Investment Products and Services Launches

TD Ameritrade Announces Alternative Solution for Portfolio Management; American Century Releases First ETFs; Putnam Reveals Two ESG Fund Offerings; and more.

When it comes to managing client portfolios, some registered investment advisers (RIAs) prefer to do it all themselves, researching and executing trades, while others employ the services of third-party asset managers. Recently, TD Ameritrade Institutional has introduced a new alternative: Model Market Center. 

This platform lets independent RIAs on the TD Ameritrade Institutional platform leverage leading money managers right from their desktops, without the constraints and complexity that come with outsourcing solutions. 

With Model Market Center, advisers can select from a menu of third-party investment models in one central location. The platform then leverages iRebal on Veo—TD Ameritrade’s trading and portfolio management technology—to execute those models in the manner they choose. As providers update their models, changes are automatically communicated to advisers. 

For do-it-yourself advisers, Model Market Center can save the time spent building models from scratch, so they can devote more time working with clients and financial planning, while retaining investment management fiduciary control and responsibility, flexibility, and trading discretion. 

And for those that employ traditional third-party platforms, Model Market Center can represent a less-costly alternative. A broad menu of models is available to advisers at no additional fee, and there’s no investment minimum for assets held at TD Ameritrade Institutional. 

“Investment management isn’t just time-consuming, it’s increasingly commoditized. Model Market Center lets advisers apply the investment strategies of well-known money managers with a few clicks. So though advisers must still research investment options and monitor models, our new platform can help them focus more on those activities that deliver greater value,” says Danielle Fava, director of product strategy and development at TD Ameritrade Institutional. “Advisers are increasingly seeking efficiencies. With this platform, we are delivering what we believe to be a more modern approach.” 

Model Market Center currently offers access to a selection of models from eight investment managers:

  • Anchor Capital Advisors 
  • CLS Investments 
  • Cambria Investments 
  • Goldman Sachs Asset Management 
  • Russell Investments 
  • State Street Global Advisors 
  • Wilshire Associates 
  • WisdomTree Investments 

American Century Releases First ETFs

American Century Investments has launched American Century STOXX U.S. Quality Value (VALQ) and American Century Diversified Corporate Bond (KORP) Exchange Traded Funds (ETF), the first two ETFs to be offered by the global asset management firm. 

“Our goal with the launch of American Century ETFs is to provide innovative strategies that strive to deliver better outcomes for investors,” says Edward Rosenberg, senior vice president and head of ETFs for American Century. “We are excited to be launching our first two ETFs, which we see as ‘core’ investments that can serve as a central, foundational component of a long-term portfolio.” 

Senior Vice President Peruvemba Satish, a portfolio manager on one of the new ETFs and director of global analytics for American Century, says the firm leveraged its cross-discipline investment capabilities and analytical skills to create the new funds. “Informed by decades of experience, our strategies apply our unique insights to solve common investment problems and help investors achieve their goals,” Satish says. 

American Century STOXX U.S. Quality Value ETF is an index-based value fund designed for investors pursuing capital appreciation. It seeks to deliver a more attractive risk/reward profile than the market capitalization-weighted value investing typical of traditional index funds. The fund utilizes American Century’s Intelligent Beta methodology, which strives to dampen the cyclicality of value investing in pursuit of strong risk-adjusted returns throughout the market cycle. 

The portfolio management team’s analysis begins with the broad universe of U.S. large-cap stocks based on the STOXX 900 Index. The team applies measures such as profitability, earnings quality, management quality and earnings revisions to identify high-quality companies at attractive valuations. It complements them with sustainable dividend-payers to help mitigate risk when value investing falls out of favor. 

The fund is co-managed by Satish and Rene Casis. Satish joined American Century in 2014 to establish and lead the firm’s global analytics team. Casis joined American Century in early 2018 after serving in ETF portfolio management roles with BlackRock, Barclays Global Investors (BGI) and 55 Institutional. 

American Century Diversified Corporate Bond ETF is an actively-managed corporate bond fund designed for investors seeking current income. The fund emphasizes investment-grade debt while dynamically allocating a portion of the portfolio to high yield in a single, systematically managed portfolio. By integrating fundamental and quantitative expertise, the portfolio management team strives for enhanced return potential versus traditional capitalization-weighted passive portfolios. 

The fund is comanaged by Kevin Akioka, Jeffrey Houston, Gavin Fleischman and Le Tran. Vice President and Senior Portfolio Manager Akioka joined American Century in 2010 and leads the fixed-income group’s corporate credit team. Vice President and Senior Portfolio Manager Houston has been with the company since 1990. Vice Presidents and Portfolio Managers Tran and Fleischman joined the firm’s fixed income team in 2004 and 2008, respectively. 

Putnam Reveals Two ESG Fund Offerings

Putnam Investments has announced plans to offer two funds with dedicated environmental, social and governance (ESG) strategies to the marketplace toward the end of Q1 2018, pending SEC staff review. The new funds, to be named Putnam Sustainable Leaders Fund and Putnam Sustainable Future Fund, will bring two distinct investment lenses to identify opportunities driven by corporate sustainability practices and solutions, respectively.  

The two new Putnam ESG funds will be formed through the repositioning of two existing products offered by the firm. Putnam Multi-Cap Growth Fund will become Putnam Sustainable Leaders Fund, a multi-cap fund—with $4.3 billion in assets at the end of December 2017—focused on identifying companies with demonstrated commitment to sustainable business practices. The fund will be managed by Katherine Collins, head of Sustainable Investing and Shep Perkins, co-head of Equities. They will be joined by Assistant Portfolio Manager Stephanie Henderson, an analyst on the firm’s sustainable investing team. Rob Brookby, who previously managed Putnam Multi-Cap Growth Fund, will be leaving the firm to pursue other opportunities.

Additionally, Putnam Multi-Cap Value Fund will become Putnam Sustainable Future Fund, a mid-cap fund—with $450 million in assets at the end of December 2017—focused on identifying companies with products and services that provide solutions directly contributing to sustainable social, environmental, and economic development. The fund will continue to be managed by Katherine Collins, who will be joined by Assistant Portfolio Manager Stephanie Henderson.    

“There is a growing realization in the marketplace that companies engaged in sustainability often show enhanced fundamental and financial performance,” says Aaron Cooper, chief investment officer, Equities, Putnam Investments.  

The two Putnam ESG-focused funds are expected to be available in the marketplace in March 2018.

Fidelity Increases Factor-Based ETFs for Individual Investors and Advisers

Fidelity Investments is expanding its factor-based exchange-traded fund (ETF) offerings for individual investors and financial advisers with the introduction of two international factor-based ETFs: Fidelity International High Dividend ETF (FIDI) and Fidelity International Value Factor ETF (FIVA). 

The new ETFs, which began trading on the New York Stock Exchange, are competitively priced with total expense ratios of just 0.39%. They are available to individual investors and financial advisers commission-free through Fidelity’s online brokerage platforms. 

“Many investors have expressed strong interest in international dividend and value factor strategies,” says Greg Friedman, head of ETF management and strategy at Fidelity. “These new ETFs, which will help us address that demand, benefit from our powerful research capabilities and decades of investing experience and expertise and provides great value to investors.” 

With the addition of these two ETFs, investors now have access to 93 commission-free ETFs, including the full suite of eight domestic and international factor ETFs, three Fidelity actively-managed bond ETFs, 11 Fidelity passive equity sector ETFs, Fidelity ONEQ, and 70 passive iShares ETFs.

“Overall cost is a key consideration when evaluating ETFs. Commissions, bid-ask spreads, and expense ratios are three important factors in evaluating overall ETF cost,” says Friedman. “Our commission-free ETFs provide customers with tighter spreads and lower expense ratios, compared to the average commission-free ETFs.”