November 6, 2011

Top Portfolio Products: Vanguard Adds Two Funds; Russell Launches Three

American Century, IndexIQ expand offerings; Putnam introduces fund

Product RoundupLogoNew products introduced over the last week include two new international bond funds and ETFs from Vanguard, three new international equity factor ETFs from Russell, three alternative strategies from American Century and a new alternative investment ETF portfolio from IndexIQ.

In addition, Putnam launched a new short-duration income fund; Highland Funds added a long-short fund; Altegris added a futures fund and DoubleLine's core fixed income fund topped $1 billion in assets.

Here are the latest developments of interest to advisors:

1) Vanguard to Expand Index Fund Roster With Two New International Bond Funds And ETFs

Vanguard announced October 31 that it plans to introduce two international bond index funds. Registration statements have been filed with the SEC for the Vanguard Total International Bond Index Fund and Vanguard Emerging Markets Government Bond Index Fund. Vanguard expects to offer both conventional (investor, admiral, and institutional) and ETF shares of the new funds.

The Total International Bond Index Fund will seek to track the investment performance of the Barclays Global Aggregate ex-USD Float Adjusted Index (Hedged) and employ currency hedging strategies, entering into currency transactions to protect against uncertainty in future exchange rates. The Emerging Markets Government Bond Index Fund will seek to track the investment performance of the Barclays Emerging Markets Sovereign Index (USD). By investing solely in U.S. dollar-denominated international bonds, the fund will not subject U.S.-based investors to currency risk.

2) Russell Launches Three International Equity Factor ETFs

Russell Investments launched its first international equity factor exchange-traded funds (ETFs) Thursday, designed to provide investors with focused exposure to fundamental risk factors within their portfolio’s international equity allocation. They are: Russell Developed ex-U.S. Low Beta ETF (XLBT); Russell Developed ex-U.S. Low Volatility ETF (XLVO); and Russell Developed ex-U.S. High Momentum ETF (XHMO).

XLBT focuses on large-cap stocks in developed markets outside the U.S. market with the lowest predicted beta or sensitivity to price changes of the broad market over the next three to six months. XLVO focuses on large-cap stocks in developed markets outside the U.S. market that have exhibited the lowest variability in total returns over the previous 60 trading days. XHMO focuses on large-cap stocks in developed markets outside the U.S. market that have exhibited the highest cumulative total returns over the previous 250 trading days, excluding the last 20 trading days.

3) American Century Introduces Three Alternative Strategies

American Century Investments announced on October 31 that it has launched three new alternative strategies that will employ short selling but in different proportions and using different investment approaches.

Core Equity Plus is a 130/30 version of the American Century Equity Growth Fund (BEQGX); it will take long positions in securities that managers believe will appreciate and short positions in securities that managers believe will underperform. Disciplined Growth Plus is a 130/30 version of the American Century Disciplined Growth Fund (ADCVX). It also uses limited shorting to enhance portfolio efficiency and obtain higher excess returns without increasing market risk. Market Neutral Value (ACVWX) will buy long securities that appear relatively undervalued while selling short securities that appear relatively overvalued.

4) IndexIQ Launches Second-Generation Alternative Investment ETF Portfolio

IndexIQ announced Tuesday that it has expanded its ETF model portfolios with the launch of the IQ Global Alternatives ETF Model Portfolio, a comprehensive investment strategy designed to achieve portfolio diversification, growth of capital and low volatility through the use of liquid, transparent, low cost alternative investments.

It is constructed using a proprietary, rules-based methodology developed by IndexIQ and invests in liquid exchange-traded products. The benefits of this approach include transparency, liquidity, significantly lower costs compared to traditional alternative investment options, and the avoidance of manager and style-specific risk. The model is available to subscribers who receive monthly guidance on tactical asset allocation across 10 underlying exchange-traded products.

5) Putnam Launches Short Duration Income Fund

Putnam Investments announced Thursday that it has launched the Putnam Short Duration Income Fund (PSDTX). It will strive for a higher rate of current income than is typical of money market funds and have a greater focus on capital preservation than is usually associated with ultrashort bond funds, with the goal of maintaining liquidity. The fund offers a check-writing feature, through which investors may redeem shares by writing checks.

The fund will invest in a diversified portfolio of fixed-income securities composed of short-duration, investment-grade money market, and other fixed income securities. Its primary benchmark will be the BofA Merrill Lynch U.S. Treasury Bill Index. It will be managed by a team of veteran Putnam portfolio managers, led by Michael V. Salm, Co-Head of Fixed-Income.

6) Highland Funds Launches Global Long/Short Fund with Anchor Capital as Subadvisor

Highland Funds Asset Management, L.P. announced on October 31 the launch of the Highland Alpha Trend Strategies Fund (HATAX). Anchor Capital Management Group, Inc. will serve as the fund’s subadvisor. The fund is a long/short international strategy, designed for more consistently positive returns along with low correlation and low volatility relative to regular equity indexes. It is expected to be classified in the Morningstar Multialternative category.

The fund’s strategy will be comprised of two components: rotating investment positions primarily among country- and region-specific ETFs, and taking long and short positions in broad equity indexes to vary the fund’s net exposure over time.

7) Altegris Launches Futures Evolution Strategy Fund Subadvised by DoubleLine

Altegris Advisors announced recently the launch of the Altegris Futures Evolution Strategy Fund (EVOAX, EVOCX, EVOIX, EVONX, EVOYX). The fund combines active management of managed futures managers with an active fixed income approach. Altegris will collaborate with DoubleLine Capital LP portfolio manager Jeffrey Gundlach and his investment team to determine allocations to various DoubleLine substrategies including core, low duration, and opportunistic income.

The managed futures strategy will primarily access Winton Capital Management, led by David Harding. In addition, Altegris will access International Standard Asset Management (ISAM), overseen by Stanley Fink and Larry Hite. Additional managers may be also be accessed in the future.

8) DoubleLine Core Fixed Income Fund Tops $1 Billion in Assets

The DoubleLine Core Fixed Income Fund (I shares DBLFX; N shares DLFNX) has reached $1 billion in total net assets, DoubleLine Capital LP announced Wednesday. DBLFX is also the top-ranked fund for one-year total return for one-year total return in Morningstar's Intermediate Term Bond Fund category out of 326 funds as of October 31. The fund's reaching the $1 billion milestone follows a new record month of net mutual fund inflows at DoubleLine, where net inflows across all funds totaled $1.6 billion in the month of October.

Jeffrey Gundlach, CEO of DoubleLine Capital, is portfolio manager of the fund and chairs the Fixed Income Asset Allocation Committee, which decides the fund's sector weightings.

9) PowerShares Waives Fees

PowerShares waived fees on four of its KBW linked financial ETFs. The portfolios provide investors with targeted access to the bank, capital markets and insurance sectors. The fee waivers are good through February 1, 2012.

The ETFs impacted by the temporary fee waivers are as follows:

--PowerShares KBW Bank Portfolio (KBWB)

--PowerShares KBW Capital Markets Portfolio  (KBWC)

--PowerShares KBW Insurance Portfolio (KBWI)

--PowerShares KBW Regional Banking Portfolio  (KBWR)

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

 

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