Investment Product and Service Launches

Northern Trust Launches Outsourced Trading Capability; State Street and Charles River Development Acquisition Improves Investment Platform; Mercer and Morningstar Launch Digital Analytics Platform; and more.

Northern Trust has launched an outsourced trading capability designed to help asset owners and asset managers achieve better overall trading and performance outcomes. 

The capability, named Integrated Trading Solutions (ITS), combines Northern Trust’s trading experience in equities and fixed income with comprehensive access to global markets, trading venues and liquidity. Potential benefits to clients may be reduced costs and reduced risks, said Northern Trust.

“Institutional investors are at a tipping point, faced with unprecedented pressure from multiple sources: the need to invest in technology, support regulation and compliance requirements alongside competitive fee pressures,” says Guy Gibson, head of institutional brokerage for EMEA & APAC at Northern Trust. “All these factors combine to drive down profitability. Through our newly-launched end-to-end integrated trading capability, we are positioned to deliver an immediate solution to help our clients address these challenges.”

State Street and Charles River Development Acquisition Improves Investment Platform

State Street Corporation has acquired Charles River Systems, Inc. (Charles River Development), the combination of which is said to enable a global interoperable investment platform connecting the front, middle and back office with one provider. This platform, supported by deep enterprise data management capabilities, will accelerate investment workflows, provide advanced data aggregation, analytics and compliance tools, and connect and exchange data with other industry platforms and providers. 

“The combination of State Street and Charles River Development will create an open platform that will standardize data and systems across multiple asset classes and the entire investment lifecycle. We are delighted to welcome the more than 700 talented employees who join State Street today and look forward to working with the Charles River Development clients to support their current and future business needs,” says Jay Hooley, chairman and CEO of State Street.

In addition to the announcement, State Street has established the Charles River Development Client Advisory Board to provide ongoing strategic input into the platform development, engage with peers across the industry, as well as shape new products and solutions aligned with market and industry trends. Jenny Tsouvalis, senior vice president and enterprise head of investment reporting, operations and applications for OMERS Administration Corporation, will chair the advisory board.

“I have worked closely with State Street and Charles River Development, and I am excited about the opportunity to chair this new client advisory board,” says Tsouvalis. “From the inception of our relationship with Charles River Development, the functionality has grown each year expanding and offering both front- and middle-office business solutions that we have taken advantage of and implemented. The acquisition by State Street creates a deeper platform to develop additional workflow features and integration to support the front, middle and back offices. As a client, we see this as an opportunity to further grow the product and increase with expanded innovative capabilities.” 

Other developments include the arrival of Charles River Development CEO, John Plansky, and the transition of Peter Lambertus, from founder at Charles River Development to strategic consultant of the firm.

Mercer and Morningstar Launch Digital Analytics Platform

Mercer and Morningstar, Inc. have formed an alliance to provide investors and advisers with a single global digital platform for institutional investment manager data, performance analytics and qualitative research.

The new alliance pairs Mercer’s global institutional manager data and research with Morningstar’s independent research and data spanning open-end mutual funds, exchange-traded funds (ETFs), separately managed accounts, and indexes.

“Investors and their advisers do not have comprehensive resources for institutional strategies research and data. Working together with Morningstar, we can give investors and their advisers an extensive and deep view of their opportunity set and costs, empowering them to make better, overall investing decisions,” says Rich Nuzum, global president, Mercer’s wealth business. “We chose to collaborate with Morningstar because they understand the changing landscape of financial advisers’ needs. Through this alliance with Morningstar, we will bring a new level of transparency and insight to the industry and enable advisers and wealth managers to deliver holistic solutions to their clients.”

Mercer and Morningstar’s collective business intelligence and intellectual capital represents a robust source of global investment manager data, performance analytics, qualitative research, strategic research, information on investor trends, and artificial intelligence applied to fund data.

“Morningstar has a 35-year history of serving financial professionals in the pursuit of delivering the best possible outcomes for investors. We’ve seen how asset management firms, investment consultants, and wealth managers have struggled to find a comprehensive, forward-looking, qualitative research solution at the strategy and share-class level,” says Tricia Rothschild, chief product officer, Morningstar. “We selected Mercer for this venture to close that gap by developing a global solution that will help advisers, asset managers, and investment consultants focus decision-making and create new investment options for the end investor, driving stronger outcomes.”

Institutional consultants and investors, asset managers, and financial advisers will be able to access this new global data and research offering through Morningstar Direct. Mercer and Morningstar will be mapping research and data on institutional strategies held within Mercer Insight to Morningstar Direct, creating a seamless link among strategy, vehicle data and analytics. The new offering will be rolled out by region, beginning in early 2019 in the United States.

Natixis Adds Strategies to Sustainable Future Funds

Natixis Investment Managers has appointed three portfolio managers to the Natixis Sustainable Future Funds, primarily responsible for the oversight of the funds’ sub-advisers. The named portfolio managers include Marina Gross, EVP of Natixis’ portfolio research and consulting group (PRCG), Curt Overway, president of managed portfolio advisors (MPA), and Daniel Price, CIO of MPA. 

Additionally, Natixis has added three new equity segments to the funds to further diversify the product range while staying true to the funds’ sustainable investment focus. These additions, which include a small/mid-cap segment, an international developed markets segment and an emerging markets segment, will each follow a sustainable investment approach.

“We’re excited to add these additional equity strategies that we think will help achieve our long-term mission of providing 401(k) plan participants the option to invest in strategies that reflect their personal values,” says Ed Farrington, EVP, head of retirement strategies at Natixis. “We’re very pleased with the funds’ performance to date, however, we expect to continue evolving our offering in order to meet the asset allocation needs of the funds, and to provide an ESG option that continues to deliver strong performance for our investors.”

The funds are advised by Natixis Advisors, L.P. with Wilshire Associates Incorporated acting as a sub-adviser, as well as responsible for providing glide path design and portfolio allocation services. The funds’ assets will be invested within affiliated underlying funds and separately managed account segments that the portfolio managers and Wilshire deem appropriate based on the funds’ overall objectives.

These enhancements will be effective October 15.

GSAM Offers Fourth Fixed Income ETF

GSAM launched the Goldman Sachs Treasury Inflation Protected Securities ETF (GTIP), an exchange-traded fund (ETF) that seeks to offer smart beta exposure to treasury inflation-protected securities (TIPS). GTIP is priced to investors at 12 basis points and is GSAM’s fourth fixed income Access ETF.

“In an inflationary economic environment, GTIP provides investors with a potential hedge through its innovative screening approach to TIPS bonds,” says Michael Crinieri, GSAM’s global head of ETF Strategy. “The addition of GTIP further highlights the mission of our Access ETF lineup, providing investors with lower-cost bond funds.”

GTIP seeks to track the FTSE Goldman Sachs Treasury Inflation Protected USD Bond Index, owned and calculated by FTSE Fixed Income LLC using concepts developed with GSAM. The index uses a transparent, rules-based methodology, designed to measure the performance of bonds that meet certain liquidity and issuance criteria.

“TIPS present an attractive diversification opportunity for many investors with relatively low correlations to other major asset classes,” says Jason Singer, portfolio manager for GTIP. “We are excited to extend our Access ETF lineup and provide investors with a smarter, more systematic way to invest in the bond market.”

GTIP will be passively managed by GSAM’s Global Fixed Income team.

PGIM Launches Second Actively Managed ETF

PGIM Investments has launched its second actively managed exchange-traded fund (ETF), the PGIM Active High Yield Bond ETF (NYSE Arca: PHYL), as it continues to expand the ETF platform created earlier this year. PGIM Investments is the worldwide distributor of retail products for PGIM, the $1 trillion global investment management businesses of Prudential Financial, Inc.

“Having the benefit of scale has provided us the flexibility to expand our platform and thoughtfully develop strategies in a variety of vehicles that meet client demand,” says Stuart Parker, president and CEO of PGIM Investments. “When it comes to ETFs, our focus is on developing competitive products that align with our core investment capabilities.”

PGIM Investments’ first ETF, the PGIM Ultra Short Bond ETF, was launched in April. Just like PULS, the PGIM Active High Yield Bond ETF is also actively managed by sub-adviser PGIM Fixed Income and is attractively priced. PHYL is priced at 0.53%, 14 basis points below the average active high yield ETF, according to Morningstar as of August 31. The fund invests primarily in high yield bonds and seeks to generate total return through a combination of current income and capital appreciation.

“We see a lot of opportunity for an experienced active manager with a core capability in high yield bond investing,” says Parker. “Our investors couldn’t be in more capable hands—our portfolio management team has the experience, credit research, and risk management capabilities critical to investing in this sector.”