December 27, 2011

Top Portfolio Products: Granite Launches Value Fund, Knight Capital Adds Two Astor ETFs

Vanguard Total World index fund adopts a broader, FTSE benchmark; Schwab adds tools for active traders

New products introduced over the last week include a new value fund from Granite Investment Advisors and two new ETF mutual funds from Knight Capital; the adoption of a FTSE benchmark by Vanguard for one of its funds; and the addition of more tools to its active trading platform by Schwab.

In addition, Eagle Asset Management’s Small Cap Core Value Fund is now rated by Morningstar, and the Russell Global Index gained 31 IPOs.

Here are the latest developments of interest to advisors:

1) Granite Investment Advisors to Launch First Retail Mutual Fund

New Hampshire-based Granite Investment Advisors has announced that on Jan. 4 it will publicly launch its first retail mutual fund, the Granite Value Fund (GVFIX). The fund will be a concentrated portfolio of 30 to 40 mid-cap and large companies.

Scott Schermerhorn, CEO and CIO of the firm, will serve as portfolio manager of the new fund, which will have an expense ratio of 135 basis points.

2) Knight Announces Launch of Two ETF Mutual Funds from Astor

Knight Capital Group Inc. announced that subsidiary Astor Asset Management launched the Astor Active Income ETF Fund and the Astor SP Growth ETF Fund on December 21.

The Astor Active Income ETF Fund (A share: AXAIX; C share: CXAIX) takes a tactical approach to fixed-income investing based on macroeconomic principles and yield curve analysis, and seeks to provide investors with yield while protecting capital.

The Astor SP Growth ETF Fund (A share: ASPGX; C share: CSPGX) follows a tactical asset allocation approach based on macroeconomic fundamentals and seeks to provide a lower level of volatility than the broad equity markets over a complete market cycle.

3) Vanguard Total World Stock Index Fund Adopts Broader FTSE Benchmark

Vanguard Total World Stock Index Fund announced recently that it has changed its target benchmark to the FTSE Global All Cap Index from the FTSE All-World Index. The new target benchmark, a float-adjusted, market-capitalization-weighted index designed to measure the equity market performance of large-, mid-, and small-cap stocks worldwide, offers broader diversification by adding exposure to U.S. and international small-capitalization stocks.

The fund invests in a broadly diversified sampling of securities from the benchmark, which comprises nearly 7,400 securities in 47 countries and captures 98% of the world's investable stock market capitalization. Approximately 56% of the index is made up of stocks from outside the U.S.

The transition to the new benchmark was recently completed for the investor (VTWSX), institutional (VTWIX) and ETF (VT) shares of the fund, which is not expected to generate any capital gain distributions as a result. Vanguard also expects the expense ratios to remain unchanged: 0.45% for VTWSX, 0.23% for VTWIX, and 0.25% for VT. It has also eliminated the 0.25% purchase fee on VTWSX and VTWIX, effective immediately.

Vanguard has also filed a registration statement with the Securities and Exchange Commission C for Vanguard Total International Bond Index Fund, which will seek to track the investment performance of the broad

international bond market as represented by the Barclays Global Aggregate ex-USD Float Adjusted Index (Hedged).

4) Schwab Enhances Order Entry Capabilities and Adds Tools for Active Trading Platform

Charles Schwab announced Dec. 19 a new suite of enhancements to StreetSmart Edge, its platform for active traders, which incorporates more flexible order entry capabilities and new market monitoring features. The new tools are integrated into the platform workflow to help clients identify new trading opportunities and efficiently execute their trading strategies.

Highlights include customizable stock screening; heightened market monitoring; integrated access to the ETF Screener; and a notes feature.

5) Eagle Asset Management Announces Three Years, Four Stars

Eagle Asset Management Inc. announced on Dec. 14 that its Eagle Small Cap Core Value Fund, which as of March 1, 2012 will be called the Eagle Smaller Company Fund, has achieved its three-year anniversary and is now rated by Morningstar. The fund’s Class C (EGECX), I (EGEIX), R-3 (EGERX), R-5 (EGESX) and R-6 (EGEUX) shares received Morningstar’s 4-star rating based on risk-adjusted performance as of Nov. 30, out of 573 funds in the small-cap blend category.

The fund is co-managed by Dave Adams, CFA, and Jack McPherson, CFA, of Eagle Boston Investment Management Inc., a wholly owned subsidiary of Eagle.

6) Russell Global Index Gains 31 IPOs

Russell Investments announced that it added 31 initial public offerings (IPOs) to the Russell Global Index for the fourth quarter of 2011 on Dec. 19, including 11 additions to the U.S. small cap Russell 2000 Index, consistent with the firm’s systematic quarterly process. Of the 15 IPOs added to the Russell Global ex-U.S. Index, 12 are across the Asia-Pacific region, with eight falling into Asia-Pacific emerging markets as classified by Russell Indexes. Four companies become part of the Russell Greater China Index.

In the U.S., 16 IPOs were added to the U.S. broad market Russell 3000 Index, including one to the large-cap Russell 1000 Index and 11 into the small-cap Russell 2000 Index. Four additional companies joined the Russell Microcap Index. Overall, this is nine fewer IPOs than were added in the U.S. in Q3 of 2011. The total of 31 IPOs added to the global index in Q4 represents a significant drop from the 90 IPOs added in Q3 2011.

Some of the key U.S. IPO additions to the Russell 3000 Index for this quarter include Groupon Inc. (GRPN), Angie’s List Inc. (ANGI) and Manning & Napier Inc. (MN).

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

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