Investment Product and Service Launches

Vanguard releases international bond index fund; Putnam Investments will launch active ETF strategies; and Alger expands CIT offerings.

Art by Jackson Epstein

Art by Jackson Epstein

Vanguard Releases International Bond Index Fund

Vanguard has introduced a broad market international bond index fund, Vanguard Total International Bond II Index Fund. The fund will provide international fixed income exposure for Vanguard Target Retirement Funds, Vanguard Target Retirement Trusts and Vanguard LifeStrategy Funds, which will be the only investors in the new fund.  

As previously announced, the investment strategy of the new fund mirrors that of the Vanguard Total International Bond Index Fund and will seek to track the same benchmark. Effective immediately, Total International Bond II Index Fund will receive new cash flows from the Target Retirement series and LifeStrategy series. The fund of funds’ existing Total International Bond Index Fund holdings will be transitioned to the new fund in a prudent and tax-sensitive manner over time. 

“This will enable Vanguard to segregate transaction costs produced by the fund of funds from those generated by other investors in Total International Bond Index Fund, which we believe to be in the best interest of investors,” says Kaitlyn Caughlin, head of Vanguard’s portfolio review department. 

Given the significant market volatility experienced last year, and in an effort to protect investors’ interests, Vanguard said it delayed the launch until market conditions improved. The investment strategies, asset allocations, glide path and expense ratios for Vanguard Target Retirement series and LifeStrategy series remain the same.

Putnam Investments Will Launch Active ETF Strategies

Putnam Investments will bring four of its key U.S. equity strategies to market this year in the form of semi-transparent active exchange-traded funds (ETFs), with the first of the products expected to be available in the spring, upon completion of the registration process.

These offerings will represent the first ETF products provided by the company, which currently makes available an array of retail mutual funds, separately managed accounts, collective investment trusts (CITs), private funds and non-U.S. funds.

The investment strategies for the four initial ETF products will be similar to existing mutual funds with well-established track records, both in the environmental, social and government (ESG) and large-cap equity areas, and will include: Putnam Sustainable Leaders ETF, Putnam Sustainable Future ETF, Putnam Focused Large Cap Growth ETF and Putnam Focused Large Cap Value ETF. 

“In an effort to provide our clients with greater optionality in accessing the firm’s deep, expansive capabilities, Putnam will be combining its fundamentally driven investment approach with the benefits offered by an ETF structure,” explains Putnam Chief Operating Officer (COO) Aaron Cooper. “Our goal is to deliver strong, risk-adjusted investment performance through an array of products, including traditional mutual funds, separately managed accounts, and, soon, active ETFs.”   

All four Putnam ETFs will use the Fidelity tracking basket methodology for active equity ETFs.

Alger Expands CIT Offerings

Fred Alger Management LLC (Alger) has expanded its collective investment trust (CIT) offerings with Alger Focus Equity CIT, a focused portfolio of approximately 50 high-conviction, large capitalization stocks.

The Alger Focus Equity strategy, started by Alger in 2013, has more than $3.2 billion in assets under management (AUM). Currently, the strategy is offered in several vehicles, including a mutual fund (the Morningstar 5-star rated Alger Focus Equity Fund), separate accounts, retail separately managed accounts (SMAs) and an offshore vehicle. The Alger Focus Equity CIT joins a strong lineup of CITs, including the Alger Capital Appreciation Series CIT, which was launched in 2014. 

“We believe it’s important to offer retirement plan clients a choice when it comes to investments in their plans. With the launch of the Alger Focus Equity CIT, we’re able to package a high-conviction strategy into a vehicle with an attractive pricing structure for a retirement plan,” says Jim Tambone, executive vice president and chief distribution officer at Alger.

  In addition to the launch of the new CIT, Alger and SEI Trust Co. have registered these CITs with Nasdaq Fund Network (NFN). Plan sponsors and advisers will now be able to access daily net asset value and performance information. The three CITs on NFN include: Alger Capital Appreciation Series CIT (R1): AGCASX; Alger Capital Appreciation Series CIT (R5): SEIAAX; and Alger Focus Equity Series CIT (R1): SEIACX.