January 18, 2013

Top Portfolio Products: Fidelity to Disclose Additional Money-Market Fund Data

Small Cap Discovery Fund closed to new investors; as Morningstar launches U.S. Real Assets Index

Portfolio Products logoNew products introduced and changes made over the last week include additional data disclosure on Fidelity’s money-market funds and the closure of Fidelity’s Small Cap Discovery Fund to new investors; an advisor change made by Vanguard on its International Value Fund; the launch of Morningstar’s U.S. Real Assets Index; the availability of the Hatteras Managed Futures Strategies Fund on Schwab’s OneSource platform; the launch of a new business improvement platform for advisors by Zero Alpha Group; and a new ETF from Global X.

In addition, Oppenheimer Funds announced the launch of its Diversified Alternatives Fund; Russell Indexes and NYSE Euronext announced a global alliance; American Independence launched its new Dynamic Conservative Plus strategy and fund; The Guardian launched a new deferred income annuity; and ground was broken for the new Charles Schwab Trading and Technology Lab at UC Irvine.

Here are the latest developments of interest to advisors:

1) Fidelity to Disclose Daily Per-Share Market Value Price of Money-Market Funds

Fidelity Investments announced recently that it would begin daily disclosure of the per-share market value of money-market mutual funds that it manages, effective Jan. 16. The new daily disclosure does not affect the $1 stable net asset value (NAV) that continues to apply to all investor transactions in Fidelity money-market mutual funds or the way the funds are managed.

Beginning January 16, money market mutual funds Fidelity manages published their per-share market values the following business day on Fidelity’s website. This information is already disclosed on a monthly basis as part of the SEC’s rules. Fidelity money market mutual fund holdings remain available daily to shareholders, upon request.

2) Fidelity to Close Small Cap Discovery Fund

Fidelity Investments announced Wednesday that it is closing the Fidelity Small Cap Discovery Fund (FSCRX) to new accounts. Fidelity will open new accounts in FSCRX until 4 p.m. EST on Jan. 31. After that, investors generally will not be able to open new accounts in the fund. However, existing shareholders invested in the fund can continue to add to their accounts. Employer-sponsored retirement plans and certain discretionary programs offered by registered investment advisors may be able to open additional accounts for investors if the fund was established as an option as of Jan. 31.

FSCRX seeks long-term growth of capital by investing at least 80% of its assets in securities of companies with small market capitalizations (those with market capitalizations similar to companies in the Russell 2000 Index or the S&P Small Cap 600 Index). Chuck Myers has managed the fund since March 2006.

3) Vanguard Announces Advisory Change for International Value Fund

Vanguard recently announced modifications to the investment advisory structure of the $6.8 billion Vanguard International Value Fund (VTRIX). Hansberger Global Investors will no longer serve as an advisor under the new arrangement, and its portion of the fund (approximately 17%) will be reallocated to Lazard Asset Management and Edinburgh Partners Limited, which currently serve as advisors to the fund.

Under the new arrangement, Lazard will manage approximately 39% of the fund’s assets, Edinburgh Partners 34%; and ARGA Investment Management, LP 24%. Cash investments will account for the remainder of the fund’s assets. VTRIX invests in non-U.S. companies from developed and emerging international markets, focusing on stocks that its advisors view as temporarily undervalued. The fund has followed a multimanager approach since 2004.

4) Morningstar Launches Real Asset Index

Morningstar announced Thursday that it has launched the Morningstar U.S. Real Asset Index, a diversified portfolio of liquid assets that traditionally provide a hedge against inflation, including Treasury inflation-protected securities (TIPS), real estate investment trusts (REITs), and commodity stocks and futures.

The Morningstar U.S. Real Asset Index consists of liquid assets that can be accessed easily in public markets. The index holds approximately 40% TIPS, 30% commodities futures, 15% REITs and 15% commodity stocks, including both companies involved with resource extraction and master limited partnerships (MLPs) engaged in resource transportation and processing. Morningstar reconstitutes the index semiannually.

5) Hatteras Managed Futures Strategies Fund Available on Schwab OneSource

Hatteras Funds announced that the Hatteras Managed Futures Strategies Fund (HMFIX, HMFAX) is now available on the Charles Schwab Mutual Fund OneSource platform.

The fund launched on Sept. 27. The team has managed the strategy since September 2011 as one of the five strategies within Hatteras Alpha Hedged Strategies Fund (ALPHX, ALPIX).

6) Zero Alpha Group Launches New Business Improvement Platform for Advisors

The Zero Alpha Group (ZAG) recently announced the launch of a new advisor improvement platform called ZAG Leadership Institute (ZLI), designed to directly address current near- and long-term challenges financial advisors face in business.

The ZLI is a collaboration of firms investing in each other’s next generation leaders via a training regimen overseen by Jerry Foster. With an emphasis on peer-to-peer interaction, the ZLI collectively provides a template for adoption of best practices.

7) Global X Funds Launches First Junior MLP ETF

Global X Funds launched the Global X Junior MLP ETF (MLPJ) on Tuesday. MLPJ is the first and only ETF to specifically target the small-cap segment of the MLP market.

The Global X Junior MLP ETF tracks exposure to the Solactive Junior MLP Index, which is designed to be a MLP benchmark index for small-cap energy and resource MLPs. As of January 11, the index consisted of 25 MLPs and the three largest components of the index were Suburban Propane Partners LP, Northern Tier Energy LP, and Alliance Resource Partners LP. The fund pays quarterly income distributions. Tax features of MLPJ include 1099 tax reporting (no K-1s) and qualified dividends. Like all MLP ETFs, MLPJ is IRA and 401(k) eligible.

8) RiverNorth Launches High Income Fund with Oaktree

RiverNorth Capital Management LLC announced Thursday that it has launched the RiverNorth/Oaktree High Income Fund (I shares: RNHIX, R shares: RNOTX), a new mutual fund focused on total return consisting of long-term capital appreciation and income. The fund is advised by RiverNorth and is designed to capitalize on market inefficiencies in both closed-end funds and the credit markets. Oaktree Capital Management L.P., a subsidiary of Oaktree Capital Group LLC comanages the fund as subadvisor to RiverNorth.

The fund provides daily liquidity and allocates its assets among three strategies: a closed-end fund strategy, managed by RiverNorth, and a senior loan strategy and a high-yield bond strategy, both managed by Oaktree. The fund’s portfolio managers are Patrick Galley, chief investment officer, and Stephen O’Neill of RiverNorth, along with Sheldon Stone, principal, and Desmund Shirazi of Oaktree.

9) OppenheimerFunds Launches Oppenheimer Diversified Alternatives Fund

OppenheimerFunds announced recently that it has launched a new fund, The Oppenheimer Diversified Alternatives Fund (ODAAX).

The fund comprises energy MLPs, real estate, currencies, gold mining stocks, commodities and global multistrategy exposures, and is focused on nontraditional growth and income that addresses key needs of investors.

10) Russell Indexes and NYSE Euronext Announce Alliance, Agreement

Russell Indexes and NYSE Euronext announced Tuesday a global alliance that will span three distinct NYSE Euronext business lines and multiple geographies, as well as several facets of Russell’s global index business. The agreement includes the transition of RussellTick, an index feed for realtime intraday values for the Russell family of indexes in the U.S. and globally, to NYSE Technologies’ Global Index Feed (GIF) protocol and extensive global distribution. Approximately $3.9 trillion in assets are currently benchmarked to the Russell Indexes globally. The alliance also includes a commitment to develop additional joint global services and products, such as new index-based options.

The migration of RussellTick to NYSE Technologies’ GIF protocol makes Russell the first major index family distributed through the global Secure Financial Transaction Infrastructure (SFTI) network. The RussellTick calculation engine is now hosted and managed from NYSE Euronext’s U.S. Liquidity Center, home to its U.S. trading, co-location and market data infrastructure. Additionally, by accessing NYSE Euronext’s diverse geographical footprint, proprietary SFTI network and liquid customer base, Russell can provide clients anywhere in the world access to real-time Russell index data.

11) American Independence Launches Dynamic Conservative Plus Strategy

New York-based American Independence Financial Services LLC announced Wednesday that it is launching a new investment strategy, Dynamic Conservative Plus (DCP). The strategy will also be available through a mutual fund, to be run by manager Imanol Laresgoiti, and will make tactical investments in a set of ETFs across sub-asset classes in the fixed-income, commodity, equity and alternative asset markets. The Dynamic Conservative Plus Fund is available in class A (AABBX) and institutional (TBBIX) share classes, and the fund’s investment objective is long -term capital appreciation. The DCP strategy is also available as a separately managed account (SMA) through various SMA and model platforms and sponsor programs.

DCP uses a proprietary business cycle model and optimization engine to allocate across a global portfolio of ETFs and manage downside risk. The fund is targeted at risk-conscious investors and intermediaries seeking to generate total return while addressing investors’ demands for a portfolio that moves quickly to “safer,” or defensive, sectors and away from riskier assets and markets.

12) The Guardian Launches Deferred Income Annuity

The Guardian Insurance & Annuity Company, Inc. (GIAC), a wholly owned subsidiary of The Guardian Life Insurance Company of America, recently announced the introduction of Guardian SecureFuture Income Annuity, a deferred income annuity product designed to provide a future stream of guaranteed lifetime annuity payments.

With a minimum initial premium payment of $5,000, owners of the annuity can begin receiving lifetime payments, backed by the claims-paying ability of GIAC, at a predetermined future date chosen by the annuity owner within the rules of the annuity. Annuity owners are able to make additional premium payments to increase their future lifetime income up until 13 months before the income start date and can benefit from a variety of annuity features to meet their current or future income needs.

13) Development of Charles Schwab Trading and Technology Lab Under Way

The University of California, Irvine broke ground Jan. 9 on the planned Charles Schwab Trading and Technology Lab, the cornerstone of a new 78,000-square-foot building to be located within the University’s Paul Merage School of Business. Once completed, the planned lab will offer students the ability to receive training and educational tools in the areas of investment and wealth management in a tutorial environment, complete with demo data. It is designed to provide students with hands-on experience using the technology, as well as to teach about a wide range of advisor activities from business development and client service to investment management and back-office operations.

The building itself will include a new 300-seat auditorium, 70-seat and 90-seat case study classrooms, a multipurpose classroom, an executive conference room and 20 group study breakout rooms. The development of this hands-on learning environment is made possible by funds from The Charles Schwab Foundation to build the facility and a donation of technology each by Schwab Performance Technologies and Schwab Intelligent Technologies.

Read the Jan. 11 Portfolio Products Roundup at AdvisorOne.

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