RiXtrema will be revamping its FiduciaryOptimizer platform by
utilizing retirement plan benchmarking, red flag data, and other
features introduced through a partnership with Larkspur Data. RiXtrema in turn
will provide Larkspur Data with value-added information about aggregate plan
saving, annual percentage rate savings, and diversification ratings for
complimentary use by Larkspur Data’s clients.
The IRA FiduciaryOptimizer is designed to help clients comply with the upcoming Department
of Labor (DOL)’s Conflict of Interest rule by helping advisers servicing retirement
plans to analyze clients’ best interests, as well as fee reasonableness. Also
known as the fiduciary rule, the DOL policy goes into effect in April 2017.
Larkspur Data will supplement RiXtrema’s existing data
sets. These currently consist of Plan Screener, based on the plan’s schedule of
assets reported along with Form 5500; and FeeComp,
a database of advisers’ fees based on their Form ADV Part 2.
“The Larkspur Data team is expert in retirement plan data,
providing information on more than a million plans in the U.S.,” says RiXtrema President Daniel Satchkov, CFA. “Their database is a robust, value-added
enhancement to our system, enabling advisers to pull in needed data with just a
couple of clicks.”
Satchkov adds, “Plan advisers frequently find that
participants could not, or would not, obtain required disclosures from plan
sponsors. The recent DOL FAQ clarification on best interest documentation under
the fiduciary rule explicitly states that if advisers cannot obtain the plan
sponsor disclosure on current out-of-pocket retirement fees, then advisers can
use the plan’s annual reporting and benchmarking data.”
The IRA FiduciaryOptimizer also produces a report summarizing why
a rollover would be the best interest of the client. Reports can be generated by
individual advisers, or by a home office compliance team using an administrator
portal to manage outcomes for all advisers/representatives with the firm.
Larkspur Data will also power RiXtrema’s 401kFiduciaryOptimizer, a
separate part of RiXtrema’s platform that is used to win business in the plan
sponsor space.
“At Larkspur Data, we’ve analyzed every plan filing for the
past 10 years (over 10 million in total) using 90 different ‘risk’
factors,” says Robert Morris, vice president of Operations.“Our
research has revealed that roughly one-third of all retirement plans are either
out of compliance or have significant operational flaws. With this integration,
advisers will be able to quickly access data that will enable them to
effectively leverage the power of RiXtrema. The quantitative data that RiXtrema
will provide us will help our clients gauge whether the plans they are
researching are following best fiduciary practices in their investment menu
construction.”
Founded in 2010, RiXtrema is a portfolio
crash-testing company that helps advisers discuss risk with clients. Larkspur
Data is a provider of targeted data and market intelligence
for financial advisers in the 401(k) and qualified plan industry.
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Lincoln Financial and BlackRock Launch Variable Annuity; Vanguard Taps RS
Investments to Manage Mid-Cap Growth Fund; LGIMA Releases New Scientific Beta Funds for Institutional Investors;
and more.
Lincoln Financial and
BlackRock Launch Variable Annuity
To help fee-based advisers meet their clients’ lifetime
retirement income needs, Lincoln Financial Group has partnered with BlackRock
to develop a new variable annuity, Lincoln Core Income. It’s built exclusively
with BlackRock’s iShares exchange-traded funds (ETFs). The annuity is designed
to provide guaranteed lifetime income, which can increase each year.
“Retirement savers are facing unprecedented challenges,”
says Will Fuller, president, Annuity Solutions, Lincoln Financial Distributors
and Lincoln Financial Network. “People are living longer, equity markets are
volatile and interest rates remain low, putting more pressure on their savings
to work harder for longer to provide adequate income. Annuities can provide
income for life that is guaranteed and an essential strategy for savers who
want to know they have predictable income.”
The fund is expected to be available during the first
quarter of 2017. There is no surrender charge, according to Lincoln
Financial.
“Fee-based advisers want a simple, transparent and lower-cost
strategy without a surrender charge that fits the way they serve their
clients,” says Fuller. “Lincoln Core Income, built with iShares can provide
savers with the equivalent of a paycheck for life that increases every year. We
fully expect this product to be welcomed by retiring Baby Boomers and the
advisers that serve them.”
Salim Ramji, head of BlackRock’s U.S. Wealth Advisory
business, says: “A shift by advisers toward fee-based models is a growing
trend. Lincoln and BlackRock are collaborating to meet the need of advisers
looking for simpler ways to help clients meet their retirement income goals
with more low-cost, quality options using ETFs.”
NEXT: Vanguard Taps RS Investments to Manage Mid-Cap Growth Fund
Vanguard Taps RS
Investments to Manage Mid-Cap Growth Fund
The RS Investments team of Victory Capital Management will oversee
Vanguard’s $4.1 billion Mid-Cap Growth Fund. The firm will manage 50% of the
fund previously managed by Chartwell Investment Partners.
The RS Investments team utilizes a bottom-up stock research and
selection process. Its investment strategy is rooted in deep analysis to
identify the drivers of sustainable, long-term growth. Scott Tracy, CFA, chief
investment officer of the eight-person RS Investments Growth Team, will serve
as co-portfolio manager along with Steve Bishop, Melissa Chadwick-Dunn, and
Chris Clark, CFA.
RS Investments adds to Vanguard’s roster of external investment
advisory firms, which now total 30.
“Vanguard has a meaningful legacy in the world of active
management, stretching back to the 1929 launch of the Wellington Fund,” says
Vanguard CEO Bill McNabb. “We seek to select and retain the industry’s leading
investment firms and we welcome the addition of Victory’s RS Investments team
as a complement to our deep and broad roster of active managers.”
The investment objectives and principal investment strategies of
the Mid-Cap Growth fund will remain the same, and Vanguard says it does not
expect the expense ratio to be affected by the changes.
NEXT: LGIMA Launches New Scientific Beta Funds
for Institutional Investors
LGIMA Launches New Scientific Beta Funds for Institutional Investors
The U.S. index fund management business of
Legal & General Investment Management America (LGIMA) is moving forward
with Scientific Beta Multi-factor strategies using commingled funds designed
for institutional investors. The new funds will be aimed at defined benefit
(DB), defined contribution (DC), Taft-Hartley, and public plans.
LGIMA will be launching four funds
comprising the global, U.S., developed ex-U.S., and emerging market components
of the Scientific Beta Multi-factor indices. These indices will initially have
exposure to the low volatility, value, momentum and size factors. It will use weighting
methodologies that seek to improve diversification and risk-adjusted returns
relative to market-cap weighted indices.
"It’s a perfect marriage of
LGIMA’s commingled fund platform that emphasizes a high level of governance,
transparency and flexibility,” says Greg Behar, head of Index Strategy at
LGIMA. “This marks the first time that U.S. investors will be able to access
scientific beta’s academically-driven smart beta 2.0 methodology in a
collective investment trust designed for institutional investors.”
Noël Amenc, CEO of ERI Scientific Beta added, “At ERI
Scientific Beta, we have long been emphasizing the importance of diversifying
the specific risks of factor indices. Diversification has been described as the
only ‘free lunch’ in finance, and it is crucial that investors who wish to
avoid the levels of concentration of cap-weighted indices do not fall into the
trap of choosing highly-concentrated smart beta indices instead on the pretext
of being as highly exposed to factors as possible.”
NEXT:
American Century Investments Releases Emerging
Opportunities Total Return Fund
American
Century Investments Releases Emerging Opportunities Total Return Fund
AC Alternatives, from American Century Investments, has
launched the Emerging Opportunities Total Return Fund. The fund is aimed at
clients looking to diversify their fixed-income portfolios with securities that
are tied to emerging markets. It is available in investor, institutional, A, R
and R6 share classes.
"Our new total return fund is a benchmark-agnostic
portfolio that tactically allocates among all [emerging market debt] EMD asset classes, including
sovereigns and corporates, hard and local currency debt, currencies and
derivatives," says EMD Head Marge Karner. "We strive to capture most
of the upside in the EMD universe with only 50% to 75% of the volatility
over the full business cycle. Our goal is to provide an alternative to clients
seeking exposure to the full range of EMD asset classes with a focus on seeking
strong risk-adjusted returns and on minimizing drawdowns."
A team of EMD experts utilizes a combination of top-down
and bottom-up analysis to develop their views on emerging markets, as well as
an integrated and quantitative investment process. The team focuses on
delivering returns through enhanced attention to risk and stress testing of
portfolios. Consequently, proprietary risk management and portfolio engineering
tools are integrated into the daily portfolio management process.
According to Co-Chief Investment Officer David MacEwen,
American Century Investments is committed to offering a solution-based product
that aims to help clients navigate the complex EMD universe, while striving to
actively manage downside risk.
"We believe emerging markets may account for roughly
two thirds of global growth over the next few years, fueled by supportive
demographics, the growing middle class and increasing incomes," says
MacEwen. "Over the past few years, we've built an experienced team of EMD
experts to manage our growing capabilities and to respond to our clients'
evolving preferences."
MFS Investment Management has rolled out the MFS Lifetime
2060 Fund, the latest offering in its target-date funds (TDF) series. The fund
is meant for younger workers in the defined contribution space who expect to
have more than 40 working years ahead of them.
"Target-date funds are a compelling option for young
savers because they provide a disciplined, systematic way to invest for
retirement," says Ryan Mullen, senior managing director and head of MFS'
Defined Contribution Investments business. "With a broad need to increase
retirement savings across all generations, MFS is pleased to offer our
longest-dated Lifetime Fund to the market. This fund will offer younger workers
a chance to start investing today for a goal that is over four decades
away."
This TDF is substantially invested in other MFS mutual funds.
From inception, it will allocate a majority of its assets to U.S. and
international stock funds. As the fund moves closer to its target date, it will
follow a glide path decreasing exposure to stock funds and increasing exposure
to fixed income funds. By 2060, it will seek total return through a combination
of current income and capital appreciation. It will have an asset allocation
aligned with that of the MFS Lifetime Income Fund.
MFS has offered its Lifetime target-date funds since 2005.
Over time, MFS has enhanced the diversification among the underlying fund mix
of equities, bonds and other non-correlated asset classes, and added funds with
five-year increments to give investors options more closely aligned to their
specific goals. Recently, the firm added several of its MFS Blended Research
Funds as underlying investments in its Lifetime TDFs in an attempt to further
enhance the funds' risk/reward profiles and lower overall expenses. MFS also
added Class R6 shares to the Lifetime target-date fund lineup.
As of October 31, 2016, MFS manages more than $2.5 billion
in the Lifetime Funds.