August 25, 2013

Top Portfolio Products: DoubleLine Plans Fund With Shiller Benchmark

Franklin Templeton adds four new target date funds; First Trust introduces international multi-asset diversified income fund

New products introduced over the last week include a new fund from DoubleLine that will use a Shiller index as its benchmark; four new target date funds from Franklin Templeton; and First Trust announced a new international ETF.

In addition, Allianz Life launched two new enhanced index allocations for its preferred fixed indexed annuities and SunGard introduced its new MyRetirement income calculator for plan participants.

Here are the latest developments of interest to advisors:

1) DoubleLine Plans Fund to Beat Shiller Benchmark Index Using Derivatives

Jeff Gundlach’s DoubleLine Capital LP has filed to launch a mutual fund seeking to outperform Robert Shiller's benchmark ShillerBarclays CAPE US Sector TR USD Index, which invests equally in the four most undervalued U.S. stock sectors based on their CAPE ratio and their price momentum over the past 12 months.

The DoubleLineShiller Enhanced CAPE fund will seek a higher return than its index, according to the SEC filing, and will use derivatives — swaps or futures contracts — possibly together with direct and bond investments, to try to generate long-term total returns that beat the index. Gundlach and Jeffrey Sherman will run the new fund. The use of derivatives will allow the fund to invest in a range of fixed-income securities with the majority of the fund's assets to boost returns.

2) Franklin LifeSmart Expands Retirement Target Fund Lineup for U.S. Investors

Franklin Templeton Investments recently announced the introduction of four new funds within the company’s retirement target fund lineup: the Franklin LifeSmart 2020, 2030, 2040 and 2050 Retirement Target funds. Each fund’s investment goal is to seek the highest level of long-term total return consistent with its specific asset allocation,each is designed for investors planning to retire around the fund’s target year. The funds invest their assets primarily in other Franklin Templeton mutual funds.

On the whole, each fund’s asset allocation shifts over time from being less conservative (by investing primarily in equity funds when the target date is the furthest away) to becoming increasingly conservative (by shifting its allocation emphasis from equity to fixed income investments) as the stated target date draws near. Over time, each fund’s allocation will change, but portfolio managers Tony Coffey and Tom Nelson also have the flexibility to make adjustments along the way.

3) First Trust Launches International Multi-Asset Diversified Income Index Fund

First Trust Advisors L.P. announced Thursday the launch of a new ETF, the International Multi-Asset Diversified Income Index Fund (YDIV), which seeks investment results that correspond generally to the price and yield (before fees and expenses) of the NASDAQ International Multi-Asset Diversified Income Index.

YDIV provides international exposure to a diversified mix of asset classes in a single investment portfolio that has built-in volatility screens. The index is comprised of international dividend-paying stocks, international REITs, non-U.S. infrastructure companies, non-U.S. preferred securities and an ETF that invests in non-U.S. debt instruments, with yield as the main driver.

4) Allianz Life Launches Enhanced Index Allocations

Allianz Life Insurance Company of North America announced the launch of two enhanced index allocations added to the firm’s three exclusive preferred fixed index annuities (FIAs). The newly created Barclays U.S. Dynamic Balance Index and the Russell 2000 Index, which is being offered as a stand-alone option for the first time, are now available for the Allianz 222, Allianz 360, and Allianz 365i FIAs. The enhancement has been launched in 44 states.

The Barclays U.S. Dynamic Balance Index offers an uncapped strategy with an annual spread. It strives to provide balance by shifting weight daily between the S&P 500 Index and the Barclays Capital U.S. Aggregate Bond Index (BCAG) based on realized market volatility. This option uses an annual point-to-point with a spread crediting method and annual reset to capture interest yearly. The Barclays index can be tracked on the market using Bloomberg ticker BXIIUDBI.

The Russell 2000 Index allocation measures the performance of small-cap companies for customers seeking to diversify their accumulation strategy. The crediting methods available on the Russell 2000 Index include monthly sum (with a monthly cap) and an annual point-to-point (with an annual cap). This index replaces the EUROSTOXX 50 Index currently available on Allianz Preferred FIAs.

5) SunGard Launches MyRetirement for Plan Participants

SunGard has launched its new MyRetirement income calculator, which gives participants in employer-based defined contribution plans the ability to determine sustainable spending amounts throughout their retirement years. In addition, the tool helps retirement administrators increase business growth by differentiating their services to plan sponsors while facilitating greater participant engagement and incentive to maximize their retirement contributions.

Accessible from SunGard’s Relius Plan Participant web portal, MyRetirement uses data automatically extracted from SunGard’s Relius Administration retirement recordkeeping system without requiring the participant to input additional information. For participants desiring a more personalized experience, MyRetirement provides the option to add personal data including outside holdings, preferred allocation, custom assumptions such as retirement age, social security benefits, and expected income.

A web-based component of SunGard’s WealthStation Financial Planning, MyRetirement combines probability tools with Monte Carlo analyses to illustrate annual withdrawal rates from multiple model portfolios at different probabilities of success.

Read the Aug. 19 Portfolio Products Roundup at ThinkAdvisor.

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