Our weekly roundup of industry highlights
ETFs suffer as volatility prompts collapse of inverse notes
A three-day volatility spike sent one Credit Suisse exchange traded product tumbling and halted dozens of other funds, according to Bloomberg.
Credit Suisse said the firm will buy back its VelocityShares Daily Inverse VIX Short-Term ETN (XIV), which had a market value of nearly $2 billion as of late January, after the CBOE jolted nearly three-fold in three days, shedding $3 trillion away from equities on signs that the U.S. economy may be overheating, Bloomberg reports.
XIV fell nearly 89% as a result. The ProShares Short VIX Short-Term Futures ETF, a similar short-volatility fund, dropped 84%, wiping out more than $1 billion in market value.
A dozen other exchange-traded products tracking the VIX stopped trading as the volatility gauge spiked above 50 and later tumbled below 35.
Mobius retires after 3 decades with Franklin Templeton
Franklin Templeton Investments said its executive chairman of emerging markets, Mark Mobius, will retire after more than three decades with the firm.
“There is no single individual that is more synonymous with emerging markets investing than Mark Mobius,” said Franklin Templeton CEO Greg Johnson. “My colleagues and I are deeply grateful to have had the opportunity to work alongside a legend, and we thank Mark for his many years of dedicated service and tremendous contributions to the firm.”
Franklin Templeton hired Mobius in 1987 to head one of the firm’s first emerging markets mutual funds. Mobius led the team through 2016, according to Franklin.
Managers confident about insurance investment outsourcing
Insurance general accounts remain a strong, growing segment of the institutional asset management space, despite a pause in the allocation of assets to third-party, nonaffiliated asset managers, according to a survey.
Cerulli Associates conducted the research and reports the fundamentals of the insurance industry dictate that asset management services for insurance companies will continue to see growth for the foreseeable future.
“Despite the increased activity, it is expected that insurance-related merger and acquisition transactions in the asset management industry will likely cool in the near term,” said Alexi Maravel, director at Cerulli. “The majority [81%] of insurance asset management survey respondents indicate that they plan to grow their insurance capabilities organically in the next 12 months, while 82% of respondents report that it is unlikely for them to do an acquisition in the near term.”
Managers are pausing to take stock of their investments, deepen client relationships and employ strategic hiring. They are showcasing strategies and capabilities that might be new to insurance companies, according to the survey.
JP Morgan launches alternative beta ETF
J.P. Morgan Asset Management rolled out a new ETF with long and short exposure to equity factors with dynamic market beta, the firm said.
The JPMorgan Long/Short ETF (JPLS), which has an expense ratio of 0.69%, employs a rules-based, bottom-up security selection process by using value, quality, momentum and size factors.
“As investor needs and demands evolve, we are constantly looking to innovate and be at the forefront of a rapidly expanding ETF market,” said Joanna Gallegos, U.S. head of ETFs for J.P. Morgan Asset Management. “With JPLS, we are proud to contribute to the democratization of hedge fund investing by offering our clients access to institutional-quality products, which helps them build stronger portfolios.”
American Century launches first 2 ETFs
American Century Investments is adding two ETFs to its lineup: American Century STOXX 1 U.S. Quality Value (VALQ) and American Century Diversified Corporate Bond (KORP).
The firm’s global analytics team, which played a key role in designing the offerings, will partner with American Century’s investment teams to spearhead empirical research for the fund in global macro, alpha generation and product engineering.
WisdomTree and ICBC Credit Suisse unveil new ETFs
WisdomTree and ICBC Credit Suisse Asset Management announced a collaborative effort to launch two ETFs.
The WisdomTree ICBCCS S&P China 500 Fund (WCHN), which has an expense ratio of 0.55%, seeks investment results that correspond to the S&P China 500 Index, according to the firm.
The WisdomTree Balanced Income Fund (WBAL), with an expense ratio of 0.35%, tracks the price and yield performance of the WisdomTree Balance Income Index.
“China offers an attractive mix of high growth rates, a burgeoning middle class, and an economy poised to climb the value chain from export-oriented growth,” said WisdomTree Research Director Jeremy Schwartz. “China’s influence among global financial markets is likely to grow as the government increases integration among global investors.”
TD Ameritrade expands commission-free trading platform
TD Ameritrade announced the expansion of its commission-free trading platform, ETF Market Center, with the launch of 24 new ETFs. It also added USAA as a provider. The platform now has 320 total funds.
The firm’s RIAs and investor clients will have exclusive access to the funds from iShares ETFs, State Street Global Advisors’ SPDR business, USAA and WisdomTree, the firm said.
Krane Fund Advisors introduces China health care ETF
Krane Fund Advisors has launched a new China health care ETF.
The KraneShares MSCI All China Health Care Index ETF (KURE), which has an expense ratio of 0.79%, tracks the performance of MSCI China All Shares Health Care 10/40 Index, which includes publicly listed companies in Mainland China, Hong Kong and the U.S. involved in the health care industry, according to the firm.
Specifically, the index focuses on patent and generic pharmaceuticals, hospital administration, biotechnology, medical equipment production, health care IT and traditional Chinese medicine.
“China’s aging population, rising incomes and increasing urbanization may provide a sustained catalyst for growth in China’s health care sector,” said KraneShares CEO Jonathan Krane. “We believe China’s competitive research and development environment and favorable government policies also make China’s health care sector particularly attractive.”
Fidelity launches 2 factor-based international ETFs
Fidelity Investments is expanding its line of factor-based ETFs to reach individual investors and advisors with the addition of two international funds.
The Fidelity International High Dividend ETF (FIDI) seeks to provide investment results that correspond with the total return of dividend-paying stocks as it corresponds to the Fidelity International High Dividend Index, the firm said.
The Fidelity International Value Factor ETF (FIVA) seeks to provide investment results that correspond to the total return of international stocks exhibiting value characteristics, as represented by the Fidelity International Value Factor Index. Both funds have an expense ratio of 0.39%.
“Many investors have expressed strong interest in international dividend and value factor strategies,” said Greg Friedman, head of ETF management and strategy at Fidelity. “
Putnam to offer 2 ESG funds
Putnam Investments announced plans to reposition two funds to expand its line of ESG offerings, pending SEC approval.
The Putnam Sustainable Leaders Fund, formerly the Putnam Multi-Cap Growth Fund, a multi-cap offering with more than $4.3 billion in assets will focus on companies committed to sustainable business practices, according to the firm.
The Putnam Multi-Cap Value Fund will become the Putnam Sustainable Future Fund, a mid-cap fund with $450 million in assets. The fund will focus on companies with products and services that provide solutions directly contributing to sustainable social, environmental and economic development.
AssetMark implements J.P. Morgan Global Flexible strategy
A new solution from AssetMark will combine active and passive market approaches with the launch of the J.P. Morgan Global Flexible strategy.
The strategy, available on AssetMark’s platform, combines actively managed mutual funds with strategic beta ETFs in an effort to bring advisors flexibility to capitalize on immediate opportunities and adjust portfolio allocations while more efficiently managing risk at a lower cost, the firm said.
“The balance between active and passive strategies sets the stage for potentially better outcomes for investors by giving advisors a solution with broader flexibility to express conviction views,” said Zoë Brunson, senior vice president of investment strategies at AssetMark. “It also provides the potential for higher risk-adjusted returns.”
Hennessy Advisors appoints new president
Hennessy Advisors promoted former executive vice president and corporate secretary Teresa Nilsen to president of the firm.
Nilsen, who has served as executive vice president, chief financial officer and director of the company since 1989, will succeed founder Neil Hennessy in that role, according to the firm. Nilsen will continue to serve as chief operating officer and corporate secretary, the firm said.
“Nilsen has been instrumental to the company’s success over the past 28 years,” Hennessy said. “While I will continue in an active role in the company, I am excited to welcome [her] as our new leader. I am confident in her abilities, and I have witnessed firsthand her commitment, focus and integrity. She is both talented and thoughtful.”
Nilsen was named one of Money Management Executive’s top women in asset management in 2017.
Hennessy will remain the company’s chairman of the board and CEO, responsible for leading business strategy, strategic affairs and corporate policy. Former Hennessy Advisors Controller Kathryn R. Fahy was promoted to chief financial officer with a senior vice president title.
Fahy previously served as a public accountant at Deloitte & Touche and senior internal auditor for Knight Ridder, according to the firm.
Brian Carlson, head of distribution at the firm, was appointed to chief compliance officer.
Ankura Trust names managing director
The newly formed Ankura Trust Company announced the appointment of Lisa Price, former vice president of escrow administration services at HSBC, as managing director.
In this role, Price will facilitate the execution of services to clients in the non-depositary trust company, utilizing her expertise in handling administration within the indenture trustee, escrow and loan agency.
Price was in charge of the oversight and negotiation of agreements to ensure that transaction roles and responsibilities were feasible in relation to respective policies and procedures in her former positions.
Price’s expertise in the administration of indenture trustee and agency services shows how Ankura Trust is committed to building a successful trust company, the company’s co-president, Kevin Lavin, said.
Franklin Templeton hires emerging markets CIO
Franklin Templeton Investments announced Manraj Sekhon, the ex-CIO and director of Singapore-based Fullerton Fund Management, as its chief investment officer.
Sekhon will represent over $45 billion in AUM and oversee more than 80 professionals in the firm’s emerging markets equity groups around the world.
The new hire is part of the global investment management organization’s effort to further enhance on-the-ground research and establish a stronger global team of local experts in emerging countries, Jenny Johnson, president and COO of Franklin Templeton Investments, said.
Sekhon previously managed various portfolios while at Fullerton Fund. In that role, he was responsible for driving the strategy and growth of the business globally.
“We remain committed to bringing high- quality emerging markets investment options to our retail and institutional clients under Manraj’s capable leadership.” Johnson said.
Lord Abbett announces leadership changes
Following Daria Foster’s retirement as managing partner at Lord Abbett, client services partner Douglas Sieg will succeed her in the position as the 10th person to hold the title, according to the firm.
Foster stated her intention to retire in the meeting after 28 years at Lord Abbett, an independent, privately held investment firm with more than $160.4 billion in AUM, landing in the leading position in the U.S. retail market with a focus on the U.S. institutional market.
Over the past several years, Sieg has worked closely with Foster to strengthen various functions of the firm.
Sieg most recently held the title of partner of client services overseeing the U.S. retail, U.S. institutional and international markets, as well as the product strategy, marketing and corporate communications teams.
“I know he has the intelligence, energy, creativity and determination to successfully steer the firm forward,” Foster said.
Ali Faghri to Join Guggenheim Securities as Consumer Analyst
Guggenheim Securities announced that Ali Faghri, the former senior analyst at global quantitative trading firm Susquehanna International, will join as a senior analyst and managing director.
The addition of Faghri is part of a companywide effort to expand its consumer equity research team. In this position, Faghri will focus specifically on automotive retail.
“He has established a well-respected research product that will complement and expand our existing expertise across our retail team,” said Stefano Natella, Guggenheim’s director of equity research.
Previously, Faghri held equity research roles focused on the automotive industry at Sterne Agee/CRT Capital, the firm said.