June 6, 2011

10 Top Portfolio Products: New Offerings From T. Rowe, Matthews, Cadaret Grant

Among the week's new investment products: Global X ag fund; Putnam subadvises bond funds; Matthews China fund

New products introduced over the last week include a new emerging-markets fund from T. Rowe Price, two new funds focused on Asia, one each from Matthews and IndexIQ, and a new agricultural fund from Global X.

In addition, Putnam was named subadvisor to two Mackenzie Investments funds, Nuance began its first fund, and Tortoise Capital added an open-end fund; New York Life began a guaranteed interest pension fund; and Cadaret, Grant and Smartleaf each launched new portfolio management tools.

Here are the 10 latest developments of interest to advisors:

1) T. Rowe Price Expands Emerging Markets Bond Fund Lineup

T. Rowe Price announced on Thursday that it has launched an emerging markets bond fund invested in local currency bonds. The T. Rowe Price Emerging Markets Local Currency Bond Fund (PRELX) seeks to provide high income and capital appreciation and allows investors to diversify away from the U.S. dollar.

The fund, which takes a high-risk approach to income from foreign bonds, will be managed by Chris Rothery and Andrew Keirle with a net expense ratio estimated to be 1.10% for investor-class shares and 1.20% for advisor-class shares.

The fund will be primarily driven by currency performance, as well as local interest rate movements and credit fundamentals, and usually invests at least 80% of its assets in emerging market bonds issued in local currencies. While the mutual fund can invest in bonds issued by companies in emerging markets and other entities, it expects to invest primarily in sovereign bonds issued by emerging market governments.

Currently, it has diversification across more than 15 different emerging market local currencies in Europe, Asia, Latin America, and the Middle East and Africa. Approximate duration is 4.5 years with an average yield to maturity of about 6.4% and over 70% of assets in investment-grade bonds.

2) Matthews Launches China Small Companies Fund

Matthews International Capital Management, advisor to the Matthews Asia Funds, announced the expansion on Wednesday of its fund lineup to include a new portfolio dedicated to investing in Chinese small companies. The Matthews China Small Companies Fund (MCSMX) will seek long-term capital appreciation by investing in the stocks of companies in China, Hong Kong and Taiwan with market capitalizations generally under $3 billion.

Managed by Richard Gao, and co-managed by Henry Zhang, the fund represents the firm’s third China strategy. The number of publicly listed small Chinese companies (excluding A shares, which are generally not available to foreign investors) has nearly doubled in the past five years and now exceeds 1,000, according to the Matthews announcement.

3) IndexIQ Launches Its First ETF Focused on Mid-Cap Japanese Equities

IndexIQ announced on Thursday that it is launching the IQ Japan Mid Cap ETF (RSUN). RSUN is dedicated to providing access to Japan’s mid-cap stock sector, including the industrial, financial and technology sectors, which made up 23.16%, 17.69%, and 9.08%, respectively, of the fund’s underlying index as of May 16.

RSUN seeks to replicate, before fees and expenses, the performance of the IQ Japan Mid Cap Index (IQMDJPN), a float-adjusted market cap-weighted index that tracks the overall performance of the mid-cap sector of publicly traded companies domiciled and primarily listed on an exchange in Japan.

4) Global X Funds Launches the Global X Farming ETF

Global X Funds launched the Global X Farming ETF (BARN) on Thursday. BARN covers the farming sector, focusing on companies involved in agricultural products, livestock operations and the manufacturing of farming equipment.

The Global X Farming ETF tracks the Solactive Global Farming Index, which is designed to measure broad-based equity market performance of global companies involved in the farming industry. It is not an equal-weighted index. To pass the diversification guideline, the index is capped,

 

which affects the top 10 holdings. As of May 23, the three largest components of the index were Vitierra Inc., Kubota Corp., and Wilmar International Ltd.

5) Putnam Investments to Subadvise Two Mackenzie Fixed-Income Funds

Putnam Investments announced Wednesday that it has been named subadvisor to two fixed-income funds offered by Toronto-based Mackenzie Investments. The mandate for Putnam totals approximately $1.75 billion. Both Mackenzie Investments and Putnam Investments are affiliates of Power Financial Corporation of Canada. Putnam will assume portfolio management responsibilities effective June 1 for Mackenzie Sentinel Corporate Bond Fund and Mackenzie Sentinel Registered North American Corporate Bond Fund. Mackenzie Sentinel North American Corporate Bond Class will continue to invest in Mackenzie Sentinel Corporate Bond Fund, as will the high-yield fixed-income mandate of the Symmetry Fixed Income Class and the Symmetry Registered Fixed Income Fund.

6) Nuance Investments Launches First Mutual Fund

Nuance Investmentshas introduced the Nuance Concentrated Value Fund (NCVLX), its first open-ended mutual fund. Launched in partnership with Montage Investments, the fund invests primarily in equity securities of U.S.-based companies that Nuance believes are high quality, though temporarily out of favor.

Nuance selects securities for the fund’s investment portfolio by using a quantitative screening and fundamental research process that identifies leading businesses selling at a discount to fair value with the potential to generate above-average rates of return.

7) Tortoise Capital Advisors Adds Open-End Fund

Another new fund initiated in cooperation with Montage Investments, from Tortoise Capital Advisors, was announced on Wednesday. The Tortoise MLP & Pipeline Fund is Tortoise’s first open-end mutual. Investor and institutional class shares are available under the symbols TORTX and TORIX, respectively.

The fund will invest primarily in equity securities of MLP and pipeline companies that own and operate North American energy infrastructure assets, with an investment objective of total return. The fund is structured as a traditional mutual fund providing daily liquidity at NAV, with flow-through

 

tax treatment and no fund-level taxation.

8) New York Life Initiates Guaranteed Interest Pension Account

New York Life Investmentsannounced on Tuesday the launch of the Guaranteed Interest Pension Account (GPA). GPA provides organizations with an investment option for near-term qualified pension plan liabilities. GPA allows sponsors to structure a portion of their assets to mirror liability cash flows, as outlined the Pension Protection Act of 2006 (PPA) funding model.

GPA is a group annuity contract issued by AAA rated New York Life Insurance Co., parent company of New York Life Investments. Its objective is to offer plan sponsors competitive yields while limiting volatility. Contributions are invested in a broadly diversified fixed-income portfolio within New York Life’s general account. The GPA features a declared interest crediting rate that resets every six months.

9) Cadaret, Grant Launches Proprietary Portfolio Management Software

Cadaret, Grant & Co. announced on Tuesday the rollout of a new proprietary portfolio management and trading software (TIMSLink) for investment advisor representatives. TIMSLink was designed to help advisors track portfolios, monitor portfolio drift, and execute trades efficiently.

"The portfolio rebalancing capabilities and option to trade multiple securities within one client account on a consolidated Web page are features I have not seen with any other portfolio management technology," said Mark Waterman, product manager for Cadaret Grant's advisory services, in a statement. TIMSLink is available free to all Cadaret, Grant Advisors who use The Investment Management System (TIMS) for fee-based business.

120) Smartleaf Launches Target Templates

Smartleaf Inc. announced on Wednesday that it has launched Target Templates, a feature that allows firms to provide clients with customized solutions that reflect the firm’s best judgment regarding asset allocation and market research. “Targets” are blends of model portfolios, and they represent a combination of firm-recommended asset allocation and “product” (model) selection. Models (model portfolios) capture the best stock selection ideas of in-house and third-party asset managers.

Advisors using the Smartleaf product can adjust asset allocations and/or the models used for each asset class. Updates and changes to the guidance defined in Target Templates automatically cascade to all modified versions of the original template. Target Templates give firms the ability to create and modify targets using a familiar multi-tiered asset allocation structure, and enable portfolio managers to deliver customized solutions to investors by creating customized and compliant derivative targets.

Read last week’s Portfolio Products Roundup at AdvisorOne.com

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