Products April 12, 2018

Investment Products and Services Launches

VanEck Launches Real Asset ETF, and BlackRock Announces Approach to Firearm Manufacturers. 

Reported by

VanEck has announced the launch of the VanEck Vectors Real Asset Allocation exchange-traded fund (ETF), a fund that seeks long-term total return from exposure to a range of real assets, including commodities and companies involved in natural resources, real estate, and infrastructure, while mitigating downside risk.

“VanEck has been a long-time proponent of the benefits of real asset investments, both from a performance and portfolio diversification perspective. We also understand that the volatility of real asset investing is a challenge for many investors,” says David Schassler, portfolio manager for RAAX. “These are predominantly cyclical sectors that experience frequent periods of high volatility. RAAX was specifically designed to address this. It is a real asset investment solution with built in risk management.”

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RAAX is designed to provide exposure to real assets while seeking to minimize the impact of drawdowns. Real assets can potentially help investors combat rising inflation, enhance portfolio diversification, and participate in global growth. The new fund uses a rules-based model to allocate among approximately 12 exchange-traded products (ETPs) and has the ability to allocate up to 100% to cash and cash equivalents in the event of market stress. The ETPs provide exposure to agribusiness, coal, infrastructure, real estate, steel, oil services, unconventional oil & gas, and gold mining companies as well as diversified commodity futures exposure and physical gold.

“RAAX is the type of solution-oriented ETF our investors expect from us” says Ed Lopez, head of ETF Product at VanEck. “Its innovative allocation and risk-management methodology is indicative of VanEck’s commitment to offering forward-thinking investment solutions.”

VanEck also notes that real asset investments are not without their risks, which can include susceptibility to adverse economic events, natural disasters, geopolitical risks, and supply and demand disruptions. RAAX performance is dependent on the performance of underlying funds and is subject to the risks of the underlying funds’ investments.

The Fund is the latest addition to the VanEck Vectors suite of Guided Allocation funds, which includes an ETF, VanEck Vectors NDR CMG Long/Flat Allocation ETF, and a mutual fund, VanEck NDR Managed Allocation Fund (NDRMX).

BlackRock Announces Approach to Firearm Manufacturers

The recent tragedy in Florida has driven home for BlackRock the terrible toll from gun violence in America. It has put a spotlight on the role of companies that manufacture and distribute civilian firearms. Many of these companies are privately owned, but some of the largest manufacturers and retailers are publicly listed companies and are therefore held in the portfolios of millions of individual and institutional investors around the world.

In a statement BlackRock says it holds no firearms manufacturers in its active equity portfolios (where stocks are selected by portfolio managers within guidelines agreed to by clients). In BlackRock’s index equity products (where stocks are determined by third-party index providers) – firearms manufacturers represent 0.01% of total assets.

Because the companies in an index are determined by third-party index providers, when a client chooses an index that includes a firearms manufacturer, BlackRock is unable to sell those shares regardless of their view of the company. Within those constraints, the company says BlackRock addresses the issue of firearms manufacturers in index portfolios in two ways: Offering clients a choice of products that exclude firearms manufacturers and/or retailers if clients choose to do so and; engaging with firearms manufacturers and retailers in which clients are invested regarding business policies and practices as described in the statement.

BlackRock manages money for a diverse set of investors, including pension plans, insurers and individual investors, who have a broad set of views on firearms. Over the past several weeks, the company says it has reached out to clients to help them understand their exposure to civilian firearms companies. According to the company, BlackRock strives “for a continuous dialogue with many clients and are helping them explore their options for altering or eliminating their firearms exposures.”

More information on BlackRock’s initiative can be found here.

Data & Research April 12, 2018

Single Female Retirees Worry the Most About Longevity Risk

Forty percent of single retirees overall do not think their savings will be enough if they reach age 90.

Reported by

Single retirees, particularly single women retirees, are more concerned about outliving their savings, according to research by the LIMRA Secure Retirement Institute (LIMRA SRI).

While 71% of married retirees are confident they will be able to live the lifestyle they want in retirement, this is only true for 64% of single retirees. Additionally, 40% of single retirees overall do not think they  have enough savings to last them until age 90, and nearly half of single women are not confident their savings will last through age 90.

“We have long known that longevity risk is greater for women,” says Jafor Iqbal, assistant vice president at the LIMRA Secure Retirement Institute. “Because essential living expenses are proportionately higher for single-person households than couples’ expenses, the risk of running out of money is greater for all single people as they age. Today, there are 47.5 million single Americans who are age 65 or older.”

Thirty percent of female retirees say their basic living expenses are higher than they had anticipated, but only 20% of men say the same. Single women spend 68% of their income on basic and health care expenses in retirement, compared to 62% of single men. However, single women spend only 15% on discretionary expenses in retirement, whereas single men spend 20% on discretionary expenses in retirement.

Among female retirees who have purchased an annuity, 71% say they will be able to live the lifestyle they want in retirement, whereas only 56% of female retirees who do not own an annuity say the same; for men, the percentage in both cases is the same, at 68%. Asked if they believe their savings will not run out if they should live to age 90, 67% of female retirees who own an annuity say no, whereas only 47% of female retirees who do not own an annuity say no; for men, the percentages are 74% and 68%, respectively.

“It is clear that annuity ownership dramatically improves single retirees’ confidence in their financial security,” Iqbal adds. “Our study demonstrates that single retirees who have a relationship with an adviser are significantly more likely to own an annuity. Six in 10 single women who work with an adviser own an annuity and nearly half of men working with an adviser own an annuity—at least double the rate of single retirees who don’t work with an adviser.”

Forty percent of single retired women work with an adviser, whereas only 30% of single retired men do so. By comparison, 47% of households with married couples work with an adviser. Seventy-five percent of single male and female retirees who work with an adviser believe they will be able to achieve the type of lifestyle they desire in retirement, whereas only 66% of single male retirees and 54% of single female retirees who do not work with an adviser say the same.

Thirty percent of single retirees who work with an adviser have a formal retirement income plan. “Our findings present an opportunity for advisers,” Iqbal says. “We recommend advisers engage their clients—married or single—and begin the process of developing a formal retirement plan.”

LIMRA Secure Retirement Institute’s findings are based on a survey of 1,130 households with single men and/or women between the ages of 55 and 79 who have been retired for at least one year and have household incomes of at least $35,000.

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