April 21, 2013

Top Portfolio Products: New Factor ETFs From iShares

Credit Suisse launches silver covered-call exchange traded note, as North Peak rolls out inflation-hedged strategy

New products introduced over the last week include new factor ETFs and bond ETFs from iShares and a silver covered call ETN from Credit Suisse.

In addition, North Peak Asset Management announced a new fund aimed at hedging against inflation and the Phoenix Companies launched a new indexed annuity.

Here are the latest developments of interest to advisors:

1) iShares Expands Factor ETF Offerings, Announces Bond ETFs

BlackRock, Inc. announced that its iShares ETFs business has expanded its factor ETF product lineup with the launch of two sets of products: the iShares enhanced ETFs, which are managed using BlackRock research rather than tracking an index, and the iShares MSCI factor ETFs, which seek to track MSCI risk premium indexes. These products were designed in partnership with RIAs and institutional investors, specifically public pensions, to provide a broader range of solutions to help manage equity exposures and risk.

The iShares Enhanced U.S. Large-Cap ETF (IELG) and iShares Enhanced U.S. Small-Cap ETF (IESM) seek to provide competitive risk-adjusted returns compared to the broad large-cap or small-cap market.

The iShares MSCI USA Momentum Factor (MTUM), iShares MSCI USA Size Factor ETF (SIZE) and iShares MSCI USA Value Factor ETF (VLUE) were designed at the request of institutional investors, such as Arizona State Retirement System (ASRS), who want exposure to a specific individual factor—value, size or momentum—so they can overweight or hedge a single factor that has historically explained a significant part of companies’ return and risk over the long-term. MSCI is also a predominant choice for institutional investors.

BlackRock also announced that iShares has launched four iSharesBonds corporate ex-financials term ETFs. These new products, with defined maturity dates in 2016, 2018, 2020 and 2023, are designed to offer investors bondlike features in addition to the benefits of an iShares ETF including exchange-traded liquidity, transparency and diversification.

The new ETFs are the iSharesBond 2016 Corporate Ex-Financials Term ETF (IBCB); iSharesBond 2018 Corporate Ex-Financials Term ETF (IBCC); iSharesBond 2020 Corporate Ex-Financials Term ETF (IBCD); iSharesBond 2023 Corporate Ex-Financials Term ETF (IBCE). They will provide access to a diversified pool of investment-grade corporate credit with a defined maturity date. While relevant to all investors, the products are expected to appeal to institutional clients such as bank treasurers

2) Credit Suisse Announces Launch of SLVO ETN

Credit Suisse announced Wednesday the launch of its new Silver Shares Covered Call ETN (SLVO). SLVO is the first exchange-traded product in the U.S. market to offer investors access to a covered call strategy on a silver investment and is designed to pay variable monthly coupons; it follows the January 2013 launch of GLDI, an ETN tracking a similar strategy on gold.

SLVO, which tracks the Credit Suisse NASDAQ Silver FLOWSTM (Formula-Linked OverWrite Strategy) 106 Index, seeks to implement a rolling covered call investment strategy by maintaining a notional long position in shares of the iShares Silver Trust ETF (SLV) while notionally selling monthly out-of-the-money call options on that position. Holders of SLVO will be entitled to receive variable monthly payments based on the notional option premiums received from the sale of the covered call options each month.

3) North Peak Asset Management Introduces Inflation Hedges Strategy Fund

North Peak Asset Management recently announced the launch of the Inflation Hedges Strategy Fund (INHIX, INHRX), a multi-asset class, multimanager mutual fund designed to provide current income and real (after inflation) total returns. The fund primarily invests in asset classes that are sensitive to increases in inflation, such as commodities, global natural resource equities, bank loans and inflation-linked bonds (such as Treasury Inflation-Protected Securities) using six specialist subadvisors: Wellington Management Company, LLP; Parametric Portfolio Associates, LLC; Mellon Capital Management Corporation; Commodity Strategies AG; City of London Investment Group and The Boston Company Asset Management, LLC.

The fund is available on over 250 domestic platforms, including Schwab, Fidelity FundsNetwork and Pershing, or can be purchased directly from www.NorthPeakAM.com.

4) Phoenix Companies Launches Income Elite Annuity

The Phoenix Companies, Inc. has announced the launch of the Phoenix Income Elite Annuity, a single-premium fixed indexed annuity with a guaranteed lifetime withdrawal benefit (GLWB) rider. Designed for individuals approaching or already in retirement, it provides a guaranteed lifetime income stream through a GLWB rider. There is an additional fee associated with the rider, but the fee does not impact the guaranteed income amount. The amount of the annual income is based on the single premium, issue age and length of time until the rider is exercised.

Like all indexed annuities, the annuity protects the initial investment from market downturns, and the index credit is never less than 0%. Contract holders can choose from three point-to-point indexed accounts and a fixed account. The product is able to provide a larger guaranteed income in lieu of stronger death benefit guarantees. It is available through independent distributors working with Saybrus Partners, Phoenix’s distribution subsidiary.

Read the April 12 Portfolio Products Roundup at AdvisorOne.


 

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