SEC considers rule to streamline ETF approvals: News Scan
Our weekly roundup of industry highlights
SEC poised to advance rule that streamlines ETF approval process
The SEC is considering a proposal that will make it easier for mutual funds to introduce new ETFs into the market.
The proposal would lay out formal steps for setting up less-complicated funds and eliminate many of the issuers from having to seek a special order from the SEC to operate.
"The main goal, as we understand it, is to streamline the process for straightforward ETFs to come to market and possibly level the regulatory field," Michael Mundt, a partner at Stradley Ronon, said of the SEC's proposal.
This is the second recommendation to be considered by the SEC after years of complaints that the ETF application process is too expensive, and takes too long. The first, which attempted to get rid of unnecessary regulations, was dropped in 2008.
Vanguard to cut online ETF fees from nearly all ETFs
Vanguard plans to eliminate online commissions for a majority of its ETFs, as well as from various competitors' products.
The firm said it will expand its access to low-cost ETFs to 1,800 from, offering them at no cost. The program excludes speculative and complex ETFs, but will include funds from BlackRock, Schwab and SSgA.
"We believe giving investors access to a broad choice of low-cost, broadly diversified, commission-free investments is good for investors and good for the asset management industry," said Karin Risi, managing director of Vanguard's retail investor group.
Vanguard expects the changes to take effect in August.
Competition to intensify amid shrinking fee pool: Cerulli
Fund fees are dropping as asset allocation advice is becoming increasingly important, according to a study.
Since there is more advice available, managers are competing for a shrinking fee pool, said Cerulli Associates Director Bing Waldert. In some cases, fees are dropping close to zero, according to the report from Cerulli. One of the reasons for this has to do with greater regulation formalizing the buying process and creating demand for low-cost passive products. Cerulli also expects automation to continue to drive down fees.
"Under the influence of professional buyers, eliminating the highest-priced products is often the first screen, creating a race to the bottom as managers try to avoid having above-average fees," Waldert said.
J.P. Morgan launches digital portfolio tool
J.P. Morgan announced a new digital tool from Portfolio Insights that will help financial advisors build stronger portfolios and improve client communication.
The tool will provide on-demand diagnostics, observations and content, according to J.P. Morgan. Advisors will be able to upload a portfolio and tailor their analysis to address specific risks and concerns, evaluate new asset classes and products, or simply perform a portfolio checkup against a benchmark they choose.
Vanguard files for two ESG ETFs
Vanguard is in the preliminary stage of introducing a Stock ETF and Vanguard ESG International Stock ETF that should begin trading in September, the firm says.
The fund will seek to track the FTSE US All Cap Choice Index, a market-cap weighted benchmark that is made up of stocks that are screened to avoid companies involved in certain industries, such as adult entertainment, tobacco and weapons sales.
The quant crowd is justifiably concerned by the lack of objective statistics available.June 6
The methodology also screens stocks of companies that don't meet criteria set by the U.N. global compact principles, such as diversity and environmental standards.
"The adoption of ESG investing has accelerated in recent years, and more investors are looking for opportunities to align their investment choices with their values," said Jon Cleborne, head of Vanguard's portfolio review group.
Franklin seeks approval for Saudi Arabia ETF
Franklin Templeton Investments is seeking approval with the SEC for a Saudi Arabia ETF, Bloomberg reports.
Investors are starting to pull billions from broad emerging market funds to invest in single-country ETFs, and Saudi Arabia is having the most success.
There is only one other fund like the ETF Franklin Templeton is now launching. This fund, the iShares MSCI Saudi Arabia ETF (KSA), has ballooned by as much as 1,700% this year, surpassing all other single-country funds.
E fund, State Street develop China ESG strategy
E Fund Management and State Street Global Advisors are co-developing the State Street — E Fund Environmental Driven China A Strategy, a strategy that will integrate environmental thinking into Chinese equity portfolios.
The strategy will have a bottom-up construction approach that combines sustainability metrics with a focus on companies that are more carbon-efficient, have better environmental policies and generate higher green revenues.
VanEck is closing 2 ETFs
VanEck announced it will close and liquidate its Spin-off ETF (SPUN) and EM Investment Grade+BB Rated USD Sovereign Bond ETF (IGEM), which have expense ratios of 0.55% and 0.40%, respectively.
The firm decided to liquidate the funds based on analysis of their performance, liquidity, assets under management and investment interest, among other reasons. Shareholders will be able to sell their shares of the fund until the end of the month, when markets close on July 31, and the funds are expected to liquidate in early August, when proceeds will be sent to shareholders.
Amplify ETFs plans for new battery metals ETF
Amplify ETFs will launch the Amplify Advanced Battery Metals and Materials ETF (BATT), says the firm. It will invest in companies doing business related to Lithium, Cobalt, Manganese and Graphite.
Concerns came into focus when a $1.9 billion exchange traded note lost 90% of its value in a single day.February 15
BATT, which has an expense ratio of 0.72%, will invest in companies that either have at least 10% market share of any advanced battery metal or derive 50% or more of their revenue from an advanced battery metal. BATT will be co-managed by its sub-advisers Toroso Investments and Exponential ETFs.
CLS model offerings offered on Model Market Center
CLS-managed American Funds and AdvisorOne Funds will now be listed on TD Ameritrade Instiutional’s model market center, according to CLS.
CLS’ models cover a comprehensive range of risk tolerance levels for those seeking to accumulate wealth or avoid severe market declines. Model market center gives advisors access to a variety of third-party investment models in one place.
“By offering these models on model market center, we’re empowering advisors with additional investment choices to better serve their clients’ individual needs,” CLS CEO Ryan Beach said.
Ocean Capital, ETF managers launch global ETF
Ocean Capital Advisors is partnering with ETF Managers Group to launch the Rogers AI Global Macro ETF (BIKR), a fund that provides investors with optimally weighted global portfolios.
BIKR has an expense ratio of 1.18% and will primarily hold single-country ETFs, according to the firm. The ETF will also use artificial intelligence and Jim Rogers' insight to find, track and project leading economic indicators. It will primarily invest in global equity markets and attempt to achieve long-term capital gain by trying to outperform global large and mid-cap equity indexes, according to the firm.
"Artificial intelligence is constantly evolving and changing the asset management space, and a product like BIKR satisfies growing investor needs," said Sam Masucci, founder and CEO of ETF Managers Group.
Fidelity begins trading 2 factor ETFs
Fidelity started trading two new commission-free ETFs: the Fidelity Low Duration Bond Factor ETF and the Fidelity High Yield Factor ETF on the firm's online brokerage platform.
The Fidelity High Yield Factor ETF will invest 80% of its assets in debt securities that are rated below investment grade. It will use the ICE BofAML BB-B US High Yield Constrained Index (FRED) as a guide in structuring the fund and selecting its investments according to credit quality and risk characteristics.
The Fidelity Low Duration Bond Factor ETF will try to follow the performance of the Fidelity Low Duration Investment Grade Factor Index. The fund will invest at least 80% of its assets in securities that are included in the index.
Hunt Investment Management hired a new SVP
Hunt Investment Management announced that it hired Evan Abrams as a senior vice president from Hodes Weill & Associates, where he served as vice president.
Abrams is responsible for leading Hunt’s marketing and investor relations functions as well as work on attracting outside capital for equity and debt real estate investments.
"He will play a critical role in leading the third party capital growth of the business,” said Hunt Investment Management President Thomas Duda.
Thornburg adds 3 new members to global distribution team
Thornburg Investment Management hired Joseph Feloney as head of strategic relationships, William Loehning as head of its institutional advisor channel and David Rentfrow as head of internal sales.
Feloney is joining Thornburg from Jackson National Life Distributors’ private wealth and trust group, where he served as a managing director. Lohning is coming from a regional investment consultant position at Putnam Investments. Rentfrow was previously a managing director at Crossmark Global Investments.
“Joe, Bill and David bring decades of industry experience and leadership to Thornburg,” said Carter Sims, head of global distribution. “Their capabilities will advance our level of client engagement and drive growth in key distribution channels. We are pleased to welcome them to the Thornburg team.
Kennedy Lewis hires new chairman
Kennedy Lewis Investment Management announced that former CarVal Investors President John Brice will be joining the firm as chairman.
Brice will work on strategic initiatives with the firm's executive committee and co-founders David Chene and Darren Richman.
"John's client-first philosophy and strong track record of success make him a valuable addition to the team as we continue to pursue new and innovative market opportunities across a broad range of sectors," said Chene in a statement.
Franklin Templeton Investments names new senior vice president
Franklin Templeton Investments hired former Voya Portfolio Manager May Tongas as senior vice president of Franklin Templeton's multi-asset solutions division.
Tong will report to Tom Nelson, senior vice president and director of portfolio management.
"We anticipate adding her as a portfolio manager to certain US products over the coming months," Nelson said.
Fiduciary Trust hires new vice president
Fiduciary Trust Company appointed John Morey from GMO to vice president, head of client service and business development, the firm said.
“He will … assist our growth with families seeking investment and estate advice from a firm aligned with their best interests,” said Fiduciary Trust CEO Austin Shapard.
Morey served as the head of client relations in North America for 15 years at GMO. Prior to that, he was a senior manager at Putnam and a managing director at BankBoston.