Our monthly roundup of industry highlights
Fidelity faces government probe over fees
Fidelity Investments is under investigation regarding disclosure of a fee it charges on some of its mutual funds, according to a report by The Wall Street Journal.
The annual charge, called an infrastructure fee, is aimed at other firms who sell their own funds on Fidelity's platform. An internal Fidelity document reviewed by The Journal notes the fee is "designed to ensure that each fund firm meets a minimum required payment to Fidelity."
The Labor Department is investigating Fidelity's disclosure of these fees, which are also a focus of a lawsuit filed against Fidelity by an investor in T-Mobile USA's 401(k) plan. The suit claims that Fidelity conceals their infrastructure fees.
"The infrastructure fee has been fully disclosed to 401(k) plans and their sponsors via a disclosure that Fidelity sent to over 20,000 401(k) plans," according to a firm spokesman.
SoFi files for first no-fee ETFs
Social Finance, the online lender specializing in student loan refinancing, is planning two passive ETFs that waive all charges for at least the first year, according to Bloomberg News. If passed, the funds would represent the industry's first passive, no-fee ETFs.
SoFi, which offers personal loans, mortgages and term life insurance, is one of the latest financial services firms to enter the traditional wealth management realm. The new products offered on the company's trading platform, SoFi Invest, will help it compete with low-cost passive investing platforms such as Betterment and Wealthfront, along with newer automated platforms including Merrill Edge.
Following the announcement, Vanguard said it would also cut management fees on 10 ETFs and make reductions on 43 mutual funds, The Journal reports. The fee for Vanguard's FTSE 100 Emerging Markets ETF (VWO) will drop to 0.12% from 0.14%, making it cheaper than its rival from BlackRock's iShares Core lineup.
"The marketing gimmick of permanently lower pricing is quickly becoming the industry standard and is here to stay," Forrester senior analyst Vijay Raghavan told Financial Planning.
Spikes launched as VIX competitor
MIAX Options announced the launch of the Spikes Index, a measure of the expected 30-day volatility in the SPDR S&P 500 ETF (SPY).
"For the first time in its history, the volatility trading market will be open to the full supply and demand pressures of the entire U.S. market," said MIAX CEO Thomas P. Gallagher.
Spikes, designed to buy tight SPY option bid-ask spreads, was created by the T3 Index, a research-based indexing firm, in partnership with MIAX, according to the firm. The VIX competitor will implement a proprietary 'price dragging' strategy aimed at minimizing price distortions for traders in volatile and illiquid markets with faster dissemination speeds — every 100 milliseconds — and by insulating the erratic movements in the bid-ask spread of constituent options, MIAX says.
Raymond James takes full ownership in ClariVest
Raymond James Financial has reached an agreement to take full ownership of ClariVest Asset Management from a previous 45% stake in the company, according to the firm.
ClariVest, which has $7.3 billion in assets under management, will now become wholly owned by Raymond James' Eagle Asset Management, a subsidiary of the firm's multi-boutique asset management firm, Carillon Tower Advisers, which, with its subsidiaries and affiliates has a combined $64.6 billion in assets under advisement, Raymond James said.
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Fee wars are great for clients, but don’t judge a fund solely on its expense ratio.
August 14 -
The Fidelity Zero Total Market Index Fund attracted $753.5 million through Aug. 31, while the Fidelity Zero International Index Fund gathered $234.2 million, according to Fidelity’s website.
September 4 -
Let’s face it, portfolio management will never be free.
March 7
"Adding to our asset management suite of capabilities is consistent with the firm's long-standing strategy of prioritizing organic growth and targeted acquisitions to thoughtfully expand Raymond James' position in the industry," said Raymond James CEO Paul Reilly.
PRODUCTS
Rothko adds its first mutual fund
Rothko Investment Strategies has launched its first mutual fund, the Rothko Emerging Markets Equity Fund (RKEMX).
The fund, which has a $1 million investment minimum, applies AI to fundamentally driven value investing across non-U.S. equity markets, the firm said. Its active, defensive, value-oriented investment process seeks to learn and use fundamental expert investment rationales while avoiding the behavioral biases of human stock selectors.
Legg Mason launches active ETF
Legg Mason announced the launch of the actively managed Western Asset Short Duration Income ETF (WINC).
The fund, which has a short-duration fixed-income strategy, aims to generate income through a diversified portfolio with emphasis on low interest rate sensitivity, higher credit quality and active credit selection, according to the firm.
"WINC targets short-duration credit exposure while leveraging Western Asset's global investment capabilities and strong risk management program, employing an active process that is both top-down and bottom-up to help identify attractive credit and income opportunities while actively managing risk," said Michael C. Buchanan, deputy chief investment officer of Western Asset.
AdvisorShares announces active ETF
AdvisorShares announced the launch of the AdvisorShares Sabretooth ETF (BKCH).
Managed by Sabretooth Advisors, the fund will seek to hold companies using cloud computing and blockchain technology, according to AdvisorShares. The fund, which has an expense ratio of 0.85%, will invest in U.S.-listed stocks and American deposit receipts.
ARRIVALS
Guggenheim names senior advisor
Guggenheim Securities announced that the founder and president of Bayne Advisors, Katie Bayne, has joined the firm as a senior advisor.
Prior to founding Bayne Advisors, a strategic consulting and advisory firm, Bayne spent two decades at The Coca-Cola Company, where she served as president of North American brands and chief marketing officer for North America, according to Guggenheim.
"We look forward to her contributions in broadening our relationships, finding new consumer and industry growth opportunities, as well her insights and advice as Guggenheim Securities continues to grow and is committed to attracting and retaining a diverse and innovative workforce," said Guggenheim Securities CEO Mark Van Lith.
Pacific Oaks Capital markets hires product manager
Pacific Oaks Capital Markets, the affiliated distributor of investment offerings sponsor Pacific Oaks Capital Markets, appointed former KBS Capital Markets product manager Mark Koshan to manager of product and due diligence, the firm said.
In his new role, Koshan will oversee performance reporting and analysis of the firm's alternative investment offerings for broker dealers, Pacific Oaks said. Koshan will work with senior executives on product development and strategic positioning for future alternative investment offerings, which could include REITs, private placements like tax-advantaged Delaware statutory trusts, qualified opportunity zone funds and private equity products, the firm said.
"Mark will support us in the successful pursuit of our mission to deliver quality commercial real estate investment opportunities to financial advisors and their clients across the United States," said Keith Hall, co-founder of Pacific Oak Companies.
After beginning his financial services career as an internal wholesaler with Grubb & Ellis Securities, Koshan served as vice president at Realty Capital Securities, where he led the firm's California internal sales team.
Wells Fargo Asset Management appoints head of ESG
Wells Fargo Asset Management announced Hannah Skeates, the former head of global ESG strategy at S&P Dow Jones Indices, has been named global head of ESG.
Skeates is now responsible for developing ESG strategy for the firm's asset management division, which includes 28 teams, according to Wells Fargo. She will also partner with the firm's investment management division to ensure a companywide vision. Skeates will be based in London and report to Fredrik Axsater, head of Wells Fargo Asset Management's strategic business segments.
"ESG is one of the greatest challenges and opportunities facing our clients," Axsater said. "WFAM is focused on solving the most pressing challenges of our clients, and with the collective experience of Hannah, Jessica and Chris, we believe we are even better positioned to provide exceptional ESG expertise and solutions."
