Investment Product and Service Launches

Franklin Templeton Creates Additional Active Funds; Hartford Funds Presents ETF Focused on Fixed Income; First Trust Introduces Actively Managed ETF; and more.

Franklin Templeton Introduces Three New ETFs

Franklin Templeton Investments introduced three new exchange-traded funds (ETFs)—Franklin Liberty Senior Loan ETF, Franklin Liberty High Yield Corporate ETF  and Franklin International Aggregate Bond ETF—expanding its lineup of fixed-income active ETFs managed by Franklin Templeton Fixed Income Group. The three ETFs are listed on the Cboe BZX exchange.

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The three new ETFs are managed by group team members who specialize in the asset classes.

Franklin Liberty Senior Loan ETF seeks to provide a high level of current income with a secondary goal of preservation of capital. The fund invests at least 80%% of its net assets in senior loans and investments that provide exposure to senior loans. Senior loans include those referred to as leveraged loans, bank loans and/or floating rate loans. The fund invests predominantly in income-producing senior floating interest rate corporate loans made to or issued by U.S. companies, non-U.S. entities and U.S. subsidiaries of non-U.S. entities. It is managed by Mark Boyadjian, senior vice president, director of floating rate debt and portfolio manager, Madeline Lam, vice president and portfolio manager, and Justin Ma, vice president and portfolio manager.

Franklin Liberty High Yield Corporate ETF seeks to provide a high level of current income with a secondary goal of capital appreciation. The fund invests at least 80%% of its net assets in high-yield corporate debt securities and investments that provide exposure to high-yield corporate debt securities. The fund may enter into certain derivative transactions, principally currency and cross currency forwards and swap agreements, including interest rate and credit default swaps—e.g., credit default index swaps. The fund is managed by Glenn Voyles, senior vice president, director of portfolio management, corporate bonds, and Patricia O’Connor, vice president and portfolio manager.

Franklin International Aggregate Bond ETF seeks to maximize total investment return, consistent with prudent investing, consisting of a combination of interest income and capital appreciation. The fund invests at least 80% of its net assets in bonds and investments that provide exposure to bonds. Bonds include debt obligations of any maturity, such as bonds, notes, bills and debentures. The fund invests predominantly in fixed- and floating-rate bonds issued by governments, government agencies and governmental-related or corporate issuers located outside the U.S. The fund may enter into various currency-related transactions involving derivative instruments, principally currency and cross currency forwards, but it may also use currency futures contracts. It is managed by John Beck, senior vice president, director of fixed income – London, and portfolio manager.

Hartford Funds Presents ETF Focused on Fixed Income

Hartford Funds has launched the Hartford Short Duration exchange-traded fund (ETF), which seeks to provide current income and long-term total return by investing in fixed-income securities. The fund, along with another recently launched fixed-income ETF, the Hartford Schroders Tax-Aware Bond ETF, adds to Hartford Funds’ ETF suite of six fixed-income and seven multifactor ETFs.

“Lower duration and more frequent reinvestment are strong tools to help address rising rates within a fixed-income allocation, and our actively managed Short Duration ETF is designed to deliver both,” said Vernon Meyer, chief investment officer (CIO) of Hartford Funds. “We see fixed-income ETFs as being well-positioned for the current market, with the goal of providing income and stability to help round out a portfolio.”

Sub-advised by Wellington Management Company LLP, the Hartford Short Duration ETF will typically invest in investment grade securities, but can also invest in bank loans and non-investment grade fixed-income securities. The fund will use derivatives—such as Treasury futures and interest rate swaps—to manage its interest rate risk and duration, maintaining a dollar-weighted average duration of less than three years. The fund’s expense ratio is 0.29%.

First Trust Introduces Actively Managed ETF

First Trust Advisors L.P. (First Trust) has launched a new actively managed exchange-traded fund (ETF), the First Trust TCW Unconstrained Plus Bond ETF. The portfolio is sub-advised and managed by TCW Investment Management Co. LLC (TCW). The fund’s managers look for value across a range of global fixed-income market segments seeking to maximize long-term total return.

The fund is managed in an “unconstrained” manner, meaning that its investment universe is not limited to the securities of any particular index and TCW may invest in fixed-income securities of any type or credit quality. Unlike index-based strategies, unconstrained strategies provide a flexible, adaptable, go-anywhere approach. TCW’s fixed-income management philosophy applies a long-term value discipline emphasizing fundamental bottom-up research, which seeks to identify securities that are undervalued and offer a superior risk/return profile.

The fund’s portfolio management team from TCW includes Stephen Kane, group managing director and portfolio manager, Tad Rivelle, chief investment officer (CIO), co-director – fixed income, portfolio manager; Laird Landmann, co-director – fixed income, portfolio manager; and Bryan T. Whalen, CFA, group managing director, portfolio manager. The portfolio managers are jointly responsible for the day-to-day management of the fund. 

ABG and Russell Investments’ Merge for Retirement Account Program

Alliance Benefit Group (ABG) has announced its alliance with Russell Investments to offer Russell’s Adaptive Retirement Accounts (ARA) program. Along with providing the managed accounts program to its clients, ABG will partner with Russell’s defined contribution (DC) and intermediary sales teams to jointly promote the ARA program to the financial advisory community.

Don Mackanos, president of ABG, says, “ABG is thrilled to offer Russell Investments’ ARA program. We strongly believe managed accounts will be a competitive differentiator for many years because they can provide better participant outcomes than target date funds [TDFs]. This program is well-positioned from a pricing and feature standpoint, and is fully integrated with industry-leading recordkeeping software vendors such as the Relius platform. The ARA program, coupled with Russell Investments’ distribution through financial advisers, supported by ABG member firms for their administration and recordkeeping services, makes this a home run in the market.”

Andrew Scherer, senior director of defined contribution for Russell Investments, says, “We have longstanding relationships with many of the ABG member firms and look forward to partnering with them to capitalize on the benefits of our ARA program. A lot of time and effort went into building this program, and we look forward to a very successful rollout.”

Scherer adds that ARA’s benefits include a customized asset allocation designed to increase the likelihood of participants achieving an appropriate level of retirement income based on their needs. In addition, ARA delivers its asset allocation by leveraging the plan’s core menu, a process that accentuates a financial adviser’s value in selecting and monitoring a plan’s investments.

The alliance is expected to begin in the summer.

GSAM Builds Large Cap Equity ETF

Goldman Sachs Asset Management (GSAM) has announced the launch of JUST, an exchange-traded fund (ETF) that seeks to provide broad exposure to U.S. large-cap equities, with a focus on companies that demonstrate just business behavior, as measured by JUST Capital. The ETF seeks to track the JUST U.S. Large Cap Diversified Index (the Index), constructed by JUST Capital.

JUST Capital is an independent nonprofit that uses data and markets to promote positive change in corporate behavior. To create its rankings and the index, JUST Capital conducts an annual survey of the American public and then analyzes 120,000 data points across 85 unique metrics to score companies based on how they perform on the key issues prioritized by the public.

The index is designed to provide the broad market exposure of the Russell 1000 Index, while featuring only companies with above-average scores across major environmental, social and governance (ESG) issues of interest to the American people.

More Than Half of Advisers Say Clients Ask Them About Social Security

Yet, only 13% of workers have discussed Social Security with an adviser.

Sixty-two percent of advisers say their clients frequently ask them about when to collect Social Security, the Nationwide Retirement Institute learned in a survey of advisers. Yet, in a separate consumer survey, Nationwide learned that only 13% of American workers have discussed Social Security with an adviser, and, among this group, 40% say they started the conversation.

This same survey found that 88% of older adults do not know how to maximize their Social Security payments, and 63% of pre-retirees are not confident in their knowledge of Social Security.

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The adviser survey found that only 25% think that 80% or more of their client base understand the factors that will impact their Social Security income.

The adviser survey also found that 90% think there is a retirement readiness crisis in America, and only 54% are confident in their clients’ plans to live comfortably in retirement.

Eighty-three percent of advisers think their clients expect them to give advice on Social Security, and 42% say their clients might move to another adviser if they don’t show them how to optimize their Social Security benefits. The consumer survey found that 72% of investors would actually switch advisers if this were not to happen.

Only 37% of advisers say they are confident in their ability to help their clients maximize Social Security.

A separate survey of adults ages 50 and older who are retired or plan to retire in the next 10 years found that 27% of the retirees say their Social Security payment is lower than they had expected. Twenty-six percent of future retirees think they can live comfortably on Social Security alone.

Retirees who worked with an adviser receive Social Security benefits that are more than 20% higher ($1,500 vs. $1,234). Additionally, 88% of the former group vs. 55% of the latter say they are able to do the things they want in retirement.

“Advisers can easily build trust and relationships by starting the Social Security conversation,” says Ron Ransom, senior vice president of integrated relationship strategies at Nationwide. “Social Security is a universal benefit and a primary source of retirement income for many. However, it’s often overlooked in the planning process.”

The Harris Poll conducted the online survey of 252 advisers for Nationwide last October.

Nationwide offers advisers a free Social Security 360 Analyzer tool so that they can help their clients maximize the benefit.

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