Investment Product and Service Launches

SEI launches asset allocation-based models as part of ETF strategies; Vanguard adds active equity funds to Personal Advisor Services solution; and John Hancock introduces mortgage-backed securities ETF.

Art by Jackson Epstein

Art by Jackson Epstein

SEI Launches Asset Allocation-Based Models as Part of ETF Strategies

SEI has announced the launch of the SEI Domestic ETF [exchange-traded fund] Strategies, adding five new asset allocation-based models to the SEI ETF strategy family.

The strategies offer independent advisers enhanced investment flexibility through the SEI Wealth Platform. They leverage SEI’s investment philosophy and oversight, as well as its experience in asset allocation, to develop diversified portfolios comprised of ETFs from a wide range of investment managers.

The underlying asset allocation models are designed to maximize risk-adjusted returns with options across a broad risk-return spectrum—all of which exclusively allocate to equity and fixed income securities issued by U.S. companies.

“Investors are increasingly looking to their advisers for lower-cost, tax-efficient and transparent investment solutions that can help them to achieve their financial goals,” says J. Womack, managing director of investment products and services for Independent Advisor Solutions by SEI. “We’re excited to expand our ETF solutions and provide advisers the added flexibility to offer their clients a range of thoughtfully constructed and well-diversified model portfolios that emphasize domestic equity and fixed income exposures.”

Independent Advisor Solutions by SEI delivers technology and investment solutions that provide a unified, digital wealth management experience for independent financial advisers and their clients.

Vanguard Adds Active Equity Funds to Personal Advisor Services Solution

Vanguard said it has filed initial registration statements with the Securities and Exchange Commission (SEC) to launch three new active equity mutual funds: Vanguard Advice Select Dividend Growth Fund, Vanguard Advice Select Global Value Fund and Vanguard Advice Select International Growth Fund.

The funds are expected to launch in the fourth quarter of this year and will be available exclusively to clients of Personal Advisor Services (PAS), Vanguard’s advice offering that combines customized portfolio management, financial planning tools and a virtual experience with the behavioral coaching and guidance of a financial adviser.

The funds will be made available for PAS clients investing through their advised portfolios as part of a five-fund active equity offer, along with two existing products—Vanguard International Core Fund and Vanguard Capital Opportunity Fund.

PAS portfolios currently use both active and passive fixed income and equity products to meet client preferences and needs. The new offer will deliver global active equity exposure through a combination of five single-manager funds, including the three new funds:

  • Vanguard Advice Select Dividend Growth Fund will seek to outperform the broader U.S. market, focusing on financially sound, large-cap companies across a diverse range of sectors that have prospects for long-term total returns, as a result of their ability to grow earnings and their willingness to increase dividends over time. A more concentrated version of the strategy used in Vanguard Dividend Growth Fund, the fund will be managed by Wellington Management Co. LLP and will have an estimated expense ratio of 0.45%, compared with the average expense ratio for large-cap core funds of 0.9%;
  • Vanguard Advice Select Global Value Fund will provide global, all-cap, contrarian-value exposure by investing in discounted companies that are being avoided or overlooked. The fund will be managed by Wellington Management Co. and will have an estimated expense ratio of 0.4%, compared with the average expense ratio for global multi-cap value funds of 1.1%; and
  • Vanguard Advice Select International Growth Fund will employ a bottom-up equity strategy—analyzing the fundamentals of specific companies instead of broad sectors or industries—focused on exceptional international growth companies. The fund will be managed by Baillie Gifford Overseas Ltd. as a more concentrated version of the strategy used in Vanguard International Growth Fund. The fund will have an estimated expense ratio of 0.42%, compared with the average expense ratio for international large-cap growth funds of 1.13%.

“Patience, discipline and a long-term perspective are central to Vanguard’s investment philosophy and portfolio construction methodology, and are especially vital for active management,” says Jon Cleborne, head of Vanguard PAS. “Active management is particularly well-suited for advised portfolios because advisers can ensure expectations are managed appropriately, allocations are consistent with risk tolerance, and clients are supported and coached through periods of underperformance.”

John Hancock Introduces Mortgage-Backed Securities ETF

John Hancock Investment Management LLC has announced the availability of the John Hancock Mortgage-Backed Securities ETF (ticker: JHMB).

The exchange-traded fund (ETF) is subadvised by Manulife Investment Management (U.S.) LLC, John Hancock Investment Management’s affiliated asset manager. It is the second actively managed fixed-income ETF launched by John Hancock Investment Management this year, following the launch of John Hancock Corporate Bond ETF (ticker: JHCB) in March.

John Hancock Mortgage-Backed Securities ETF is actively managed and seeks a high level of current income while seeking to outperform the benchmark over a market cycle. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in mortgage-backed securities (MBS). The fund may invest in mortgage-related securities issued or guaranteed by U.S. governmental entities and privately issued mortgage-related securities. These may include residential MBS, commercial MBS and to-be-announced mortgage contracts and may be rated investment grade or below.

The ETF is managed by David A. Bees, Chartered Financial Analyst (CFA), managing director and portfolio manager; Peter M. Farley, CFA, managing director and senior portfolio manager; and Jeffrey N. Given, CFA, and Howard C. Greene, CFA, senior managing directors and senior portfolio managers, Manulife Investment Management.

“According to SIFMA [the Securities Industry and Financial Markets Association], the market for mortgage-backed and other asset-backed securities is large and in demand, and represents over $12 trillion of the bond market today, which is larger than the investment-grade and high-yield corporate bond markets combined”” says Steven L. Deroian, co-head of retail product, John Hancock Investment Management. “We’re excited to bring this new ETF to market in a growing category for asset allocators and advisers.”

With this announcement, the firm’s ETF offering has grown to 17 ETFs with nearly $5 billion in assets under management (AUM) as of June 30, including mortgage-backed securities, corporate bond, U.S. and international equity portfolios, and a range of sector-specific products.