Investment Product and Service Launches

Vanguard to expand ESG lineup; TIAA offers lifetime income for corporate retirement market; and MSCI announces alliance with Menai Financial Group.

By DJ Shaw
Art by Jackson Epstein

Art by Jackson Epstein

Vanguard to Expand ESG Lineup

Vanguard has filed an initial registration statement with the U.S. Securities and Exchange Commission (SEC) to introduce the Vanguard Baillie Gifford Global Positive Impact Stock Fund, which is designed to meet the needs of investors seeking actively managed global equity returns along with a measurable impact on environmental and social challenges.

The fund is expected to launch in the second quarter of 2022 and subsequently seeks to adopt the existing Baillie Gifford Positive Change Equities Fund, contingent upon shareholder approval. Vanguard expects to make the combined fund available for public investment in the third quarter.

“We’ll continue to thoughtfully expand our ESG [environmental, social and governance] lineup, introducing funds and ETFs [exchange-traded funds] with enduring investment merit that reflect clients’ needs and preferences,” says Tim Buckley, Vanguard chairman and CEO. “The new Global Positive Impact Stock Fund will tap Baillie Gifford’s significant expertise in fundamental equity research and impact analysis, helping our clients to achieve both their impact and investment goals.”

Vanguard believes an active approach to impact investing enables managers to better navigate the complexities of identifying companies driving positive change and build a portfolio with the potential to deliver on both excess return and impact objectives.

Introduced in 2017, the Baillie Gifford Positive Change Equities Fund employs a consistent framework to identify high-quality growth companies driving solutions to global challenges. Its portfolio managers expect these companies to achieve strong long-term returns. The fund’s global mandate provides clients with a broad exposure to companies that meet both excess return and impact objectives.

In the second quarter of this year, Gifford will conduct a proxy vote for approval from the Positive Change Equities Fund’s existing shareholders to undergo a tax-free reorganization into the new Vanguard fund. Vanguard and Gifford say they are confident that this approach serves both existing and prospective investors, as the new fund is expected to have lower shareholder costs. If the reorganization is approved, current shareholders of the Positive Change Equities Fund are expected to realize an expense ratio reduction of approximately 0.06%. The new combined fund will have an estimated expense ratio of 0.59%.

The Vanguard Baillie Gifford Global Positive Impact Stock Fund will maintain the investment objectives and portfolio management team of the existing Gifford fund, ensuring consistency upon reorganization. Furthermore, Gifford will continue to produce an annual impact report using robust, bottom-up research that complements its investment analysis.

TIAA Offers Lifetime Income for Corporate Retirement Market

TIAA for the first time is offering its guaranteed lifetime income solutions to the corporate retirement market, through the TIAA Secure Income Account.

Over its 100-year history, TIAA has paid out more than $500 billion in retirement benefits to millions of people working in higher education and other nonprofit, purpose-driven fields. Now, private-sector companies can provide employees with TIAA’s pension-like guaranteed income for life as part of their retirement plan.

“People are living longer and need help preparing for a secure retirement, yet few corporate defined contribution [DC] plans offer the guaranteed lifetime income they need,” says Thasunda Brown Duckett, TIAA president and CEO. “Building on our heritage, we are offering companies of all types and their employees a solution to more efficiently save, invest and ensure those assets last through retirement.”

The TIAA Secure Income Account is a deferred fixed annuity that offers a predictable, steady stream of guaranteed income for life in retirement. Plan participants’ contributions are guaranteed to grow over time and are protected from losing value no matter what the market does.

The TIAA Secure Income Account also provides the flexibility and personalization people have come to expect in their 401(k)s. It is fully cashable during employees’ working years, and they can take the account with them if they leave their employers or the workforce. Employees can choose—but are not required—to turn some or all their savings into monthly income paychecks for life when they stop working. They also have the opportunity for more growth and higher amounts of income the earlier and longer they contribute, because of the way TIAA shares profits with its individual clients.

Lifetime income payments may also increase once people are in retirement, which can help offset the effects of inflation. In 2022, for example, many currently receiving income from TIAA fixed annuities are enjoying a 5% increase in their lifetime income payments.

The TIAA Secure Income Account is specifically designed to be used as an allocation within managed accounts or custom target-date model portfolios in 401(k) plans. And as part of a plan’s qualified default investment alternative (QDIA), it can turn participant inertia into an advantage, enabling plan sponsors to automatically direct plan participants to a product with principal protection, guaranteed growth, low volatility and lifetime income with potentially increasing payments. Employees who choose to annuitize will not pay any expenses or commissions.

The TIAA Secure Income Account is available through the defined contribution investment-only (DCIO) distribution channel overseen by Nuveen, TIAA’s asset manager. It is the first in a series of lifetime income solutions TIAA plans to create for a variety of retirement savings vehicles, including employer-sponsored and individual retirement accounts (IRAs).

MSCI Announces Alliance With Menai Financial Group

MSCI Inc., a provider of critical decision-support tools and services for the global investment community, has announced its collaboration with Menai Financial Group, a provider of institutional-grade digital asset investment products and trading services. This strategic alliance marks one of MSCI’s first collaborations in the digital asset space. MSCI will aim to develop innovative tools for institutional investors seeking to capitalize on the growth of blockchain technology and digital assets.

The collaboration between MSCI and Menai comes at a time when institutional investors are increasingly considering opportunities within the digital asset class. As investor interest grows, MSCI has recognized the demand for robust frameworks and analytical tools to help provide insights into performance, risk and classification within this emerging asset class.

Menai’s expertise in digital assets will support MSCI’s development of the solutions institutional investors can leverage to navigate this market, understand the risks and challenges, and capitalize on emerging opportunities and developments as the rapidly growing industry drives technological change. This collaboration seeks to help institutional investors identify and understand the investment universe for digital assets and the relationship between digital assets and traditional assets.

“Digital assets often get conflated with cryptocurrencies, but the market is far larger than that. Applications associated with digital assets are transforming long-established technologies such as payment, trading and settlement systems, among others,” says Henry Fernandez, MSCI chairman and CEO. “While investors are eager to enter the digital asset market as it matures, there is need for a robust suite of tools to gain reliable insight into the space.”

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