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Top Portfolio Products: Vanguard Introduces New Fund, ETF

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Portfolio Products logoNew products introduced over the last week include a new short-term TIPS index fund and ETF from Vanguard; a suite of new and existing ETFs from iShares; a new index launched by S&P Dow Jones Indices; and a new mutual fund from Goldman Sachs Asset Management.

In addition, UBS launched a new ETN; Invesco PowerShares offered a new ETF; Securian announced a turnkey asset management program; and Brown Brothers Harriman said it will close a fund to new investors.

Here are the latest developments of interest to advisors:

1) Vanguard Introduces Short-Term TIPS Index Fund and ETF

On Tuesday, Vanguard launched the Vanguard Short-Term Inflation-Protected Securities Index Fund (VTIP), which offers low-cost conventional shares and ETF shares and seeks to track the performance of the Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index. Vanguard’s fixed income group will serve as investment advisor, and co-managers are Joshua Barrickman and Gemma Wright-Casparius.

The estimated expense ratios of the four share classes are 0.07% (institutional shares); 0.10% (admiral and ETF shares); and 0.20% (investor shares). The Treasury inflation-protected securities fund and ETF categories have average expense ratios of 0.82% and 0.20%, respectively (source: Lipper). To help defray the transaction costs of purchasing TIPS, the fund assesses a 0.25% purchase fee on all non-ETF shares.

2) iShares to Launch Core Series ETFs

BlackRock announced the launch of the iShares Core Series, a suite of four new and six existing U.S. ETFs designed for the needs of long-term, buy-and-hold investors. The firm also announced that iShares is launching a global brand initiative and integrating the iShares and BlackRock U.S. retail sales teams.

The new suite consists of the following iShares ETFs: Core S&P Total U.S. Stock Market ETF (ITOT, formerly ISI; Core S&P 500 ETF (IVV); Core S&P Mid-Cap ETF (IJH); Core S&P Small-Cap ETF (IJR); Core MSCI Total International Stock ETF; Core MSCI Emerging Markets ETF; Core MSCI EAFE ETF; Core Total U.S. Bond Market ETF (AGG); Core Long-Term U.S. Bond ETF (ILTB, formerly GLJ); and Core Short-Term U.S. Bond ETF.

3) Emerging Markets Core Index Launched by S&P Dow Jones Indices

S&P Dow Jones Indices announced Tuesday that it has launched the S&P Emerging Markets Core Index, which provides core emerging-market exposure through an investable stock portfolio that is diversified by country, sector and industry. It also announced that it has licensed the new index to EGShares, the ETF offering of Emerging Global Advisors (EGA), to list an ETF on the NYSE Arca.

The S&P Emerging Markets Core Index seeks to reduce concentration in legacy frontier market sectors, broaden country diversification and tap into available liquidity to gain exposure to emerging industries. It focuses on industry groups rather than sectors as index building blocks, equal weights emerging-market constituents, caps country exposures, and contains no developed-market companies.

4) Goldman Sachs Asset Management Announces New Mutual Fund for DC Plans

Goldman Sachs Asset Management has announced a new mutual fund. The Goldman Sachs Retirement Portfolio Completion Fund (A shares: GRPOX) offers defined contribution plan sponsors and investors access to the diversifying nontraditional asset classes used by pension plans, in a single daily valued mutual fund. GRPOX’s performance benchmark is a composite of the S&P 500 Index (60%) and the Barclays US Aggregate Bond Index (40%). Additionally, GSAM created a proprietary retirement portfolio completion benchmark.

GRPOX intends to gain exposure to inflation-linked government bonds, global real estate investment trusts, commodities, emerging-markets equity, emerging-markets sovereign credit, North American high-yield corporate credit, and hedge fund industry beta (i.e., the component of hedge fund returns that is attributable to market risk exposure, rather than manager skill). It is offered in class A and class C shares, both with $1,000 minimum initial investments, and also in institutional, class R and class IR shares.

5) UBS Launches ETN with Leveraged Exposure to Mortgage REITs

UBS Investment Bank announced Wednesday the launch of the ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN (MORL). MORL is linked to the monthly compounded 2x leveraged performance of the Market Vectors Global Mortgage REITs Index, reduced by investor fees. It offers a variable monthly coupon linked to 2 times the cash distributions, if any, of the index constituents, less any withholding taxes.

MORL is the only exchange-traded product with leveraged exposure to a mortgage REIT index offered on U.S. exchanges.

6) Invesco PowerShares Announces High Dividend ETF

Invesco PowerShares Capital Management recently announced the listing of the PowerShares S&P 500 High Dividend Portfolio (SPHD). SPHD, based on the S&P Low Volatility High Dividend index, will provide access to the 50 securities in the S&P 500 Index that historically have provided high dividend yields with lower volatility.

SPHD will generally invest at least 90% of its total assets in securities that comprise the underlying index.

7) Securian Offers Turnkey Asset Management Program

On Wednesday, Securian Financial Services announced Securian Freedom, a turnkey asset management program available for investments of $50,000 or more. Advisors can offer a range of Securian Freedom model investment portfolios to clients; accounts are managed by Securian’s investment resource group (IRG) on a discretionary basis in accordance with the model portfolios selected by clients. Each of the five model portfolios combines 13–17 subasset classes to maximize risk-adjusted returns They range from an aggressive growth option to an income option.

Securian Freedom also gives clients access to institutional share class pricing. Additional services include performance reporting; consolidated statements; online access; and e-mail delivery of statements, trade confirmations and other important documents. One transparent advisory fee covers all investment advisory and transaction expenses, though miscellaneous fees may be charged, depending on the size and structure of the account. 8) Brown Brothers Harriman to Close BBH Core Select Fund to New Investors

Brown Brothers Harriman & Co. announced Wednesday that it intends to close the BBH Core Select Fund (BBTEX and BBTRX) to new investors when total net assets in the fund reach approximately $3.5 billion. Currently it has $3.3 billion in assets.

BBH Core Select follows a disciplined investment selection process and aims to invest in established, cash-generative businesses that are leading providers of essential goods and services with strong leadership. The fund generally holds investments in 20-30 large-cap companies, with a targeted holding period of 3-5 years.

Read the Oct. 14 Portfolio Products Roundup at


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