F-Squared Rebrands and Updates Fixed-Income Indices

The asset manager F-Squared Investments upgraded its AlphaSector Fixed Income Indices.

 

Key aspects of the modifications to the indices, which have been rebranded as AlphaSector INFInity, derived from “inflation neutral fixed income,” include an ability to “de-risk” in challenging markets by going 100% to short-term treasuries, expanding the fixed income sector exposure to include treasury inflation-protected securities (TIPs) and floating rate securities, and a revised investment algorithm that has an absolute return decision framework.

“Investors have recently had to weather two bear markets in equities, and now their concerns are increasingly turning to the risk of a crushing halt to the long-running bull market in bonds,” said Howard Present, president and chief executive of F-Squared Investments. “Bonds are a critical risk management tool, and client expectations for losses are almost non-existent. Therefore, while our fixed income indices have fully delivered on their investment mandate since their launch in 2009, we have been working since late last year to upgrade the design to make them ‘inflation neutral,’ or independent of the direction of interest rates.”

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The enhanced INFInity indices will be automatically included within existing AlphaSector Allocator, Asset Allocation, and Target Risk indices and portfolios. The indices will also be made available as the basis for a stand alone separately managed account (SMA).

 

Advisers Favor Extending the Fiduciary Standard

More advisers should be bound by the Employee Retirement Income Security Act (ERISA) fiduciary standard, a survey found. 

Advisers were asked their opinions on fiduciary relationships and the definition of the fiduciary standard, as well as their understanding of what the fiduciary standard means nowor would mean in the futureand its impact on their businesses.  

The survey, conducted for the second year, found that advisers believe that extending the fiduciary standard would not limit access to advice or products (65%); cost investors more for advice (82%) or price them out of the market altogether (71%).

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Most advisers believe that extension of the fiduciary standard to brokers would help restore investor confidence. Ninety-seven percent of survey respondents said investors do not understand the difference between brokers and advisers. A majority of respondents (85%) said the gap between what investors and advisers know makes fiduciary advice much more important for ordinary investors.

A majority (70%) agree with the Department of Labor’s proposal to extend the ERISA fiduciary duty to more advisers, and 89% felt that fiduciary duty should cover advice on money being distributed from 401(k)s and IRAs. (See “PSNC 2012: The New Fiduciary.”)

“That support for the fiduciary standard is coming from registered reps and investment advisers across the spectrum of business models demonstrates that the majority of professionals understand that putting the best interests of their clients first is in their long-term best interests, as well, and has become a competitive necessity,” said Blaine Aikin, president of fi360.

Fielded in March and April, the survey by fi360 and AdvisorOne was completed by 380 advisers across a range of adviser business models and affiliations.

Key findings are available here.

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