Investment Product and Service Launches

Northern Trust offers ESG analytics solution; Innovator announces May series of Defined Outcome ETFs; Capital Group launches fund invested in sectors of the credit spectrum; and more.

Art by Jackson Epstein

Art by Jackson Epstein

Northern Trust Offers ESG Analytics Solution

Northern Trust has enhanced its analytical capabilities to provide pension funds and other global institutional investors with insights and transparency over their environmental, social and governance (ESG) risk exposures.

The ESG Analytics Summary, prepared by Northern Trust’s Investment Risk and Analytical Services group, provides investors with periodic snapshot analysis across their equity and corporate bond portfolios—setting out investment “scores” against a range of ESG factors, the United Nation (UN)’s Global Compact principles and business activity flags. This analysis enables investors to track changes in a fund’s ESG profile over time, compare results on an absolute and relative basis, and compare asset managers’ scores against each other. These insights are generated by combining Northern Trust’s extensive global custody asset information with data provided in partnership with information services provider IdealRatings.

Institutions can use the resulting data to support their governance and oversight objectives—for example, providing evidence of their ESG scores and exposures and supporting adherence to regulatory requirements and global standards. It can be used to facilitate discussions with their investment managers and manage potential stakeholder concerns and reputational risk.

ESG analytics can also supplement traditional investment analytics—providing a more holistic view of investment risks, exposures and opportunities. For example, during volatile market conditions, understanding the strength of a company’s governance structures and processes can give investors a timely and more complete picture of its resiliency.

“ESG rules play a heightened role in global investor considerations, with institutions increasingly seeking to integrate sustainability factors into their portfolios,” says Serge Boccassini, product lead, Investment Accounting and Analytic Solutions at Northern Trust. “To achieve that effectively, it is vital they understand their investment risks. Our analysis provides insights into clients’ ESG exposures to help them identify financial risks and opportunities—and help ensure their investments continue to be aligned with their values.”

Mohamed Donia, CEO of IdealRatings, adds, “The ESG Analytics Summary provides enhanced transparency to help investors avoid companies that pose a greater financial risk due to their ESG practices—as well as satisfy regulatory requirements and meet global standards.”

Innovator Announces May Series of Defined Outcome ETFs

Innovator Capital Management announced the May Series of the S&P 500 Buffer ETFs [exchange-traded funds]—Innovator S&P 500 Buffer ETF (BMAY), Innovator S&P 500 Power Buffer ETF (PMAY) and Innovator S&P 500 Ultra Buffer ETF (UMAY)—are scheduled to begin trading on the Cboe.

The Buffer ETFs are part of Innovator’s category-creating Defined Outcome ETF family—the first group of exchange-traded funds designed to provide investors with built-in buffers against losses of -9%, -15% or -30% and exposure to the growth of equity markets, to a cap, in a tax-efficient vehicle over a one year outcome period.

Bruce Bond, CEO of Innovator ETFs, said, “The completion of our flagship S&P 500 Buffer ETF suite marks a significant milestone for investors, providing liquid, low cost and transparent access to the S&P 500 with built-in downside buffers. With monthly ETF issuance providing frequent new upside caps and refreshed downside buffers, these products are helping advisers and their clients weather the recent drawdowns, volatility and intense uncertainty in the current market, without credit risk concerns.”

Bond continued: “With Buffer ETFs, portfolios can be positioned to participate in the capital appreciation that stocks can provide in the event of a continued recovery but also be buffered against a known level of loss over the next year should the market trend downward from current levels. Now advisers can better align a portfolio to an investor’s risk tolerance and aid investors in overcoming the behavioral challenges associated with staying the course through market turbulence and the persistence of bad news.”

A spokesperson said the ETFs are available to all investor types. “Their tax-efficiency and known return profiles make them attractive cash management sleeve positions for pensions, as well as a substitute to long/shorty equity hedge fund strategies and absolute return strategies on the risk mitigation side of things.

“The lower beta, lower volatility (standard deviation) and lower drawdowns within the outcome period, as well as the buffer against specific levels of loss over the outcome period, make them a great fixed income alternative for institutional investors and retirees or pre-retirees who cannot stomach the risk of naked equity exposure. Investors can have the capital appreciation potential of stocks but with less volatility and drawdown potential,” the spokesperson said.

Capital Group Launches Fund Invested in Sectors of the Credit Spectrum

Capital Group has launched a fixed-income fund called the American Funds Multi-Sector Income Fund.

It invests across four sectors in the credit spectrum: high-yield corporates, investment-grade corporates, emerging markets and securitized debt. The fund also may use up to 20% of assets under management (AUM) to invest opportunistically in other fixed income securities, including U.S. government debt, municipal debt and non-corporate credit.

“We began designing our Multi-Sector Income Fund in September 2018, knowing at that time we were late in the bull market cycle and that investors would be seeking a bond fund that could consistently generate income with lower volatility for investors through an entire market cycle,” says Mike Gitlin, head of fixed income at Capital Group. “The new fund is designed to do just that and will be managed using the disciplined, long-term view and rigorous research that we have applied to our suite of bond funds for the past 40 years.”

The Multi-Sector Income Fund will be managed by five portfolio managers: Damien McCann, Kirstie Spence, Scott Sykes, Shannon Ward and Vince Gonzales. It will be benchmarked against the Bloomberg Barclays U.S. Aggregate Index.

Domini Introduces Sustainable Solutions Fund

Domini Impact Investments LLC launched the Domini Sustainable Solutions Fund, a mutual fund dedicated to investing in companies contributing solutions to global sustainability challenges. The Fund is available to individual and institutional investors (tickers: CAREX/LIFEX).

The Domini Sustainable Solutions Fund is designed to help impact investors make a difference and meet their own personal financial goals through a global equity portfolio of companies that Domini believes can play an important role in addressing some of the world’s greatest social and environmental challenges. The fund invests worldwide in public companies of any size, seeking investments that support one or more of its seven sustainability themes:

  • Accelerate the transition to a low-carbon future
  • Contribute to the development of sustainable communities
  • Help ensure access to clean water
  • Support sustainable food systems
  • Promote access to health and well-being
  • Broaden financial inclusion
  • Bridge the digital divide

By investing in companies providing solution-oriented products and services aligned with these themes—from renewable energy systems and electric vehicles to breakthrough medical technologies, healthy and organic food, and lending for underserved communities—the fund is designed to help create a more sustainable future and provide investors an opportunity to better align their portfolios with the United Nations’ sustainable development goals (SDGs). By seeking investments that support the transition to a more sustainable economy, Domini also believes it can identify strong long-term investments.

More information about the Domini Sustainable Solutions Fund is here.

Northern Trust Enhances Online Report Center

Northern Trust has launched a new version of its most popular client-facing tool, Online Report Center, as a cloud-based service with a redesigned user interface, available through Northern Trust Passport.

Northern Trust applied a human-centered design approach to create a contemporary user experience that enables global clients to access an extensive range of information. The breadth and depth of information available is enhanced by the performance and speed of the application. The report center is used by more than 80,000 asset manager and institutional investor clients in more than 50 countries, generating 3 million reports per month.

New features include:

  • Enhanced scheduling and interactive reporting and report packaging capabilities;
  • Event-based and time-based report generation triggers; and
  • Secure email attachments, email notifications and SFTP [SSH File Transfer Protocol] report delivery.
The new report center platform is currently in its beta phase with a select group of clients. The full release for all clients will be available later this year.