Vanguard debuts U.S. factor funds: Fund Scan
Our weekly roundup of new fund launches your clients may be thinking about.
Vanguard debuts U.S. factor funds
Vanguard unveiled its very first actively managed funds in the U.S. The launch including six ETFs and one mutual fund is part of the firm’s latest effort to expand its low-cost active funds.
Five of the ETFs seek to target risk and return objectives through factor exposures such as minimum volatility, value, momentum, liquidity and quality. Vanguard estimates these funds will have an expense ratio of 0.18%. The sixth ETF and the mutual fund, which are both based on multiple factors, will have expense ratios of 0.13%.
"The newly launched factor funds further broaden our active equity lineup and represent a differentiated approach — disciplined, rules-based, targeted exposure to factors — along with Vanguard's low costs," said Vanguard CEO Tim Buckley. "The funds are aimed primarily at financial advisors and institutional investors, who we believe understand the risks of potential underperformance and can effectively incorporate factor funds into their portfolios."
To complement the launch of the funds, Vanguard Financial Advisor Services (FAS) introduced an education center. The center will provide advisors with Vanguard's latest research on factor investing.
Putnam adds 10 funds to its Advantage Retirement series
Putnam Retirement Advantage Funds introduced 10 target-date funds. The new funds will provide retirement plans with actively managed investment strategies at a lower price. The 10-year-old suite currently has $3.8 billion assent under management.
The new Class X Shares will have 0.35% management fee and be available to defined contribution plans that have at least $5 million invested in Putnam Retirement Advantage Funds. This addition will be managed by the firm’s Global Asset Allocation team with a focus on multi-asset investment strategies.
“The addition of the new share class underscores our commitment to deliver performance and value to plan sponsors — to ultimately help their participants meet their retirement goals.” said Steven P. McKay, head of defined contributions at Putnam Investments.
Direxion spices up new ETFs with added exposure
Direxion Advisors has launched Portfolio+ ETFs, a new suite of ETFs that offer access to extra daily exposure to magnify returns for long-term investors.
The funds provide 25% more daily exposure to broad-based indexes targeted by advisors. Two of the funds already have a three-year track record, as they have already been part of the Direxion ETFs. The leveraged solutions can seek greater upside potential over time.
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While the funds are designed for investors to monitor their portfolios, their low leverage allows them to be managed within a longer-term portfolio.
"Over time, a small amount of added exposure can make a significant difference," said Andy O'Rourke, managing director at Direxion. "At the right price point, just a 25% boost allows advisors who already manage a diversified strategy to seek out additional risk-adjusted returns in a manageable way."
J.P. 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 unveils 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 announce 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.
Fidelity adds 2 factor-based international ETFs to lineup
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.
Krane Fund Advisors introduces 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."
AssetMark implements J.P. Morgan global flexible strategy
A new solution from AssetMark will combine active and passive market approaches with the launch of 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."