December 7, 2012

Top Portfolio Products: Ultra Short-Term Bond Fund From T. Rowe

BNY Mellon and OTC Markets Group roll out new ADR index; Invesco PowerShares lists S&P 500 Downside Hedged ETF

New products introduced over the last week include a new ultra short-term bond fund from T. Rowe Price; an enhanced retail platform from Tradeweb; and Two Roads Shared Trust, a shared mutual fund trust announced by Gemini Fund Services.

In addition, BNY Mellon and OTC Markets Group announced a new OTCM ADR index; IRI announced that income annuity sales had set a new quarterly record; and Invesco PowerShares announced the listing of the S&P 500 Downside Hedged ETF.

Here are the latest developments of interest to advisors:

1) T. Rowe Price Launches Ultra Short-Term Bond Fund

T. Rowe Price announced Wednesday that it has introduced the Ultra Short-Term Bond Fund (TRBUX) for investors. The new no-load mutual fund, managed by Joseph Lynagh, seeks to provide a high level of income consistent with minimal fluctuations in principal value and liquidity. It also will offer similar flexibility to the firm’s money market products, allowing for check writing capabilities and no trading restrictions.

TRBUX will invest in a highly diversified portfolio of shorter-term investment-grade corporate and government securities, including mortgage- and asset-backed securities, money market securities, and bank obligations, with an approximate average maturity of 1.5 years or less, with a broader credit spectrum that includes any investment-grade security rated BBB or better. Its net expense ratio is estimated to be 0.35%, and the minimum initial investment is $2,500, or $1,000 for retirement plans or gifts or transfers to minors (UGMA/UTMA) accounts.

2) Tradeweb Enhances Retail Platform, Adds Vanguard Wealth Management

Tradeweb Markets announced Tuesday that it has released significant enhancements to its Tradeweb Retail platform; the new functionality includes compliance tools that allow, among other things, a market snapshot of compliance tests based on FINRA guidance, and online audit trails that track compliance and business rules run at order placement. It also adds search and filtering that allow customizable search modeling and searches of market opportunities across multiple asset classes.

Tradeweb Retail also announced the addition of Vanguard Brokerage Services as its newest client. Vanguard Brokerage Services clients and fixed income traders now access Tradeweb Retail as their primary fixed income trading system.

3) Alternative Investment Managers to Launch New Mutual Funds

Gemini Fund Services, LLC announced Tuesday that Alternative Road Investment Advisers, LLC, Belvedere Asset Management, LLC, and LJM Funds Management, Ltd., will advise new alternative mutual funds through Two Roads Shared Trust, a shared mutual fund trust open to new advisers effective November 1.

Two Roads is designed to help hedge fund managers and other alternative investment managers cost-effectively launch mutual funds by leveraging experienced hedge fund and mutual fund service providers, including Gemini Fund Services and Dechert LLP, legal counsel to the trust. In addition to operational efficiencies and cost savings, advisors that use the Two Roads platform are also provided with distribution support, including introductions to broker/dealers and assistance with their marketing and distribution plans.

4) BNY Mellon and OTC Markets Group Announce New OTCM ADR Index

BNY Mellon and OTC Markets Group Inc. recently announced the creation of the OTCM ADR Index, a comprehensive index for American Depositary Receipts traded on OTCQX, OTCQB and OTC Pink marketplaces. The new index, powered by BNY Mellon DR Indices and made up of 535 large-cap international companies, was developed to benchmark ADR investment opportunities available to investors through their U.S. brokers.

OTCM ADR is a rules-based index that is market capitalization weighted, adjusted for free float, and has various liquidity screens to ensure tradability. It is also priced in real time and disseminated on all electronic platforms. OTCM ADR Index data will be available on the OTC Markets Group and BNY Mellon DR Index  websites.

5) Income Annuity Sales Set New Quarterly Record

The Insured Retirement Institute (IRI) recently announced final Q3 2012 sales results for the U.S. annuity industry, based on data reported by Morningstar and Beacon Research. Industrywide annuity sales in Q3 reached nearly $52.9 billion, down 4.3% from $55.3 billion in Q2.

Q3 fixed annuity sales were buoyed by the strongest sales quarter ever for income annuities and steady indexed annuity sales, according to Beacon Research. Income annuity sales increased to nearly $2.4 billion in Q3, up 3.8% from about $2.3 billion in the second quarter and up 6.7% YOY from $2.2 billion in Q3 2011. Indexed annuity sales totaled $8.7 billion, down 1.2% from $8.8 billion in Q2 and up 0.5% YOY from just under $8.7 billion in Q3 2011.

Q3 variable annuity total sales fell 4.9% to $36.3 billion from $38.2 billion in Q2 2012, according to Morningstar. YOY VA total sales decreased 7.2% from $39.1 billion in the third quarter of 2011. Despite the decline, VA net sales for the quarter increased by 44.3% to $5.8 billion from $4 billion during Q2. Within the VA market, there were $24.5 billion in qualified sales and $11.8 billion in nonqualified sales during Q3. VA total net assets reached a new all-time high of $1.62 trillion during Q3 2012, up about 4% from $1.56 trillion in Q2.

Total Q3 fixed annuity sales were down 3.1% to $16.6 billion from $17.1 billion in Q2 2012. YOY fixed annuity sales decreased 12.8% from $19 billion in Q3 2011. For the fixed annuity market, there were nearly $8.6 billion in qualified sales and $8.0 billion in nonqualified sales during Q3.

6) Invesco PowerShares to List S&P 500 Downside Hedged ETF

Invesco PowerShares Capital Management LLC recently announced the listing of the PowerShares S&P 500 Downside Hedged Portfolio (PHDG) for December 6. The new ETF will be a liquid alternative solution providing investors broad US equity market exposure with a downside hedge by dynamically allocating to VIX futures and cash depending on market volatility trends. PHDG will have an expense ratio of 0.39%.

PHDG is an actively managed ETF that seeks to achieve positive total returns in rising or falling markets that are not directly correlated to broad equity or fixed income market returns. PHDG seeks to achieve its investment objective by using a quantitative, rules-based strategy designed to provide returns that correspond to the performance of the S&P 500 Dynamic VEQTOR Index.

Read the Nov. 30 Portfolio Products Roundup at AdvisorOne.com.

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