Investment Products and Services Launches

TD Ameritrade Adds ESG Investment Models and First Trust Creates Index-Based ETF.

With a growing number of Americans looking to invest in companies that express their environmental, social and governance (ESG) values, TD Ameritrade Institutional is making more of these investment choices available to independent registered investment advisers (RIAs) for their clients.

Through the Model Market Center platform, RIAs can access investment models that may meet their criteria for ESG, controversial business involvement or carbon footprint. With a few clicks, advisers can invest a client’s assets in a way that they feel meets sustainable standards and the client’s overall risk tolerance. These models are currently available to advisers at no additional fee and with no investment minimum for assets held at TD Ameritrade Institutional.

Launched in October 2017, Model Market Center allows advisers to tap the brain power of money managers from their desktops, potentially reducing time spent building investment models from scratch and develop in-house expertise. Advisers subscribe to investment models and can then leverage the TD Ameritrade iRebal on Veo portfolio-management technology to incorporate the models into their client’s portfolios.

Advisers on the Veo brokerage platform also can apply a screening tool to identify 559 mutual funds that have identified themselves as socially responsible and are open to new investors, including 234 funds that can be traded commission-free.

Likewise, advisers who use TD Ameritrade’s exchange-traded fund (ETF) Market Center can use screening tools to find and access 63 ETFs identifying themselves as socially responsible, including eight commission-free offerings.

R. Thomas Manning Jr., CFA, chief executive and president of F.L. Putnam, notes that investors do not have to sacrifice performance when pursuing a sustainable approach. In fact, ESG factors can help investors measure risks that are not always found in a company’s financial statements.

“There’s this myth that sustainable investing means giving up returns, but after 35 years of using an ESG-based approach, we know that is simply not true,” Manning said.

“There’s a real appetite for socially responsible investing among new and existing clients, and yet many firms don’t offer this as an area of expertise,” says J.D. Bruce, president of Abacus Wealth Partners in Santa Monica, California. “We’ve been incorporating social factors into our client’s investments for decades, and since 2009 we’ve included environmental screening in virtually all of our portfolios.”

First Trust Creates Index-Based ETF


First Trust Advisors L.P. (First Trust) has launched a new index-based exchange-traded fund (ETF), the First Trust Dorsey Wright DALI 1 ETF. The fund seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an index called the Nasdaq Dorsey Wright DALI 1 Index.

The index is designed to evaluate four broad asset classes: Domestic Equity, International Equity, Fixed Income and Commodities. The Dynamic Asset Level Investing process (the DALI process) is used to identify the asset class best positioned to outperform the market generally. The DALI process was designed as a tool to provide guidance for asset allocation decisions among asset classes, as well as within asset classes, steering an investor toward those areas of the market that Nasdaq Dorsey Wright believes may outperform. The DALI process is used to evaluate supply and demand forces of asset classes, and rank them from strongest to weakest based on Nasdaq Dorsey Wright’s proprietary relative strength methodology. The asset class with the highest relative strength score is selected for inclusion in the index and the fund’s assets will be allocated to ETFs that provide exposure to the asset class. 

The index construction process was developed by Nasdaq Dorsey Wright, a registered investment advisory firm that provides professional management and investment research services for numerous broker/dealers and large institutions around the world. The cornerstone of their approach is technical analysis, and in particular, the law of supply and demand.

“In times of increasing volatility, the ability to differentiate between the values of asset classes has never been more important. Our relative strength-based asset class ranking system, DALI, has been a mainstay of our research for over a decade, and we are excited to bring this unique strategy to market with First Trust,” says Jay Gragnani, head of Research and Client Engagement for Nasdaq Dorsey Wright.