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Schwab expands commission-free lineup: Fund Scan

Our roundup of new fund launches.

Schwab expands commission-free lineup
Schwab has added 25 new commission-free ETFs to its OneSource platform where clients now have access to 539 ETFs covering 83 Morningstar Categories with $0 online commission, representing 98.79% of ETF assets in the industry.

Of the recently added ETFs, the majority come from JPMorgan and investment company Direxion.

Charles Schwab Corp. signage is displayed on the door of an office building in New York, U.S., on Thursday, April 12, 2018. Charles Schwab Corp. reported earnings per share for the first quarter that beat the average analyst estimate, with 443,000 new accounts, the highest quarterly level in 18 years, chief executive officer Walt Bettinger said in a statement. Photographer: Christopher Lee/Bloomberg
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"From day one, our priority with the Schwab ETF OneSource program has been to provide a broad lineup of commission-free ETFs that spans a variety of asset classes and index weightings, to make it simple for investors and advisors to build highly diversified, commission-free ETF portfolios," says Kari Droller, Schwab's vice president of third-party mutual funds and ETFs.

Vanguard proposes international stock fund
Vanguard filed a preliminary registration with the SEC for a new stock fund, specializing in developed and emerging markets outside the U.S., the company announced.

The International Core Stock Fund will be actively managed by Wellington Management and is expected to be available by the fourth quarter of 2019, according to the firm. The fund will hold anywhere from 60 to 100 equities across sectors and will have no position holding more than 5%.

Vanguard has been expanding its roster of actively managed funds over the past two years.

Alger launches 'best ideas' fund
Alger is launching the Alger Mid Cap Focus Fund, which will invest in roughly 50 growth equities based on the investment team's opinion, according to the firm.

"The fund is a focused, high-conviction portfolio of 'best ideas' generated by our team of talented analysts," says Amy Zhang, the fund's portfolio manager. "Common characteristics of the companies we invest in are both defensible competitive positions and high financial quality, such as solid balance sheets and strong cash flow generation."

Vanguard unveils commodity futures fund
Vanguard announced the launch of Vanguard Commodity Strategy Fund (VCMDX) to hedge against inflation, according to the firm.

The fund mixes Treasury bills and short-term TIPS, with the objective of broadening commodities exposure and capital appreciation. The fund will be offered in Admiral Shares, with an estimated expense ratio of 0.20%.

VCMDX gives investors low-cost exposure to commodities and provides additional inflation protection by holding longer futures contracts and collateralizing a portion of the portfolio in short-term TIPS, according to the firm.

Interactive advisors to offer ETF model portfolios from Global x
Interactive Advisors, an online investing platform, will offer two new ETF model portfolios from Global X, the ETF provider announced.

The ETFs that bested the strategy “offer exposure to extremely narrow and volatile segments of the market,” an expert says.
June 5

The portfolios will be allocated across several ETFs, mostly from Global X. The China Sector ETF model consists only of Global X ETFs and exposes investors to China and consumer-led sectors. The other ETF model portfolio, Equity Thematic Disruptors, uses both Global X and third-party ETFs. The model targets ETFs that have the potential to disrupt sectors in the marketplace. The minimum to use Interactive Advisors starts at $5,000 with a management fee of 10 basis points.

JPMorgan Chase launches automated investment portfolios
JPMorgan Chase announced a new portfolio platform called You Invest Portfolios, which uses a client's risk tolerance assessment to allocate assets into the bank's proprietary index ETFs, according to the firm. The product is available on the website and mobile app, according to the firm.

The portfolio builder is an extension of the You Invest brand which launched last year as a digital brokerage product and offered investors 100 free stock and ETF trades for their first year.

You Invest attracted new and younger customers for JPMorgan, as 90% of its users were first time customers and 56% were under the age of 40. The platform has an account minimum of $2,500 with a fee of 35 basis points and is designed for customers who want help investing.

Amplify announces actively managed cannabis ETF
Amplify ETFs released Amplify Seymour Cannabis ETF (CNBS), an actively managed fund with a 0.75% expense ratio, according to the company. It will expose investors to businesses that operate in the marijuana industry, specifically ones that support cultivation and retail, provide services to the broader market, and specialize in the cannabis or hemp plant.

The ETF will contain at least 80% of companies that receive over half of their revenues from the cannabis and hemp industry.

Capital Square rolls out first opportunity zone fund
Leading sponsor of tax-advantaged real estate investments Capital Square is set to launch its first opportunity fund aimed at promoting economic growth in Richmond, Virginia, the firm announced.

The CRSA Opportunity Zone Fund I's focus is to develop Scott's Collection I, a multifamily property in the Scott's Addition designated opportunity zone in Richmond.

State Street announces its first ESG money market fund
State Street Global Advisors announced the launch of the State Street ESG Liquid Reserves Fund, a first-of-its-kind product for the firm.

The firm's first ESG money market fund, will use R-Factor, a new ESG scoring system, to build a portfolio completely composed of holdings that meet the ESG criteria, as deemed by the Sustainability Account Standards Board's and country-specific corporate governance frameworks, the firm said.

American Century reduces corporate bond ETF fee
The fee associated with the American Century Diversified Corporate Bond ETF (KORP) was reduced to 0.29% from 0.45%, according to the firm. The fund focuses on investment-grade debt and allocates a portion of the portfolio to high yield.

The average expense ratio among the leading 20 is nearly 40 basis points cheaper than what investors paid on average last year.
July 10

"With KORP now exceeding $60 million and attracting steady flows, we decided to reduce the fees in order to provide better value to investors," says American Century's head of ETFs and senior vice president, Edward Rosenberg. "Our goal has always been to provide a lineup of ETFs that apply our unique insights to solve common investment problems."

Robo Global brings health tech ETF to NYSE
Following a successful debut of its robotics and automation ETF in 2013, Robo Global released another index that exposes investors to the technology shifting the healthcare industry, according to the firm.

The Robo Global Healthcare Technology and Innovation Index tracks companies in nine subsectors, including precision medicine and medical instruments.

"By and large, the health care industry appears to be primed for massive market growth, thanks to the implementation of advanced technologies like robotics and AI," says CEO of Robo Global U.S., Travis Briggs, adding that he expects the health care AI market will "grow at a compound annual growth rate between 47% and 50% by 2025, a value of $36 billion."

Fidelity's first ESG index debuts in Canada
Fidelity launched Sustainable World ETF (FCSW) at Canada's next-generation exchange NEO, making it the firm's first fund on the exchange and its first ETF to use ESG strategies.

FCSW leverages a quantitative multi-factor model and invests in global companies with favorable values regarding the environment and social issues.

"As sustainable investing continues to gain momentum, we are excited to offer our clients the opportunity to align their investments with their values," says Andrew Clee, vice president of ETFs at Fidelity Investments Canada. "The Fidelity Sustainable World ETF is a global multi-factor equity strategy that uses a best-in-class approach to invest in companies with favorable ESG characteristics."

New Fidelity model portfolios focus on factor ETF strategies
Fidelity Investments expanded its offerings of model portfolios, with an emphasis on ETFs and shifts in the business cycle.

"Model portfolios allow advisors to tap into the investment management expertise of asset managers, while also offering advisors the ability to customize solutions that help address their clients' specific needs," says Matt Goulet, senior vice president, Fidelity Institutional Asset Management.

The business cycles model portfolios are designed to enhance risk-adjusted returns, while the factor ETF model portfolios help reach specific results in the U.S. equity allocation, according to the firm.

Global X to liquidate two JPMorgan ETFs
Shareholders have until July 25 to sell their shares in the Global X ETF JPMorgan Efficiente Index ETF and JPMorgan U.S. Sector Rotator Index ETF.

The funds, which represent less than 1% of the provider's assets, will cease trading at the end of the trading day as a result of Global X ETFs ongoing review process of its product lineup to ensure it meets the needs of its clients.

Investors who hold shares in the funds, as of the liquidation date, will receive a cash distribution equal to the net asset value of their shares as of that date, the firm said.

The advisor to the funds, meanwhile, will bear all fees and expenses that may be connected with the liquidation and the distribution of cash proceeds to investors, aside from brokerage fees and other related expenses.

DWS launches S&P 500 ETF Xtrackers
DWS is leading the continued expansion of its ESG product lineup with the launch of Xtrackers S&P 500 ESG ETF. The new fund is intended to provide exposure to ESG-adjusted core benchmarks that investors can use in their portfolios to invest in well-positioned companies.

Although many underperformed the broader market, just over half posted double-digit gains.
August 7

The index was developed to support the growth of sustainable investing and helps investors align their investments with their values while still achieving a risk and return profile in line with the S&P 500, according to the firm.

"Our clients seek solutions that not only deliver on their investment strategy, but also help them achieve their sustainability goals," says Luke Oliver, head of index investing for the Americas at DWS.

ProShares joins Pershing's FundVest
ETF provider ProShares has joined BNY Mellon Pershing's no-transaction-fee ETF platform, FundVest ETF, according to ProShares.

Starting July 13, seven ProShares funds will be made available on Pershing's FundVest ETF platform, including Dividend Aristocrats (NOBL), Large Cap Core Plus (CSM) and Global Infrastructure (TOLZ) funds. As investors look to reduce costs within their investment portfolios, no-transaction-fee platforms are gaining popularity, according to the firm.

"Our inclusion in the Pershing no-transaction-fee platform will allow financial professionals and their clients to further leverage the ProShares ETF lineup in a cost-effective manner," says Steve Cohen, managing director at ProShares.

SoFi offers 'stock bits'
SoFi now offers investors the ability to buy and sell fractional shares in stocks and ETFs with as little as $1, according to the firm. Through its Stock Bits feature on the SoFi Invest platform, investors can purchase fractions of stocks including Amazon, Apple and Tesla, as well as ETFs.

"People are told to 'buy what they like', but when what they like costs over $100 or $1,000 per share, first-time investors are priced out," says Anthony Noto, CEO at SoFi. "It is our focus to remove the barriers to getting started by providing features like Stock Bits."

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