: TCA’s ETF Custody Advantage launched back in April, with funds from Guggenheim Investments and Global X. TCA is actively working to increase its offering, and the expanded selection now provides advisers with a total of 74 ETFs to choose from, including asset classes such as domestic and international equity, bond, currency and commodities.

“In a time when some custodians are pulling products off the shelf, TCA is committed to supporting advisers in their growing utilization of ETFs by expanding our program and providing them with more choice and opportunities,” says TCA president and CEO Joshua Pace. “At TCA, we’re always on the lookout to expand our offerings in order to better serve our advisers. The ETF Custody Advantage platform is a great venture for our clients to enhance their existing ETF portfolio models and provide our advisers with a variety of high-quality ETFs to explore.”

“We are thrilled to expand RIA access to our innovative smart beta solutions on TCA’s platform,” says J.P. Morgan’s Head of United States ETFs Joanna Gallegos. “J.P. Morgan is proud to offer strategies that leverage our extensive research and investment expertise to deliver unique capabilities through ETF vehicles.”

For more information about the ETF Custody Advantage program, call 1-800-955-7808 or email learnmore@trustamerica.com.

Vanguard Releases Latest Fund to Complement Existing Index and ETF Offering

Vanguard has announced that Vanguard Emerging Markets Bond Fund is available for investment. The new offering will expand Vanguard’s U.S.-domiciled active fixed income fund roster to 25 funds and is said to complement the firm’s existing emerging markets bond index offering. 

The new fund is designed to offer financial advisers and institutions the potential for additional diversification, along with potentially higher returns that can accompany the considerable volatility associated with emerging markets debt. 

The fund’s investment adviser, Vanguard Fixed Income Group, seeks to outperform the JP Morgan EMBI Global Diversified Index by investing in a broadly diversified portfolio of debt issued by emerging market governments and government-owned enterprises, with a majority of its assets either denominated in, or hedged back to, the U.S. dollar. Emerging market countries include countries whose economies and capital markets are less developed, which includes most countries except for Australia, Canada, Japan, New Zealand, the United States, the United Kingdom, and most European Monetary Union countries. The fund also has the ability to invest, on a limited basis, in out-of-benchmark emerging market sectors, such as emerging market corporate bonds and local currency bonds. The fund’s duration, a measure of interest rate risk, is expected to be within one year of its benchmark. 

“Emerging market debt is a well-established asset class offering credit exposure and diversification that is complementary to corporate and high yield bonds,” says John Hollyer, global head of Vanguard Fixed Income Group. “The fund provides investors with low-cost, broad exposure to emerging fixed income markets.” 

The Emerging Markets Bond Fund is among the lowest-cost actively managed funds in its category,1 with the fund’s Investor and Admiral shares (VEMBX and VEGBX) featuring expense ratios of 0.60% and 0.45%, respectively. 

The new actively managed fund serves as a complement to Vanguard’s corresponding index and ETF offering, Vanguard Emerging Markets Government Bond Index Fund, which was introduced in 2013. Investors now have a choice between both active and passive products that provide access to emerging market debt, which may be suitable to some investors based on their goals, preferences, and tolerance for risk. 

“Our emerging markets credit team has demonstrated their deep expertise in this growing segment of the global fixed income landscape,” says Paul Jakubowski, head of Credit, Vanguard Fixed Income Group. “We look forward to continuing to build out our fixed income team and capabilities, inclusive of portfolio management, trading, and credit research around the globe.” 

Vanguard has also extended its bond index and ETF lineup, introducing Vanguard Short-Term Inflation-Protected Securities Fund in 2012; Vanguard Total International Bond Index Fund/ETF and Vanguard Emerging Markets Government Bond Index Fund/ETF in 2013; Vanguard Tax-Exempt Bond Index Fund/ETF in 2015; and Vanguard Total Corporate ETF in 2017. 

Hartford Funds Presents First NextShares Fund

Hartford Funds announced the launch of Hartford Global Impact NextShares Fund, the firm’s first NextShares product.

NextShares are a way to invest in actively managed strategies, which, because they trade on an exchange, may offer cost and tax efficiencies that may enhance shareholder returns. Hartford Global Impact NextShares Fund seeks long-term capital appreciation by investing in companies throughout the world that it believes are likely to address major social and environmental challenges.

“The Hartford Global Impact NextShares Fund is yet another step we are taking in listening to financial adviser demand for lower-cost, tax-efficient, and innovative products that can help investors reach their goals,” says Vernon Meyer, chief investment officer of Hartford Funds. “The Hartford Global Impact NextShares Fund allows us to offer actively managed strategies while also providing investors the opportunity to align their portfolios with their values.” 

“We are proud to partner with Hartford Funds to bring Hartford Global Impact NextShares Fund to market,” says Stephen Clarke, president of NextShares Solutions LLC.  “It is the first equity NextShares product to invest in companies whose core business seeks to address the world’s major social and environmental challenges.” 

NextShares, which, as an exchange-traded managed fund (ETMF), offer investors a way to tap into and capitalize on actively managed strategies with potential cost and tax advantages, seek to outperform their benchmark index and peer funds based on their manager’s investment insights and research judgments. NextShares offers the potential benefits of protecting the confidentiality of fund trading information and providing trading cost transparency to fund investors. 

Hartford Global Impact NextShares Fund will invest in companies that focus their operations in areas that address themes including, but not limited to, sustainable agriculture and nutrition, health, clean water and sanitation, affordable housing, education and training, financial inclusion, narrowing the digital divide, alternative energy, resource stewardship and efficiency, as determined by the sub-adviser, Wellington Management Company LLP (Wellington Management). The fund will operate as a “feeder fund” under a master-feeder structure along with the Hartford Global Impact mutual fund, with both funds investing all of their assets in shares of the Global Impact Master Portfolio.

The Hartford Global Impact NextShares Fund complements Hartford Funds’ two existing socially responsible investment products, the Hartford Global Impact Fund (HGXAX) and the Hartford Environmental Opportunities Fund (HEOMX). 

Wellington Management’s Eric Rice, managing director and portfolio manager, and R. Patrick Kent, managing director and portfolio manager, will serve as the portfolio managers of the Hartford Global Impact Master Portfolio.