State Street Launches New Retirement Income Strategy
State Street Global Advisors, the asset management business of State Street Corp. has launched IncomeWise, a next-generation solution that blends the flexibility and simplicity of traditional target-date funds (TDFs) with the security of guaranteed lifetime income. Available for defined contribution (DC) plans, this solution represents a multi-year, cross-industry development, resulting in a new kind of retirement income strategy.
IncomeWise focuses on providing a simple investment option to support participants through all their retirement years. The solution uses State Street’s target-date glide path to help participants accumulate wealth during their savings years. A portion of these savings can then be converted into a guaranteed income stream for later years of retirement by purchasing a qualified longevity annuity contract (QLAC). This approach offers participants income security when they are likely to need it most, while providing flexibility and access to savings during their early retirement years.
State Street says IncomeWise is available to any plan sponsor as a custom TDF offering. The company also said, “State Street Global Advisors is actively developing a collective investment trust [CIT] vehicle for the product as it continues to have a number of exciting discussions with plan sponsors similarly interested in better addressing longevity risk.”
Federated Hermes Launches Two New ETFs
Federated Hermes Inc. has launched the Federated Hermes Short Duration Corporate ETF and Federated Hermes Short Duration High Yield ETF.
These short-duration exchange-traded funds (ETFs) are new tools for investors concerned about inflation and the potential interest-rate risk associated with products that invest in longer-duration securities, the firm says.
The funds use the experience, insights and capabilities developed over the firm’s 50 years of managing fixed-income solutions for investors. The ETFs also incorporate Federated Hermes’ proprietary environmental, social and governance (ESG) assessment process in evaluating the risk profiles of investment-grade and high-yield securities.
“With a growing U.S. client appetite for fixed income, our first two ETF strategies build upon Federated Hermes’ heritage of responsible investing, diligent credit analysis and experience in providing compelling options at every step of the yield curve,” says John Fisher, president and chief executive officer of Federated Advisory Cos.
The Federated Hermes Short Duration High Yield ETF seeks high current income by investing in a diversified portfolio of high-yield bonds, bank loans and other securities. The strategy seeks to maintain an effective duration of three years or less. The ETF is managed by senior portfolio manager Steven Wagner, portfolio manager Tony Venturino and senior portfolio manager Mark Durbiano, who leads the firm’s domestic high-yield group. Nine industry-specific analysts and two traders complete the 14-member group supporting the fund.
The Federated Hermes Short Duration Corporate ETF seeks current income by investing primarily in securities with maturities of one to five years and will maintain a duration between 1.5 and 3.5 years. The strategy may also invest up to 10% of its portfolio in non-investment grade fixed-income securities.
Senior portfolio manager John Gentry, who heads the Federated Hermes corporate fixed-income group, and portfolio manager Robert Matthews are supported by six analysts and two traders who specialize in investment-grade fixed income.