Deals & People April 22, 2014

GSAM Acquires Smart Beta Provider

Goldman Sachs Asset Management (GSAM) has entered into an agreement to acquire Westpeak Global Advisors, a provider of smart beta solutions.
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In addition to comprehensive and fully-customizable solutions for smart beta investing, Westpeak also brings strategic alliances with global index providers and asset owners. 

GSAM announced the launch of a new Advanced Beta Strategies platform, which currently represents nearly $30 billion of assets under supervision (as of March 31, 2014). The foundation of this new platform will include the smart beta business of Westpeak along with GSAM’s S&P Global Intrinsic Value Index (GIVI) strategies, a set of tax-sensitive equity strategies, and a range of liquid alternative beta strategies. The new platform will be overseen by Armen Avanessians, head of GSAM’s quantitative business.

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Smart beta uses portfolio construction that avoids the method defining traditional index strategies—weighting by market capitalization, where holdings of individual stocks are set according to their value as a proportion of the universe. The goal of smart beta strategies is to deliver a better risk-adjusted return—either through better returns than the market portfolio at a similar volatility or a lower level of volatility while earning returns comparable to the broad equity market (see “Head of the Class: Smart Beta”).

“The launch of our Advanced Beta Strategies platform, in conjunction with the acquisition of Westpeak, is critical to address the needs of our clients,” says Craig Russell, head of the institutional client business in the Americas for GSAM. “Our most sophisticated clients are interested in customized investment solutions that allow them to tailor their exposures to markets in a smart, efficient and scalable way. The combination of these Advanced Beta Strategies enhances our ability to help our clients.”

As part of the acquisition, the entire Westpeak team will join GSAM and will continue to be based in Boulder, Colorado. Subject to certain conditions, the transaction is expected to close in June 2014.

Products April 22, 2014

Invesco Increases Collective Trust Funds for DC Plans

Invesco National Trust Company (INTC) will now offer an additional 15 collective trust funds (CTFs).
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The addition of the funds is in response to increased demand in a variety of strategies and share classes within defined contribution (DC) retirement plans, the company says. The new fund lineup has already been added to the platforms of a number of DC recordkeepers and expands the opportunity for retirement plans to invest in strategies that span across all major asset classes and are delivered through a variety of vehicles, according to INTC.

Each new CTF offers three share classes with a flat-rate, all-in fee. Client service fees in each share class range from zero to 15 basis points, to better meet plan sponsor needs. The new funds, which include domestic equity, foreign equity, fixed income and alternative funds, raise to 34 CTFs Invesco National Trust Company now offers the retirement plan market.

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“This new fund lineup allows Invesco to provide a standardized offering to clients and recordkeepers,” says Betsy Warrick, vice president, Invesco National Trust Company, based in Atlanta. “We find that recordkeepers appreciate the simplicity of net share classes, which will make the new funds more available in the medium-sized and even small-plan markets.”

INTC explains CTFs, also referred to as pooled or commingled funds, are similar to mutual funds, but with a few notable differences, including:

  • Administered by banks and trust companies, and designed exclusively for qualified retirement plans, including defined benefit (DB) and DC plans;
  • Regulated by either the Office of the Comptroller of the Currency (in the case of nationally chartered banks) or state banking examiners, with oversight by the Department of Labor;
  • Not available to retail investors; and
  • Only indirectly available to individual retirement plan participants as options within their plan investment menu.

CTFs are becoming an increasingly attractive option for plan sponsors, according to INTC. In 2013, more than half of DC plans (52%) offered CTFs in their fund lineup, up from 44% in 2011. Heightened regulatory and legal scrutiny of plan fees and costs are primary drivers of the growing popularity of CTFs in DC plans, the firm says.

According to INTC, CTFs are a cost-effective vehicle because they are exempt from securities registration requirements, but in most cases provide informational materials for plan participants that are similar to mutual fund fact sheets. Some see CTFs as more customized and less expensive investment strategies (see “Timeto Consider a Collective Trust?”). While CTFs have historically been cumbersome for retirement plans to administer, today’s technology has enabled a more seamless operation on recordkeeper platforms.

The new CTFs now available from Invesco National Trust Company are:

  • Invesco Equity and Income Trust;
  • Invesco Global Opportunities Trust;
  • Invesco International Growth Trust;
  • Invesco Global ex-U.S. Diversified Equity Trust;
  • Invesco Diversified Dividend Trust;
  • Invesco Growth and Income Trust;
  • Invesco Comstock Trust;
  • Invesco American Value Trust;
  • Invesco Charter Trust;
  • Invesco Mid Cap Core Equity Trust;
  • Invesco Small Cap Equity Trust;
  • Invesco Mid Cap Growth Trust;
  • Invesco Small Cap Discovery Trust;
  • Invesco Corporate Bond Trust; and
  • Invesco High Yield Trust.

Invesco National Trust Company is a manager of collective trust funds, with more than $63 billion in assets under management as of December 31, 2013. More information is at www.invesconationaltrust.com.

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