Investment Products and Services Launches

Wilshire Consulting has announced a new inclusivity initiative aimed to deliver fresh perspectives to client portfolios and promote greater manager diversity.

The firm has adopted this initiative in recognition of the increasing desire among its clients to enhance the diversity of the investment management firms represented in their portfolios.

“Women and minorities remain underrepresented in our industry, and ensuring that clients are aware of the many talented firms led by these managers is a priority for Wilshire Consulting,” says Andrew Junkin, president of Wilshire Consulting. “We remain committed to producing insightful research focused on addressing the investment opportunities and challenges facing our clients, and we are confident that this initiative will enable us to work more successfully with diverse-owned firms.”

In recognizing both the evidence and the potential value of manager diversity to clients, the firm has implemented the following changes:

• It will now include at least one diverse-owned firm in every public securities manager search it conducts for advisory clients, where products are available that fit the client mandate. This expands the opportunity set of prospective products to which clients have access, highlights diversity in the investment management community, and provides clients with exposure to that diversity.
• A statistic representing the percentage of ownership held in firms by women or minorities will now be included in Wilshire Consulting’s standard search books to highlight diversity in the manager search process.
• Wilshire Consulting has changed its compensation system such that one of the qualitative criteria for senior consultants for incentive compensation is the quality and level of interaction with diverse-owned firms. This is aimed at specifically aligning the interests of senior leaders with this important effort.
• Wilshire Consulting has renamed its “Emerging Manager Asset Class Committee” to the “Diverse Owned Manager Asset Class Committee.” While the focus of this committee has largely been on finding talented, diverse-owned firms (representing over 75% of evaluation activity over the past three years), it has also historically dealt with smaller (less than $2 billion in AUM) firms.
• In order to provide additional support, Wilshire Consulting plans to broaden its diverse-owned manager outreach and create a series of educational seminars for this group in 2018.
  
  

“Wilshire Consulting is taking meaningful steps towards diversity and inclusion in the asset management field, and this is genuine leadership, which we commend,” says Robert Raben of the Diverse Asset Managers Initiative (DAMI). “Wilshire recognizes that we have the talent, performance is there, and interest among asset owners for diverse managers is growing, so it’s smart business to connect supply and demand in this way. We were honored to work together regarding how they could more effectively engage with women and minority-owned firms, in a way that best serves their clients. DAMI looks forward to continuing to work with Wilshire to implement this initiative.”

SEIC Expands Manager Research Platform with Janney

SEIC has announced the expansion of the company’s Manager Research solution, which provides registered investment advisers (RIAs), private banks, and broker dealers with an outsourced, stand-alone research service for evaluating and selecting portfolio managers. SEI’s Manager Research solution offers service levels that can be customized to meet clients’ needs and price points.

Janney Montgomery Scott LLC has expanded its current relationship with SEI, which will provide Janney with SEI’s investment analysis and opinion of equity and fixed-income mandates available through Janney’s separate account program, as well as asset manager contracting, model delivery services, and customized reporting.

“SEI’s Manager Research solution provides a variety of scalable, customizable solutions that help us deliver the best possible service to our clients, as well as meet our recruiting needs and future growth,” says Robert Battista, vice president and head of Product & Research at Janney. “As a strategic partner, SEI continues to help us maintain our open-architecture investment platform, and we look forward to continuing our relationship over the coming years.”

“We are excited for this growth opportunity to provide holistic, integrated solutions that will enable Janney to focus on serving its advisers and clients,” says Kevin Barr, executive vice president and head of the Investment Management Unit at SEI. “Every asset owner and fiduciary needs to decide if they’re going to buy, build, or blend to meet the multiple objectives tugging at them. SEI’s Manager Research solution provides them the tools and strategic partnership to help drive their businesses while retaining control over the final decision of manager selection.”

SEI’s Manager Research solution features:

• Manager due diligence and evaluation based on in-depth, qualitative analysis. This approach enables the separation of skillful managers from those providing inexpensively replicable market exposure. SEI’s capabilities extend across many asset classes, including equity, fixed-income, multi-asset, commodities, currencies, and alternatives.
• Various tiers of service to meet clients’ specific business and pricing needs. SEI offers options that range from basic structured insights to full, in-depth evaluations with regular monitoring and analyst access. 
• Integrated implementation solutions to complement clients’ existing relationships and infrastructure, including portfolio construction, model delivery, manager contracting, custom reporting, etc.

ISS Creates Environmental and Social Scoring Solution

Institutional Shareholder Services Inc. (ISS) announced the launch of Environmental & Social QualityScore, a new component of ISS’ corporate profiling and scoring solution for institutional investors.

E&S QualityScore represents a data driven approach to measuring the quality of corporate disclosures on environmental and social issues, including sustainability governance, and to identify key disclosure omissions. Expectations regarding disclosure practices are defined by industry groups, based on the specific environmental and social risks identified in industry and multi-stakeholder initiatives and reflected in authoritative standards and recommendations from groups such as the Global Reporting Initiative, the Sustainability Accounting Standards Board and the Task Force on Climate-related Financial Disclosures.

The launch covers an initial set of 1,500 companies across industries viewed as being most exposed to E&S risks, including: Energy, Materials, Capital Goods, Transportation, Automobiles & Components, and Consumer Durables & Apparel. An additional 3,500 companies spanning 18 industries will be added later in 2018, bringing the total coverage universe to more than 5,000 companies, globally.

“With this launch, we are extremely pleased to respond to the growing demand from our institutional investor clients for high-quality data and analytics covering environmental and social topics,” said ISS Chief Operating Officer, Stephen Harvey. “Investment professionals, who increasingly rely on extra-financial data and research for investment decision-making and portfolio risk mitigation, will benefit greatly when screening for companies where risks in operations, business, and supply lines are often latent.”

Underpinning E&S QualityScore are more than 380 environmental and social factors under analysis of which at least 240 apply to each industry group. Like its governance counterpart, E&S QualityScore provides a score for each company in its coverage universe that measures the company’s level of environmental and social governance disclosure risk, both overall and within eight broad categories. 

Broad topical areas under the E&S QualityScore methodology for environmental disclosures include: Management of Environmental Risks and Opportunities; Carbon and Climate; Natural Resources; and Waste and Toxicity. Meanwhile, Human Rights; Labor, Health, and Safety; Stakeholder and Society; and Product Safety, Quality, and Brand comprise topical areas for social-related disclosures.

An analysis of initial data underlying E&S QualityScore shows significant disparities in environmental and social disclosures by region, with European companies generally scoring far better on environmental factors compared with their peers in the Americas and Australasia.

Later this month, ISS’ benchmark policy proxy research reports will include the subject company’s top level scores under the E&S scoring methodology in addition to that for the company’s corporate governance.

Morningstar Partners with FTSE Russell to Increase Index Marketplace

Morningstar, Inc. will be expanding its index marketplace in software products by integrating third-party index data, giving investors the ability to make direct benchmark comparisons based on their needs.

Morningstar has signed FTSE Russell, the global index and data provider, as its first strategic collaborator to provide index performance and constituent data to Morningstar on over 70 global equity index series, in order to align with its global Category benchmarking methodology.

The collaboration with FTSE Russell will map approximately 10,000 global equity indexes to Morningstar’s global Category framework, according to Morningstar. Additionally, Morningstar will assign a single FTSE Russell index to each category as the Category Benchmark replacement option, providing users the ability to compare all investment choices in the category to indexes supplied from a single index vendor.

This new mapping will initially be available to Morningstar clients via Morningstar Direct, and will allow users to also request access to FTSE Russell index constituents for an additional license fee via the Content Catalog. Users of Morningstar Direct will be able to compare different indexes within a Category and select the one that best fits their needs. By using both the Category assignment and several descriptive data points assigned to each index, navigating the increasingly complex universe of available indexes in one central location will greatly benefit users searching for appropriate benchmarks. Users will also be able to gain economies of scale by licensing more indexes from a fewer number of providers if that is their preference.

“We’re pleased to have FTSE Russell join us on our mission to offer greater transparency to investors,” says Paul Justice, director of data methodology at Morningstar. “Finding appropriate benchmarks is a difficult task and comparing the nuances of the thousands of offerings can be overwhelming. By bringing this information into the index marketplace, investors can now easily compare indexes against each other, or they can evaluate multiple indexes against an array of investable products. In addition to being the premier source for managed investment data, we are excited to evolve into a complete index information repository.”

“We’re excited to work with Morningstar to further our joint mission of helping investors in a lower-cost investing environment, providing robust and transparent index solutions to facilitate better informed investment decision making,” says Mark Makepeace, chief executive officer of FTSE Russell. “Close collaboration with Morningstar over the past ten years has helped us broaden the distribution of our index performance and data in the U.S. market.”

Franklin Templeton Adds ETFs to LibertyShares Lineup

Franklin Templeton Investments has added four new passive ETFs to its Franklin LibertyShares^® lineup—Franklin FTSE India ETF (FLIN), Franklin FTSE Russia ETF (FLRU), Franklin FTSE Asia ex Japan ETF (FLAX) and Franklin FTSE Switzerland ETF (FLSW)—expanding its country and regional passive ETF suite to now include 20 funds.

“Our suite of passive country- and region-specific ETFs has been well received in the marketplace, as clients look for low-cost vehicles that can be used to access different exposures for their portfolios or solutions capabilities,” says Patrick O’Connor, head of Global ETFs at Franklin Templeton Investments. “We think beta should be cheap, and these passive ETFs are priced close to—if not the— lowest in their category. These new ETFs further expand the options available to investors through Franklin LibertyShares, which now offers a total of 33 ETFs to U.S. investors, across active, smart beta and passive strategies.”

The new passive ETFs are listed on the NYSE Arca:

Dina Ting, vice president, head of Global Index Portfolio Management and senior portfolio manager, and Louis Hsu, vice president and portfolio manager, Global ETFs, manage the new ETFs as well as the firm’s full suite of passive ETFs, which includes both developing and emerging markets.

Like the existing passive ETFs, the new ETFs are market cap-weighted and benchmarked to country and regional indices from FTSE Russell, leveraging the global index provider’s capabilities and expertise across developed and emerging markets.