Investment Product and Service Launches

Man Group releases ESG analysis tool; Prudential Capital Group renames global investment business; Schwab expands ETF OneSource Program; and more.

Art by Jackson Epstein

Art by Jackson Epstein

Man Group Releases ESG Analysis Tool

Global active investment management firm Man Group has launched a proprietary, dashboard-style tool enabling investment teams to monitor non-financial risks and analyze environmental, social and governance (ESG) factors across single issuers, portfolios and indices. Referred to as Man Group ESG Analytics, the tool also features stewardship data, offering real-time overviews of a portfolio’s proxy voting performance and statistics.

Man Group ESG Analytics was developed internally under the direction of Man Group’s responsible investment team, with close collaboration between Man Numeric (the firm’s fundamentally driven, quantitative investment engine) and Man Group’s risk and performance analysis team and stewardship team. The tool is available to all portfolio management teams across Man Group’s investment engines and can be applied across asset classes, as well as to both traditional and alternative investment strategies.

The dashboard embeds a proprietary ESG scoring system derived from Man Numeric’s data research. The system applies advanced data science and quantitative analysis to break down multi-vendor ESG datasets, allowing the tool to generate a holistic score for the sustainability profile and impact of a business. Datasets from three leading ESG data providers—Sustainalytics (ESG scoring and controversies data), MSCI (ESG scoring), and Trucost (environmental data)—are also integrated into the platform, allowing portfolio managers to evaluate a wide variety of company-specific ESG metrics.

The dashboard provides investment teams with the ability to drill-down into this data at a company, portfolio and index level to further enhance analysis. A built-in alert function with the ability to set limits on changes in individual or benchmark scores allows portfolio managers to closely monitor and track movements. Additionally, the dashboard displays voting activity, reinforcing fund-level engagement and active ownership by Man Group’s investment teams.

“One of the main challenges that both quantitative and discretionary managers face when incorporating [responsible investing principles] into their investment processes is that ESG data is messy and subjective. This requires a different approach to understanding the variables than with traditional factors,” says Rob Furdak, co-chief investment officer at Man Numeric. “Man Numeric’s ESG team has undertaken a stringent process to understand the unique qualities of this data and develop a multi-source, industry-based view of ESG. We are excited by the launch of the ESG Analytics tool and the opportunities this presents for us as a firm.”

Prudential Capital Group Renames Global Investment Business

Prudential Capital Group has changed its global investment business to PGIM Private Capital.

 “Adopting PGIM Private Capital reinforces our connection to the global PGIM brand and underscores the types of investment products we offer institutions seeking exposure and attractive returns through private debt and mezzanine investments,” comments Allen Weaver, managing director and head of PGIM Private Capital.

PGIM Private Capital’s global origination network will adopt Prudential Private Capital (Pricoa Private Capital outside the Americas) as its new name. In the first half of 2019, $5.1 billion of senior debt and junior capital was provided to 100 middle-market companies and projects worldwide.

Schwab Expands ETF OneSource Program

Schwab has added 25 exchange-traded funds (ETFs) to Schwab ETF OneSource, the firm’s commission-free ETF program. Clients will now have access to 539 ETFs covering 83 Morningstar Categories with $0 online commissions. Schwab ETF OneSource has no enrollment requirements, no early redemption fees and no activity assessment fees.

“In Schwab’s 2019 ETF Investor Study, investors said a broad selection of ETF categories and no additional fees are critical differentiators when evaluating commission-free ETF programs,” says Kari Droller, vice president of third-party mutual fund and ETF platforms at Schwab. “From day one, our priority with the Schwab ETF OneSource program has been to provide a broad lineup of commission-free ETFs that spans a variety of asset classes and index weightings to make it simple for investors and advisers to build highly diversified, commission-free ETF portfolios.”

Schwab ETF OneSource offers commission-free ETFs from 15 leading providers: Aberdeen Standard Investments, ALPS, DWS Group, Direxion, Global X Funds, IndexIQ, Invesco ETFs, iShares ETFs, John Hancock Investment Management, J.P. Morgan Asset Management, PIMCO, State Street Global Advisors SPDR ETFs, USCF, WisdomTree and Charles Schwab Investment Management. The 83 Morningstar categories covered on Schwab ETF OneSource represent more than 98% of ETF assets in the industry.

The 25 new ETFs are from seven providers and cover a range of Morningstar categories including Muni National Intermediate, Consumer Defensive, and Consumer Cyclical. 

AllianceBernstein and Wilmington Trust to Offer CITs for DC Clients

AllianceBernstein L.P. and Wilmington Trust will partner to provide collective investment trusts (CITs) for defined contribution (DC) clients, supported by administrative and custody services.

“CITs have gained traction in defined contribution plans due in large part to their ability to offer relatively low costs, flexible pricing and operational ease, which uniquely positions them to help today’s plan sponsors effectively fulfill their fiduciary duties,” says Jennifer DeLong, managing director and head of defined contribution at AllianceBernstein. “Our partnership with Wilmington Trust, a leader in the industry for more than 70 years, is a testament to our commitment to provide investment services that meet the evolving needs of our clients.”

Wilmington Trust is highly active in the CIT market with over $38 billion in assets across funds managed by more than 50 sub-advisers, with products made available on more than 35 trading platforms.

Hartford Funds Launches AARP Retirement Fund

Hartford Funds has introduced the Hartford AARP Balanced Retirement Fund. Sub-advised by Wellington Management Company LLP, the Hartford AARP Balanced Retirement Fund seeks to provide long-term total return while reducing downside risk and the impact of inflation on retirement accumulations. The new fund expands Hartford Funds’ lineup of multi-strategy mutual funds.

 “For investors approaching or already in retirement, it’s critical to develop a well-diversified portfolio that seeks to protect purchasing power and principal while maintaining opportunity for growth,” says Vernon Meyer, chief investment officer of Hartford Funds. “We are thrilled to leverage Wellington’s investment platform to develop a multi-asset solution that offers investors the potential for both capital accumulation and loss mitigation during the retirement and near-retirement years.”

The fund will primarily invest in a broad range of equity and equity-related securities, debt securities, structured products, derivatives, money market instruments, and other investments, including other mutual funds and exchange-traded funds (ETFs). The fund’s investment strategy is intended to generate real total return, with an emphasis on downside mitigation for investors in or near retirement, who have less tolerance for significant declines in the market, but also must generate real returns to meet spending needs.

Christopher Goolgasian, managing director and portfolio manager at Wellington Management, will serve as the fund’s portfolio manager. 

“Financial security in retirement has always been at the heart of AARP’s social mission,” says John Larew, senior vice president, branded products, AARP Services Inc. “Employees nearing retirement need investment options designed to meet their specific needs. Many have saved and invested for decades and are now asking themselves, ‘What do I do with my money now, with retirement just around the corner?’ Hartford Funds has designed this product to help address that need.”

FTSE Russell Creates Climate Risk Government Bond Index 

FTSE Russell has launched a government bond index to adjust index weights based on each country’s preparedness and resilience to climate change risk. The FTSE Climate Risk-Adjusted World Government Bond Index (Climate WGBI) is derived from the FTSE World Government Bond Index, a widely used benchmark of investment-grade sovereign bonds of 22 developed economies. The index will be available to investors going forward as a portfolio performance measurement tool as well as for the basis of an investment portfolio.

The bond index uses climate risk modelling developed by Beyond Ratings, am ESG analytics provider. The higher the index-weighted Climate Score, the lower the climate risk exposure. The objective of the index is to reduce climate risk compared to the standard FTSE World Government Bond index (WGBI) while minimizing tracking error. Each country is assessed by three core climate risk pillars: Transition risk; Physical risk; and resilience.

According to FTSE Russell, transition risk represents the impact on the country and its economy from efforts to mitigate climate change, encompassed by Greenhouse Gas (GHG) emission reduction needed to meet the Paris Agreement target of less than 2 degrees Celsius of global warming and the recent trend of historical carbon emissions. Physical risk represents the climate-related risk to the country and its economy from the physical effects of climate change, and resilience represents a country’s preparedness and actions to cope with climate change.

 “Climate change and the efforts required to mitigate its impact carry numerous risks that have not historically been incorporated into investment grade government debt,” says Rodolphe Bocquet, CEO at Beyond Ratings. “However, these issues have a direct and long-term impact on government finances, with projected expenditure on climate mitigation expected to reach almost $1 trillion a year for the next 30 years according to the United Nations’ Intergovernmental Panel on Climate Change. Beyond Ratings has developed a quantitative and transparent approach to climate risk modelling and assessment that will help investors mitigate these risks.”