Our weekly roundup of industry highlights
iCapital to buy Deutsche Bank’s $2.5B fund portfolio
ICapital Network will acquire the U.S. Private Equity Access Fund Platform from Deutsche Bank. The portfolio includes 33 funds with $2.5 billion in invested assets and more than 7,000 domestic and international investors. Terms of the deal were not disclosed.
“We see this deal as an important step forward in our mission to connect alternative asset managers with high-net-worth individuals,” stated iCapital CEO Lawrence Calcano.
ICapital said it would maintain the funds’ third-party service providers and offer positions to the 18 employees currently managing the fund portfolio and servicing the investors within Deutsche Asset Management.
Pax World acquired for $90M as sustainable investing grows
Merger fever has reached sustainable investing as well.
Pax World Management, based in Portsmouth, New Hampshire, is to be acquired by U.K.-based Impax Asset Management in a $90 million deal announced on September 18.
Together, the two companies said they will become a sustainable investment firm with more than $13 billion in assets under management.
“We believe that combining our two firms will create a leading sustainable investment manager with business on both sides of the Atlantic,” said Pax CEO Joe Keefe in a statement.
Currently, the market for such investing is worth over $8 trillion in the U.S. alone, according to the US Forum for Sustainable and Responsible Investment.
The two firms are not strangers to one another, having partnered in 2007 to launch an environmental fund, which has more than $500 million in assets.
“After a decade of successfully partnering to design, launch and manage the Pax Global Environmental Markets Fund, the Impax and Pax teams will be joining forces,” stated Impax founder and chief executive Ian Simm.
Morningstar kills off standalone ETF conference
There will be one less conference for managers to attend, after Morningstar decided to end its standalone event featuring ETFs.
The conference will now be integrated into the Morningstar Investment Conference, which will take place next June, said a company spokeswoman.
“Advisors today take a holistic view when they serve clients; they don’t think about mutual funds and exchange-traded/passive funds separately,” the spokeswoman said in a statement.
“To serve advisors in a way that makes the most sense for their business, we made the decision to incorporate passive investing into our main flagship event.”
Advisors urged to focus on clients not portfolio construction
At their firm’s bidding, more advisors are outsourcing their portfolio construction needs to concentrate on client relationships, Cerulli reports.
Outsourcing of portfolio construction favors unified managed accounts, which have grown 23.3% during the past year. Most advisors expect to increase UMA assets by 2018. At present, 55% of UMA assets are housed at wirehouses and 14.9% at direct firms, according to Cerulli.
“Many advisors pride themselves on their portfolio management skills,” stated Tom O’Shea, associate director at Cerulli. “But [we find] that home-office-managed portfolios outperform open portfolios managed by advisors.”
BlackRock’s iShares adds 3 corporate bond ETFs
BlackRock’s iShares unit added three new corporate bond ETFs to its lineup, including the iShares 5-10 Year Investment Grade Corporate Bond ETF (MLQD), Investopedia reports.
MLQD, which has an expense ratio of 0.06%, “seeks to track the investment results of an index composed of U.S. dollar-denominated, investment-grade corporate bonds with remaining maturities between five and 10 years,” according to iShares.
The fund holds nearly 200 bonds, 86% of which are rated A or BBB, according to the firm.
New ETF from Global X
Global X Funds announced the launch of the Global X U.S. Preferred ETF (PFFD), which has an expense ratio of 0.23% and tracks the BofA Merrill Lunch Diversifies Core U.S. Preferred Securities Index.
“Investors continue to contend with low interest rates and narrow credit spreads, making sufficient income difficult to come by,” said Jay Jacobs, director of research at Global X. “Preferreds, however, currently have attractive yields that sets them apart from other traditional income-generating asset classes like investment grade bonds and REITs.”
Innealta Capital expands investment team
Innealta Capital, AFAM Capital’s quant investment arm, added three recruits.
Francisco Simian, an economist completing a doctoral dissertation at the University of Chicago, will provide investment research and strategic support, especially on international equity markets.
Alfred Zhang, who earned an M.S. in financial mathematics from the same school, will support the execution and enhancement of investment methodology.
Alex Gross, a research analyst graduated from the University of Minnesota, will join the data analytics team.
“Our new recruits have a strong quantitative and academic background, combining economic reasoning with computational data analysis. They will be a perfect fit for a quantitatively-driven firm like ours,” noted Innealta Portfolio Manager Joshua Kocher.
Pinnacle Capital Management names national sales director
Pinnacle Capital Management appointed Dean Dellas, who joined the firm in 2013, as national sales director, according to the firm.
Dellas will split his time between the firm’s headquarters in Fayetteville, New York and Boston-area offices.
Dellas began his career at Merrill Lynch and joined PCM as an affiliated broker-dealer. Dellas is responsible for providing advisors with access to customized asset management solutions, the firm said.
“PCM has reached a stage in its development that demands a more disciplined and sophisticated approach to growing its business,” said PCM CEO Joseph Masella. “With his years of experience interacting with both financial-services clients and financial-services professionals, Dean brings to PCM that needed level of sales and business-development expertise.
Franklin Templeton selects ETF portfolio manager
Franklin Templeton has appointed Louis Hsu from BlackRock as a vice president and senior portfolio manager, based in San Mateo, California, according to the firm.
In his new role, Hsu will assist Dina Ting, senior portfolio manager for global ETFs, in managing Franklin LibertyShares ETFs.
Hsu spent the past six years as vice president in BlackRock’s Beta Strategies and Multi-Asset Strategies in San Francisco, Hong Kong and Taiwan. He managed indexed and smart beta portfolios and was involved in multiple fund launches.
Black Diamond appoints structured product business development head
Black Diamond Capital Management named Andy Phelps, the former global head of structured products at Natixis, as senior managing director and head of structured products business development.
“Andy has been a key partner on a number of prior Black Diamond CLOs and will strengthen relationships with our global investors in his new role with the firm,” said Black Diamond Managing Principal Stephen Deckoff.