Investment Product and Service Launches

Broadridge Offers SEC Rule 30e-3 Solution; Touchstone Creates Additional Equity Funds; HB&T to Build ESG-Centered Collective Investment Fund; and more.

Broadridge Financial Solutions, Inc. has announced an industry solution to drive down costs of fund report delivery.

Securities and Exchange Commission (SEC) Rule 30e-3 will permit fund companies to mail notices of the internet availability of shareholder reports, instead of mailing complete reports. The SEC estimates potential cost savings of over $230 million annually on paper, printing and postage. 

Under the terms of the new rule, funds can start to use the new delivery option on January 1, 2021, as long as they notify shareholders beginning on January 1 of 2019. Fund companies and broker-dealers must also soon provide shareholders with a means through which to opt out of the notice delivery method.

Broadridge is providing a universal solution to capture and manage shareholder preferences during the two year notification period.  On the behalf of its more than 1,100 broker-dealer clients, Broadridge’s solution will provide a centralized website to help firms manage delivery preferences, which shareholders can access for all funds through unique identification numbers tied to their accounts.  Launching on January 1, 2019, will also provide shareholders with an easy way to enroll in electronic delivery, thereby saving fund companies the costs of mailing the new notice.

Industry participants interested in finding out more about the 30e-3 Rule can join upcoming webinars on November 26 at 12 p.m. EST, and November 28 at 2 p.m. EST.

Touchstone Creates Additional Equity Funds

Touchstone Investments (Touchstone), a mutual fund company centered on active management and benchmark differentiation, has launched two new funds: Touchstone Anti-Benchmark US Core Equity Fund, and the Touchstone Anti-Benchmark International Core Equity Fund.

TOBAM is sub-adviser to both funds, each of which seeks capital appreciation as its objective. The Touchstone Anti-Benchmark US Core Equity Fund invests in approximately 70 to 100 securities in TOBAM’s proprietary Anti-Benchmark US Core Equity Index. The Touchstone Anti-Benchmark International Core Equity Fund invests in approximately 100 to 150 securities in TOBAM’s proprietary Anti–Benchmark International Core Equity Index.

“These strategies are consistent with Touchstone’s Distinctively Active positioning insofar as they are markedly different than the broad market indices. We believe that TOBAM’s Anti-Benchmark methodology is the latest innovation in core-satellite and asset allocation investing,” says Steven Graziano, president of Touchstone Investments. “TOBAM’s patented strategy is designed to provide investors with diversified core exposure. It offers innovative investment capabilities designed to increase diversification and reduce volatility compared to traditional benchmarks over a market cycle. These strategies are ideal for those asset allocators who believe in the benefits of diversification.”

Touchstone has also entered into a marketing services agreement to distribute TOBAM Anti-Benchmark strategies in the United States with select intermediaries.

AAM Builds Third High Dividend Value ETF

Advisors Asset Management (AAM) is launching its third exchange-traded fund (ETF), the S&P Developed Markets High Dividend Value ETF.

“We are excited to launch our third ETF within our high dividend value lineup,” says Lance McGray, managing director, head of ETF Product at AAM. “With the addition of DMDV we now offer investors our innovative high dividend value strategy across domestic, emerging and international developed markets.”

DMDV is the most recent addition to AAM’s high dividend value ETF suite which includes the S&P 500 High Dividend Value ETF as well as the S&P Emerging Markets High Dividend Value ETF, which focus on income with a value tilt, and seek to help investors meet their current cash flow and future capital appreciation goals.

AAM S&P Developed Markets High Dividend Value ETF targets attractively valued developed international mid- and large-cap stocks that exhibit both a high dividend yield and sustainable dividend distribution characteristics. 

At the core of this common-sense solution is the S&P Dividend and Free Cash Flow Yield Index series, which is designed to balance current cash flow with future capital growth. To accomplish this, the underlying index series focuses on two key valuation indicators to identify sustainable dividend-paying stocks offering fundamental value: dividend yield and free cash flow yield. 

McGray added, “Reaching for the highest yielding stocks is not always the best course of action. Dividend sustainability may be just as important as the actual dividend yield itself. In our opinion, Free Cash Flow yield is an ideal indicator of dividend sustainability, and when coupled with Dividend yield in the selection process, the result can be powerful.”

In addition to providing all the potential benefits of an ETF, including low cost, tax efficiency, transparency and flexibility, DMDV is scheduled to pay monthly distributions by targeting five stocks from each GICS sector, with the goal of providing investors a full range of sustainable dividend opportunities.

HB&T to Build ESG-Centered Collective Investment Fund

Hand Benefits & Trust (HB&T), a BPAS company, has been selected by Decatur Capital Management, Inc. (DCM), to establish a new ESG (environmental, social and governance)-focused U.S. Equity collective investment fund (CIF), effective January 1.

The new collective investment fund will be available to qualified retirement plans and will trade on most major recordkeeping platforms.  

Degas Wright, founder and principal of Decatur Capital Management, Inc. (DCM), says, “With the increasing demand for environmental and socially responsible investing, Decatur Capital has incorporated an ESG process reviewing all material ESG factors in the U.S. large cap company universe. Building on our knowledge and expertise of international and domestic markets, we are committed to bringing diversified solutions to meet the evolving investor needs. As we embark on this new chapter in our journey, we look to further support the ESG efforts in the capital markets.”  

Decatur Capital’s U.S. ESG strategy provides diversified exposure to the large capitalization U.S. stock market combined with an ESG weighted allocation process. The strategy accomplishes these objectives by forming a risk-controlled portfolio based on a ranking methodology of the companies’ ESG characteristics.  “HB&T Collective Fund will provide Decatur Capital clients with an opportunity to provide products that will serve the market place.  We look forward to serving our clients by providing a low cost, environmentally, socially conscience portfolio in conjunction with the HB&T team,” Wright adds.

“As trustee, administrator, and transfer agent, we are looking forward to working with the Decatur team,” says Stephen Hand, HB&T president. “CIFs generally provide for lower expense ratios, flexibility with underlying securities, and simplified 404(a)(5) compliance, which will make it easier for Decatur clients to achieve their retirement goals.”