June 15, 2012

Top Portfolio Products: Russell Reconstitutes Indexes

Fidelity adds new fund; F-Squared offers inflation-neutral strategy; more

Portfolio Products logoNew products introduced over the last week include a reconstitution of several Russell Indexes to be completed by Friday; a new fund from Fidelity; and a new inflation-neutral strategy from F-Squared.

In addition, Thornburg offered new R shares for bond funds and Phoenix launched a new indexed annuity.

Here are the latest developments of interest to advisors:

1) Russell Posts Index Addition Lists in Annual Reconstitution

Russell Investments has posted its official lists of companies set to join or leave the U.S. broad-market Russell 3000 Index and Russell Microcap Index when its institutional U.S. equity indexes are fully reconstituted on June 22. These lists, as well as additions and deletions for the Russell Global Index, are available at the Russell reconstitution website.

Key measures of market size are lower this year due to market performance over the past year. Combined capitalization of stocks in the Russell 3000 will decrease from $16.7 trillion at May 31, 2011 to $15.8 trillion as of May 31, 2012. Similarly, the median market capitalization will decrease from $1.04 billion to $910 million. For the Russell Global Index, combined market capitalization will decrease from $52.2 trillion on May 31, 2011 to $44.2 trillion as of May 31, 2012 and median market capitalization will decrease from $1.09 billion in 2011 to $908 million.

2) Fidelity Launches Fidelity Stock Selector Mid Cap Fund

Fidelity Investments announced Tuesday the launch of the Fidelity Stock Selector Mid Cap Fund, available directly to investors. It seeks long-term growth of capital and invests at least 80% of its assets in stocks of companies between large and small capitalizations. It may invest in domestic and foreign issuers, and can invest in growth or value stocks or both.

With an overall strategy emphasizing stock picking in their respective sectors, the managers of the Fidelity Advisor Stock Selector Mid Cap Fund (FMCDX) will also manage the assets of the retail class of the fund. These managers include Monty Kori, industrials and materials; Rayna Lesser, telecom services and information technology; Shadman Riaz, energy; Gordon Scott, consumer staples and consumer discretionary; Douglas Simmons, utilities; Pierre Sorel, financials; Patrick Venanzi, health care; and Samuel Wald, REITs, an industry group of financials.

3) F-Squared Announces Inflation-Neutral Fixed Income Strategy

F-Squared Investments announced that, effective Thursday, its AlphaSector Fixed Income Indices have been redesigned to become “inflation-neutral,” to deliver returns in the event of either declining or increasing interest rates. The modifications include an ability to “de-risk” in challenging markets by going 100% to short-term treasuries, expanding the fixed income sector exposure to include TIPS and floating rate securities, and a revised investment algorithm that has an absolute return decision framework.

The fixed income strategies have been renamed as AlphaSector INFInity, derived from Inflation Neutral Fixed Income, to reflect their positioning as a multi-sector, inflation-neutral fixed income offering. The enhanced INFInity indices will be automatically included within existing AlphaSector Allocator, Asset Allocation, and Target Risk indices and portfolios. Additionally, for the first time the AlphaSector INFInity Indices will be made available as the basis for a standalone separately managed account (SMA).

4) Thornburg Investment Introduces R Shares for Bond Funds

Thornburg Investment Management announced on Wednesday new R share classes for three of its bond funds available through employer-sponsored retirement plans. An R5 share has been added to the Limited Term Income and Limited Term U.S. Government Funds; both already had an R3 share.

The Strategic Income Fund is now offering R3 and R5 share classes; this is the first time that Thornburg has made this multisector offering available through retirement plans.

5) Phoenix Launches Indexed Annuity Featuring Retirement Income, Chronic Care and Death Benefit

The Phoenix Cos. announced June 11 the introduction of the Phoenix Personal Protection Choice Annuity, a single premium fixed indexed annuity that allows an annuity holder, for an additional fee, to combine up to three different benefits (including lifetime income, chronic care and an enhanced death benefit) to create a customized solution that meets their particular retirement needs. Designed for individuals approaching or already in retirement, Personal Protection Choice also features six indexed accounts, a fixed account and principal protection from investment loss.

Issued by PHL Variable Insurance Co., a Phoenix insurance subsidiary, the product is available through independent distributors working with Saybrus Partners, the company’s distribution subsidiary.

Phoenix also announced the launch of REALIZE personal retirement analysis, an online tablet-friendly tool designed to assist agents and financial professionals in guiding clients through retirement planning conversations and individual needs assessments. REALIZE can then generate customized annuity proposals by transferring the client data to an interactive annuity quote tool, and instantly produces personalized outputs of clients’ key retirement considerations.

Read the June 8 Portfolio Products Roundup at AdvisorOne.

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