Investment Product and Service Launches

FTSE Russell creates index series for asset allocation strategies; Legg Mason reveals short-duration ETF; and Schwab announces additions to ETF OneSource.

Art by Jackson Epstein

Art by Jackson Epstein

FTSE Russell Creates Index Series for Asset Allocation Strategies

FTSE Russell has introduced the FTSE Market Based Allocation Index Series. The new series initially comprises five indexes designed for use by the U.S. wealth management and financial advisory community and other multi-asset investors, bridging a gap in index coverage for this important and growing market and demonstrating FTSE Russell’s continued expansion of its multi-asset capabilities. 

“We’re excited to be able to draw on our extensive index capabilities across equity and fixed income to offer a unique tool to meet a clear need for our clients,” says Susan Quintin, managing director of Global Product Management. “The new index series bridges a gap in the investment community and will establish a new industry standard for defining risk tolerance levels and benchmarking asset allocation investment strategies.”

FTSE Russell developed this new index series in response to feedback from customers. U.S. wealth managers, financial advisers and other multi-asset investors can now choose from five indexes, ranging from conservative to aggressive, with objectively defined risk profile levels. The asset allocation levels for each index reflect the average asset allocation levels of real-world multi-asset funds as reported in Morningstar’s fund database. The indexes are overseen by FTSE Russell’s global governance framework and can be used to benchmark asset allocation-based investment strategies or as the basis for portfolio construction and research.

Legg Mason Reveals Short-Duration ETF

Legg Mason announced the launch of its newest actively managed exchange-traded fund (ETF), the Western Asset Short Duration Income ETF (WINC).

A short-duration (zero to three years) fixed-income strategy, WINC seeks to generate current income via a diversified portfolio with an emphasis on low interest rate sensitivity, higher credit quality and active credit selection.

“We are pleased to add this exciting new actively managed income-seeking fund, offered in a cost-effective, investor-friendly ETF wrapper,” says Michael Buchanan, deputy chief investment officer of Western Asset. “WINC targets short-duration credit exposure while leveraging Western Asset’s global investment capabilities and strong risk management program, employing an active process that is both top-down and bottom-up to help identify attractive credit and income opportunities while actively managing risk. While always opportunistic, we are dedicated to providing investors with a long-term fundamental value discipline.”

As an exchange-traded fund (ETF) vehicle, WINC offers intra-day liquidity and can be traded throughout the day. The transparency afforded by the availability of daily holdings may allow investors to make more informed investment decisions. WINC is on a monthly income distribution schedule.

The portfolio managers of the Western Asset Short Duration Income ETF are S. Kenneth Leech, Michael Buchanan, Ryan Brist, Blanton Keh and Kurt Halvorson. Performance is reference benchmarked against the Bloomberg Barclays 1 to 5 Year Corporate Bond Total Return Index.

The fund takes an “all-weather” approach to income, using both offensive and defensive strategies to proactively target higher-quality income opportunities. Having the ability to look beyond core holdings to expand the opportunity set can allow Western Asset to potentially provide attractive income throughout different market cycles.

Schwab Announces Additions to ETF OneSource

Schwab has announced that the Schwab ETF OneSource will double its lineup and add iShares exchange-traded fund (ETFs) to its menu. With these additions, Schwab clients will be able to buy and sell 503 ETFs covering 79 Morningstar Categories with zero-dollar online commissions, no enrollment requirements and no early redemption fees or activity assessment fees.

Starting on March 1, iShares ETFs will join the program with 90 funds, and Invesco, State Street Global Advisors SPDR ETFs and WisdomTree will add to the number of ETFs they already make available commission-free to Schwab clients. Aberdeen Standard Investments, ALPS Advisors, Direxion, Global X ETFs, John Hancock Investments, J.P. Morgan Asset Management and PIMCO—all current participants in the Schwab ETF OneSource program—are also adding funds to the lineup.

“We’re very proud of the role that Schwab ETF OneSource has played in making ETF investing more affordable and accessible for all investors,” says Kari Droller, vice president of third-party platforms. “Today, nearly three in four investors tell us that ETFs are their investment vehicle of choice, and portfolio allocations continue to rise steadily. Against that backdrop, we’re pleased to provide investors with significantly more choice and to welcome iShares ETFs to our family of providers.”

One of the first commission-free ETF programs in the industry, Schwab ETF OneSource launched in February 2013 with six providers and 105 ETFs. In six years, the program has expanded the number of providers participating in the program to 16, including Aberdeen Standard Investments, ALPS Advisors, DWS Group, Direxion, Global X ETFs, IndexIQ, Invesco, iShares ETFs, John Hancock Investments, J.P. Morgan Asset Management, OppenheimerFunds, PIMCO, State Street Global Advisors SPDR ETFs, USCF, WisdomTree and Charles Schwab Investment Management.

With this expansion, Schwab ETF OneSource will add ETFs in the following Morningstar Categories: communications, foreign small/mid-value, Latin America stock, long-term bond, multisector bond, muni California long, muni national intermediate, muni New York intermediate, world small/mid stock.