Investment Product and Service Launches

PIMCO, Morningstar team up on personalized TDF solution; Schwab launches the Schwab Ariel ESG ETF; and Confluence Technologies to acquire Investment Metrics.

By DJ Shaw
Art by Jackson Epstein

Art by Jackson Epstein

PIMCO, Morningstar Team Up on Personalized TDF Solution

Fixed-income investment manager PIMCO has partnered with the retirement group within Morningstar Investment Management LLC, a subsidiary of Morningstar Inc., to enable PIMCO to provide a personalized target-date fund (TDF) solution to participating 401(k) plans and other types of retirement plans.

Powered by Morningstar Investment Management’s user interface and network of data integrations with recordkeepers, myTDF will incorporate factors such as an individual’s age, salary, assets, savings rate and company match rate to assign more personalized investment allocations for individuals.

PIMCO’s myTDF will use data already accessible through employer-sponsored retirement plans so that even the most disengaged saver can receive a customized solution, PIMCO says.

“myTDF aims to be a new default retirement solution for 401(k) plan participants,” says Rene Martel, PIMCO’s head of retirement. “Through myTDF’s automated personalization, we can bring a more precise and tailored target-date solution to all participants, including those who are not actively involved in managing their retirement savings.”

Schwab Launches the Schwab Ariel ESG ETF

Schwab Asset Management, the asset management arm of the Charles Schwab Corp., has announced it is launching the Schwab Ariel ESG ETF (SAEF), an active, semi-transparent (aka non-transparent) exchange-traded fund (ETF) that invests in small- and mid-cap stocks that have been screened based on environmental, social and governance (ESG) factors.

The new ETF will be sub-advised by Ariel Investments LLC, the first African American-owned investment firm in the U.S. The first day of trading is expected to be on or about November 16.

SAEF will provide investors with access to the proprietary ESG investment process pioneered by Ariel. The fund seeks to deliver long-term capital appreciation by leveraging Ariel’s value-based investment process, which is focused on small- and mid-cap U.S. companies with favorable ESG characteristics as measured by Ariel’s ESG risk rating process.

SAEF can serve as a core or complementary equity ESG allocation within a portfolio. The fund has an operating expense ratio of 59 basis points (bps).

The Schwab Ariel ESG ETF offers active management in a semi-transparent ETF. Ariel says its focus on value and small- and mid-cap equity securities differentiates the new ETF from most ESG strategies, which tend to skew toward growth and large-cap securities. Ariel will leverage its proprietary ESG research to derive a proprietary ESG-risk rating for each holding, or prospective holding, in the fund. In addition, Ariel will employ a negative screening process in the fund’s security selection, which seeks to exclude from the fund companies whose primary source of revenue is derived from the production or sale of tobacco products, the exploration for or the extraction of fossil fuels, the operation of private prisons or jails, and the manufacture of firearms, personal weapons, small arms or controversial military weapons.

Confluence Technologies to Acquire Investment Metrics

Confluence Technologies Inc., a technology solutions provider seeking to help the investment management industry solve complex investment data challenges, has agreed to acquire Investment Metrics.

Investment Metrics is a provider of investment data, performance, analytics and research software solutions seeking to help institutional investors and advisers achieve better financial outcomes, grow assets and retain clients with clear investment insights. Confluence is backed by Clearlake Capital Group L.P. and TA Associates.

The acquisition seeks to advance Confluence’s portfolio analytics offering and expands its reach into the asset owner and asset allocator markets, the firm says. With the addition of these new capabilities, Confluence will be able to offer clients greater operational efficiency. The transaction is expected to close in the fourth quarter of this year.

Founded in 1998 and headquartered in Norwalk, Connecticut, Investment Metrics services more than 400 clients across 30 countries with solutions that drive insights across more than 20,000 institutional asset pools, 28,000 funds and 910,000 portfolios, representing more than $14 trillion in assets under advisement (AUA). Investment Metrics empowers institutional investment allocators, asset owners and asset managers with reporting and analytical research solutions that are foundational to the institutional investment ecosystem.

“There is a growing need in the market for solutions that streamline operational efficiencies and drive scale,” says Mark Evans, CEO of Confluence. “By combining our capabilities with those of Investment Metrics, we will be optimally positioned to deliver a comprehensive analytics solution to our clients, while streamlining analysis and providing fiduciary oversight across the wider ecosystem.”