Products June 10, 2021

Investment Product and Service Launches

Morningstar invests $11 million in iraLogix; Transamerica announces latest R6 share classes; and ESG Asset launches new capital health care disruptors fund.

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Art by Jackson Epstein

Art by Jackson Epstein

Morningstar Invests $11 Million in iraLogix 

iraLogix Inc., which creates products for the individual retirement account (IRA) market, has announced the completion of an $11 million Series B expansion led by independent investment research firm Morningstar  Inc., with additional investments made by company insiders.

iraLogix enables institutional partners to rapidly launch profitable white label IRA programs that leverage  institutionally priced investments as well as professional advice and education. The company’s modular technologies are cloud-native and support a fully paperless process with no account minimums.

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Upon making this investment, Morningstar will take a minority stake in iraLogix. James Smith, head of workplace strategy and business development for Morningstar Investment Management, has been appointed  to iraLogix’s board of directors.

David Bernard, chief executive officer of iraLogix, comments, “In addition to their investment in iraLogix, Morningstar brings the power of their industry reach to this partnership. The combination of our uniquely flexible technology and institutionally priced investments with Morningstar’s highly respected investment advice and managed account capabilities makes for a compelling business model that will help more clients achieve IRA business profitably while providing better options to everyone saving for retirement. It offers a competitive opportunity with inherent cost and scale advantages the industry has been searching for.”

Brock Johnson, president of global retirement and workplace solutions at Morningstar Investment Management, adds, “With a mission tightly aligned with ours, iraLogix offers a natural expansion of our approach to democratizing high-quality investment and saving advice for every working American, no matter their salary or account balance. Together, we will expand on the success of our managed accounts platform so  more people can access personalized advice across not only retirement accounts such as 401(k)s, but also for IRAs in order to achieve the retirement of their dreams.”

Transamerica Announces Latest R6 Share Classes

Transamerica has launched its new R6 retirement share classes for five existing Transamerica mutual funds. The new R6 shares are available to retirement investors in employer-sponsored retirement plans, individual retirement accounts (IRAs) and health savings accounts (HSAs). The five new Transamerica R6 share classes launched on May 28.

The new share classes are:

  • Transamerica Large Growth fund(R6 Ticker: TAGDX)
  • Transamerica US Growth fund(R6 Ticker: TAGHX)
  • Transamerica Mid Cap Growth fund(R6 Ticker: TAGFX)
  • Transamerica Emerging Markets Opportunities fund(R6 Ticker: TEOOX)
  • Transamerica Intermediate Bond fund(R6 Ticker: TAGMX)

“Helping retirement investors achieve their goals is important to us, and combining strong investment strategies with these new R6 share classes can be an effective means to accomplish that,” says Tom Wald, chief investment officer (CIO) for Transamerica Asset Management Inc.

With the addition of five new R6 share classes, Transamerica Asset Management increases its array of mutual funds, variable product portfolios and exchange-traded funds (ETFs) totaling assets under management (AUM) of more than $89 billion as of April 30.

ESG Asset Launches New Capital Health Care Disruptors Fund

EFG Asset Management (EFGAM) has added to its growth equity range with the launch of the New Capital Healthcare Disruptors Fund.

Benchmarked against the MSCI World Health Care index, the fund will have up to 30 holdings across the market cap spectrum. It is managed by Mike Clulow, and EFGAM’s US growth equity team—Tim Butler, Joel Rubenstein and Chelsea Wiater— all of whom are based in Portland, Oregon.

The team seeks to identify health care companies with disrupting technologies and services in segments such as biopharmaceuticals, with gene therapy, immunotherapy and genetically targeted treatments; medical devices, including robotics, miniaturization and wearables; health care services such as telemedicine and remote monitoring; and pharmaceutical outsourcing in cloud solutions, data analytics and artificial intelligence (AI).

“We search for companies that are displacing legacy participants facing patent expirations and product obsolescence,” Clulow says. “COVID-19 has accelerated this adoption cycle, as next-generation products may drive more cost-effective outcomes and potentially minimize the likelihood of viral or bacterial transmission. The broader use of telemedicine, the shift toward minimally invasive procedures and the widespread adoption of wireless devices and wearable products all reflect this trend.”

Compliance June 10, 2021

CDI Corp. Agrees to $1.8M ERISA Lawsuit Settlement

The retirement plan in question in the suit is substantially smaller than many of those that have faced or settled similar lawsuits, and thus the size of the settlement is also reduced.

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The parties in an Employee Retirement Income Security Act (ERISA) lawsuit brought last July against CDI Corp. have filed a settlement agreement in the U.S. District Court for the Eastern District of Pennsylvania.

The underlying claims in the lawsuit echoed those detailed in numerous other ERISA challenges raised in recent years, but this litigation was distinguished by the relatively small size of the plan in question. Court documents show that, as of December 31, 2018, the plan had roughly $263 million in assets entrusted to the care of its fiduciaries. Those using retirement industry parlance would label this as either a “medium” or “large” plan, depending on their frame of reference, but either way it is much smaller than the $1 billion-plus retirement plans that historically have tended to be the focus of ERISA litigation.

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The plaintiffs claimed that, during the proposed class period of July 7, 2014, to the present, the fiduciary defendants failed to objectively and adequately review the plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost and performance. The complaint further alleged that the plan inappropriately maintained certain funds in the investment lineup presented to participants, despite the availability of identical or similar investment options with lower costs and/or better performance histories. Additionally, the plaintiffs claim the defendants failed to select the lowest-cost share class for many of the funds within the plan.

According to the settlement agreement, the gross settlement amount CDI will pay to the plan and its participants is $1.8 million. The company does not admit any wrongdoing in relation to the lawsuit’s claims, while the plaintiffs have agreed to enter a covenant not to bring any future related claims.

Other points of interest in the settlement agreement include the stipulation that the amount of attorneys’ fees for class counsel shall not exceed 30% of the gross settlement amount—a maximum amount of $540,000, in this case. As is typical in such cases, the settlement agreement calls for the appointment of an independent fiduciary and independent settlement administrator to oversee the distribution of CDI’s payment, according to a formula set out in the text of the settlement agreement.

The full text of the settlement agreement and its accompanying exhibits is available here.

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