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Portfolio > Mutual Funds

Top Portfolio Products: FBR Funds Closer to Merger With Hennessy

By Marlene Y. Satter

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New product developments announced over the last week include another step in the process of reorganization of FBR Funds into certain Hennessy Funds, five new strategies available from Jefferson National and CAPTRUST, Achaean Financial and Envestnet’s strategic partnership, and CLS’s move to make 12 new investment models available via Envestnet.

In addition, HNW launched a new retail banking practice, Russell said it completed of its annual index reconstitution, Dow Jones Indexes announced a new index launch, and Buffalo Funds announced a new name for its science and technology fund.

Here are the latest portfolio-product developments of interest to advisors:

1) FBR Funds Trustees Approve Hennessy Funds Merger

Hennessy Advisors Inc. announced June 25 that the board of trustees of the FBR Funds trust has approved the reorganization of the FBR Funds into certain Hennessy Funds. It has also recommended that FBR shareholders approve the plan of reorganization that will result in Hennessy Advisors Inc. becoming the investment advisor to each of the former FBR Funds. The vote by the trustees moves this transaction one step closer to completion.

The sale has also gained approval from the board of directors of FBR & Co., the board of directors of Hennessy Advisors, Inc., and the board of directors of Hennessy Funds. The transaction, while subject to regulatory review and the approval of the FBR Funds’ shareholders, is expected to be completed in October.

2) Jefferson National Partners With CAPTRUST to Launch Five New Strategies

Jefferson National announced that it has launched five new dynamic allocation models powered by CAPTRUST’s research. This partnership marks the first time that models powered by CAPTRUST are available within Jefferson National’s flat-fee variable annuity Monument Advisor.

Available to investors only through RIAs and/or broker dealers in Monument Advisor, these asset allocation models were designed by CAPTRUST to seek to generate superior risk-adjusted returns through portfolio construction, tactical asset allocation, and investment manager selection.

3) Achaean Financial Announces Strategic Partnership With Envestnet

Achaean Financial announced Tuesday a strategic partnership with Envestnet through which Achaean’s retirement-advice software tool, Retirement Outcome, will be integrated into Envestnet’s wealth management platform. While they can be used together today, the full integration is scheduled for November 2012.

Advisors can analyze a client’s income needs before and during retirement using Retirement Outcome, which will then be incorporated into a proposal on the Envestnet platform, where advisors can select appropriate investment solutions in order to achieve the investor’s goals. 4) CLS Offers 12 New Risk-Budgeted Investment Models via Envestnet

CLS Investments, LLC announced Tuesday that 12 risk-budgeted investment models are now available for use within client accounts through the Envestnet platform. They utilize a combination of ETFs or CLS’s proprietary funds, and emphasize investment growth and principal protection.

CLS specializes in providing risk-budgeted and actively managed strategies to give investors downside protection while helping to grow their portfolios.

5) HNW Launches Retail Banking Practice

New York-based HNW Inc. announced Tuesday that it is launching a retail banking practice that will focus on delivering a wide range of integrated marketing solutions primarily for retail banks and other financial institutions seeking to reach and better serve the mass affluent segment, defined as individuals with between $250,000 and $3 million of investible assets.

Leslie Paladin, senior vice president and managing director, will helm the new practice. She joined in 2011 with more than 30 years of marketing experience. Earlier, she served as a senior vice president, Citibank Mass Affluent for Citigroup and was national marketing director for KPMG.

6) Russell Completes Annual Index Reconstitution Process

On Monday, Russell announced that on June 22 it had completed its annual index reconstitution process for Russell Global Indexes. Final membership lists for the Russell Global, Russell 3000, Russell 1000, Russell 2000, Russell Midcap and Russell Microcap Indexes were confirmed after Friday’s market close. Final lists of additions and deletions are available on the Russell reconstitution website.

Global market capitalization, as reflected in the post-reconstitution Russell Global Index, had a notable decline, decreasing from $52.2 trillion on May 31, 2011 to $44.2 trillion on May 31, 2012. U.S. market cap, as illustrated by the Russell 3000 Index, declined from $16.7 trillion to $15.8 trillion during this same period. Overall, the Russell U.S. indexes reflect a market shift over the past year to higher returns in growth stocks. Emerging markets declined materially against developed markets over the past year, decreasing their Russell Global Index weighting from 14.7% to 13.7%.

7) Dow Jones RBP Index Family Expands

Dow Jones Indexes announced Tuesday the launch of the Dow Jones RBP U.S. Directional Allocation Index, a gauge that automatically allocates weights among other indexes that reflect distinct viewpoints on the U.S. market. Constructed as an “index of indexes,” the new gauge reallocates among an “aggressive” index, a “defensive” index and a “market” index—while also allowing the possibility to allocate fully to a cash component—based on an automated system that uses economic and market indicators as inputs.

The allocation mechanism used in the new index’s methodology utilizes a “moving average crossover system,” as it is known, to generate signals for rebalancings by comparing moving averages of economic and market indicators.

8) New Name for Buffalo Science & Technology Fund

Buffalo Funds announced Thursday that the Buffalo Science and Technology Fund (BUFTX) was renamed the Buffalo Discovery Fund effective June 29. The fund is focused on discovering high-quality companies that use innovation to create value and set themselves apart in their respective industries.

While BUFTX has a 10+ year history, its former name implied limitation to technology companies, while it invested more broadly in other sectors—hence the change in name. It retains its ticker, management team of Clay Brethour, Dave Carlsen and Elizabeth Jones, and strategy, changing only the name.

Read the June 25 Portfolio Products Roundup at AdvisorOne.com

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