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Top Portfolio Products: Muni Bonds from PIMCO & Global Bonds from T. Rowe

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New products introduced over the last week include two municipal-bond funds from PIMCO, an emerging-markets bond fund from T. Rowe Price (TROW); and Global X launched an ETF drawing on the decisions of hedge-fund managers

There is also an indexed annuity offering a chronic care benefit from the Phoenix Companies, five new volatility-weighted indexes from Compass Efficient Model Portfolios, as well as retirement-income solutions from Achaean Financial. In addition, Bregal Investments formed a new private equity fund.

Here are the latest developments of interest to advisors:

1) PIMCO Announced Launch of Two New Funds

PIMCO announced Wednesday that it has launched two new municipal bond funds, the PIMCO California Municipal Bond Fund (PCTIX) and the PIMCO National Intermediate Municipal Bond Fund (PMNIX). Both will be managed by Joe Deane, the New York-based head of PIMCO’s municipal bond portfolio management.

PCTIX, which will use as its benchmark the Barclays Capital California Municipal Bond Index, may invest its assets in California debt securities exempt from regular federal income tax and California income tax, with an average duration of 7–12 years. Its management fee will be 44 basis points for institutional shares.

PMNIX’s benchmark is the Barclays Capital Municipal Bond 1-20 Year Blend (1-22) Index; this fund will invest mostly in tax-exempt bonds from state and local governments across the country, with an average duration of 3–9 years. Its management fee will be 45 basis points.

2) T. Rowe Price Launches Third Emerging Markets Bond Fund

T. Rowe Price announced Tuesday that it has launched the Emerging Markets Corporate Bond Fund (TRECX). It offers investors access to the distinct subsets of emerging market debt in three separate funds. It is available through a no-load mutual fund or advisor-class shares (PACEX) available through financial advisors. This fund involves a high-risk approach to income from foreign bonds, and its share price could fluctuate significantly. It is subject to risks unique to international investing, such as liquidity risks, as well as credit and interest rate risks normally associated with investing in bonds.

TRECX, managed by Mike Conelius, the second-longest tenured emerging markets bond fund manager with 23 years of experience, offers diversification across more than 30 countries in Asia, Latin America, Europe, the Middle East and Africa. With approximately 50% of its assets in investment-grade bonds, it can purchase bonds of any credit quality.

It has an approximate duration of five years, and will invest primarily in bonds issued in U.S. dollars, but may also hold bonds issued in emerging-market currencies and other non-U.S. currencies.

The minimum initial investment in TRECX and PACEX is $2,500 or $1,000 for retirement plans or gifts or transfers to minors (UGMA/UTMA) accounts. The net expense ratio is estimated to be 1.15% for investor-class shares and 1.25% for advisor-class shares.

3) Global X Funds Launches the Global X Top Guru Holdings Index ETF

Global X Funds announced Tuesday that it has launched the Global X Top Guru Holdings Index ETF (GURU), which allows investors to tap into the combined expertise of the largest hedge fund managers. On a quarterly basis, all hedge funds with more than $100 million in U.S. equity investments are required to publish their holdings in a publicly available document called the 13F.

The goal of GURU is to aggregate on a quarterly basis the expertise and knowledge of hedge fund managers into the format of an ETF—with no minimum investment, immediate liquidity and a 0.75% expense ratio. The Top Guru Holdings Index uses a proprietary methodology to compile the highest conviction ideas from a select pool of hedge funds where the 13F information is most valuable. Hedge funds with high turnover and non-concentrated positions are eliminated from the pool. GURU is designed to rebalance quarterly in accordance with the 13F reports to capture any significant position changes.

4) The Phoenix Cos. Launches New Chronic Care Annuity

The Phoenix Cos. announced on June 4 the introduction of the Protected Solutions Annuity, developed through its strategic alliance with the AltiSure Group.

It is a single-premium fixed indexed annuity that offers two indexed accounts and a fixed account, principal protection from investment loss and, for an additional fee, a guaranteed chronic care and enhanced death benefit.

Designed for individuals approaching or already in retirement, the annuity provides benefits that can be applied to chronic or confinement care within the home, an assisted living facility or nursing home. If the chronic care benefits go unused, the beneficiary is entitled to an enhanced death benefit.

The product, issued by PHL Variable Insurance Co., a Phoenix subsidiary, is available exclusively through the AltiSure Group; its Guaranteed Enhanced Death Benefit provides a death benefit, payable monthly over five years, equal to a guaranteed multiple, ranging from 125% to 200%, of the original premium reduced for withdrawals. The guaranteed multiple varies by issue age and year of death.

Both the Guaranteed Chronic Care Benefit and the Guaranteed Death Benefit become available after the fifth contract year and until activated, can continue to grow for another 10 years. Additionally, if no withdrawals have been made from the annuity contract, a return of premium death benefit is available in all contract years. This feature provides a return of the additional fees paid for the SafetyGuard Benefit.

5) Compass Efficient Model Portfolios Launches Five Indexes

Compass Efficient Model Portfolios (CEMP) announced recently that it has launched five new equity indexes based on Dow Jones Indexes. These CEMP Volatility Weighted Indexes provide an enhancement of broad market exposure with selection criteria of consistent, positive earnings coupled with an equal weighting of risk among all stocks in each index.

The indexes and their tickers are CEMP Emerging Market 500 Volatility Weighted Index (CEMPEM); CEMP International 500 Volatility Weighted Index (CEMPDEV); CEMP U.S. Large Cap 500 Volatility Weighted Index (CEMPUSL); CEMP U.S. REIT 100 Volatility Weighted Index (CEMPRE); and CEMP U.S. Small Cap 500 Volatility Weighted Index (CEMPUSS).

They are unmanaged and investors are not able to invest directly into any index. The indexes began calculating in June 2003. Due to the broad market enhancement of the CEMP indexes, this proprietary methodology is patent pending. Additional indexes are expected to be added to the series over time.

6) Achaean Financial Launches Innovative Retirement Income Solutions

Achaean Financial announced on Tuesday the leveraging of its Retirement Outcome retirement advice software platform and its guaranteed income product design Income Plus+. The former, an open-architecture retirement modeling platform and customizable retirement planning tool, works with the latter, and helps investors and their advisors develop personalized retirement plans and generate solutions for income, wealth and asset allocations.

Retirement Outcome takes a variety of information about a client in or near retirement to produce a personalized outcome report. Each investing, guaranteed income and spending decision can then be adjusted to show the impact it has on the client’s income and wealth throughout retirement. User interface and all reports can be branded with the advisor’s logo, and the asset allocation portfolios can be customized to the advisor’s models.

Income Plus+ is a true annuity, with mortality credits enabling higher annual payments to investors. For insurers, Income Plus+ significantly reduces the hedging cost associated with offering an income-guaranteed product by providing offsetting market risk exposure that permits the carrier to predetermine the amount of exposure it is willing to undertake.

7) Bregal Investments Announces Formation of Private Equity Fund

Bregal Investments announced Wednesday that it has formed Bregal Sagemount I L.P., a private equity fund capitalized with $500 million in committed capital. Bregal Sagemount will be led by Gene Yoon, formerly of Goldman, Sachs & Co., and will focus on growth-oriented investments in both control and non-control situations. Previously, Yoon was head of private equity for Goldman’s Americas special situations group and a partner with Great Hill Partners LLC.

Bregal Sagemount is focused on investing $15 million to $75 million in companies, and in partnership with Bregal Investments, can invest up to $150 million. Target investments will be in growth sectors, including business services, software and technology-enabled businesses, information and media, financial services and health care. The fund will make equity and/or junior debt investments.

Read the June 3 Portfolio Products Roundup at AdvisorOne.


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