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Top Portfolio Products: iShares Offers Colombia ETF

By Marlene Y. Satter

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New products introduced over the last week include a new Colombia ETF from iShares; a new global short-term, high-yield bond fund ETF from Invesco PowerShares; a new index universal life insurance product from Genworth; and a new share class from Manning & Napier.

In addition, Alger launched two new funds; Security Benefit launched a new crediting strategy; and NASDAQ OMX and Accretive Asset Management announced a partnership on BulletShares indexes.

Here are the latest developments of interest to advisors:

1) iShares Launches an ETF to Access Colombia, The ‘New Brazil’

BlackRock announced Thursday that its iShares ETFs business has launched the iShares MSCI Colombia Capped ETF (ICOL). ICOL is designed to track the MSCI All Colombia Capped Index, a broad-based Colombia equity market index that includes companies headquartered or listed in Colombia and with the majority of their operations based in Colombia.

The index applies certain investment constraints that are imposed on regulated investment companies (RICs) under the current U.S. Internal Revenue Code, where no single group entity can exceed 25% of the index weight and all group entities with weights above 5% cannot exceed 50% of the index weight. As of May 29, 2013, the largest sector weightings of the index included financials (34.17%), energy (31.58%) and utilities (14.99%).

2) Invesco PowerShares Lists Global Short-Term, High-Yield Bond Portfolio

Invesco PowerShares Capital Management announced Thursday the launch of the PowerShares Global Short Term High Yield Bond Portfolio ETF (PGHY), which is based on the DB Global Short Maturity High Yield Bond Index.

PGHY aims to provide investors with access to short-term U.S. dollar-denominated, high-yield debt that is issued globally; including sovereign, quasi-government and corporate bond securities. PGHY has an expense ratio of 0.35% and is expected to issue monthly distributions.

PGHY generally will invest at least 80% of its total assets in bonds included in the index, which tracks the performance of U.S. dollar-denominated, short-term, non-investment grade bonds with three years or less to maturity that are issued by U.S. and foreign corporations, as well as by supranational, sovereign or sub-sovereign government entities. PGHY and the index are rebalanced quarterly and reweighted annually.

3) Genworth Launches Its First Index Universal Life Insurance Product

Genworth recently announced the launch of its first Index Universal Life (IUL) insurance product, which combines a death benefit with tax-deferred cash accumulation and an optional accelerated benefit rider for long-term care services.

The new Asset Builder IUL combines a death benefit for beneficiaries with the following features: the opportunity for greater policy value growth by linking the crediting strategy with the S&P 500 Index; protection from market downside (even if the percentage change in the S&P 500 Index is negative, the minimum crediting rate is 0%; monthly charges and fees will continue regardless of the crediting rate and will reduce policy value); supplemental income for retirement (if the policy generates sufficient cash values later in life, policy owners can take withdrawals and policy loans to supplement their income); and an optional accelerated benefit rider for LTC services that is available at an additional cost.

To help financial professionals, Genworth has also launched the Index Institute. This virtual resource offers financial professionals the education, tools and support they need to better counsel their clients on how index products work and the role they can play in helping them fulfill their insurance needs and financial objectives.

4) Manning & Napier Adds New Class With Zero-Revenue Share

Manning & Napier, Inc. recently announced the launch of a new zero-revenue share Class U for its Pro-Mix Collective Investment Trust (CIT) fund family. The new unit class helps plan sponsors to clarify administrative costs paid by participants, and recognizes the increasing trend toward more transparent, fee-conscious offerings.

The Manning & Napier Pro-Mix CIT Funds are a suite of actively managed, fully diversified collective investment trust funds that offer professional management solutions to qualified plan participants. Class U is being offered across the entire fund family, including the conservative, moderate, extended, and maximum term CIT funds. The Pro-Mix CIT Funds are also offered in Class S to address the ongoing need for various plan cost structures.

5) Alger Launches International Growth and Global Growth Funds

Fred Alger Management, Inc. recently announced the launch of the Alger International Growth Fund (ALGAX) and the Alger Global Growth Fund (CHUSX), open-end mutual funds. The strategies are also available for institutional separate accounts.

ALGAX seeks long-term capital appreciation by following an investment strategy that focuses its investments in non-U.S. developed markets, with the flexibility to invest in emerging markets. It has the ability to invest in any company analysts believe has growth potential, regardless of market capitalization, while currently maintaining an anchor in large cap. Pedro Marcal, the portfolio manager, also manages the Alger International Growth Strategy, which has a three-year track record.

CHUSX seeks long-term capital appreciation by following a three-pronged investment strategy that invests in international developed markets, emerging markets and U.S. markets. Similar to ALGAX, CHUSX currently plans to maintain an anchor in large cap but has the ability to invest in any company, regardless of market capitalization.

CHUSX previously maintained a China-U.S. focus; it continues to be managed by Dan Chung, CEO and chief investment officer, and Deborah Vélez Medenica, head of the emerging markets team. Pedro Marcal will join the current portfolio managers and is responsible for investing in international developed markets.

6) Security Benefit Launches Alternative Crediting Strategy

Security Benefit Life Insurance Company has announced the introduction of a new interest-crediting option for its Total Value Annuity (TVA). The new crediting option, the Transparent Value Blended Index Account, based on the Transparent Value Blended Index (TVBI), uses a dynamic, highly disciplined asset allocation process to blend a large-cap stock index and a U.S. Treasury index to reduce the impact of equity market volatility while increasing diversification and the potential to receive interest credits.

TVBI utilizes a proprietary process known as Required Business Performance (RBP) methodology to allocate assets among 100 stocks to the Transparent Value Large-Cap Defensive Index selected from the 750 stocks that comprise the Dow Jones U.S. Large-Cap Total Stock Market Index.

A second index, the S&P 2-Year U.S. Treasury Note Futures Total Return Index, is then blended with the Transparent Value Large-Cap Defensive Index to reduce volatility. Selection and weighting of individual stocks are driven by the RBP Methodology, which makes a mathematical assessment of the probability that management can deliver the revenue growth needed to support a company’s current stock price.

7) NASDAQ OMX and Accretive Asset Management Announce Partnership on BulletShares Indexes

The NASDAQ OMX Group, Inc. and Accretive Asset Management, LLC have announced a new partnership involving Accretive’s BulletShares Corporate Bond Index family. NASDAQ OMX and Accretive have agreed to co-brand the indexes and work jointly to promote the BulletShares concept around the world.

The NASDAQ BulletShares Indexes represent the performance of an investment in a diversified, held-to-maturity portfolio of fixed income securities with a common year of maturity. Accretive developed the BulletShares methodology in 2009 with the objective of combining the benefits of individual bonds and bond funds.

The indexes are now co-branded under NASDAQ and BulletShares and plans for new versions are already under development. The existing lineup includes 20 indexes covering the investment grade and high-yield corporate debt markets.

The high-yield indexes are: NASDAQBulletShares USD High Yield Corporate Bond 2013 Index; NASDAQBulletShares USD High Yield Corporate Bond 2014 Index; NASDAQBulletShares USD High Yield Corporate Bond 2015 Index; NASDAQBulletShares USD High Yield Corporate Bond 2016 Index; NASDAQBulletShares USD High Yield Corporate Bond 2017 Index; NASDAQBulletShares USD High Yield Corporate Bond 2018 Index; NASDAQBulletShares USD High Yield Corporate Bond 2019 Index; NASDAQBulletShares USD High Yield Corporate Bond 2020 Index; NASDAQBulletShares USD High Yield Corporate Bond 2021 Index; and NASDAQBulletShares USD High Yield Corporate Bond 2022 Index.

The corporate bond indexes are: NASDAQBulletShares USD Corporate Bond 2013 Index; NASDAQBulletShares USD Corporate Bond 2014 Index; NASDAQBulletShares USD Corporate Bond 2015 Index; NASDAQBulletShares USD Corporate Bond 2016 Index; NASDAQBulletShares USD Corporate Bond 2017 Index; NASDAQBulletShares USD Corporate Bond 2018 Index; NASDAQBulletShares USD Corporate Bond 2019 Index; NASDAQBulletShares USD Corporate Bond 2020 Index; NASDAQBulletShares USD Corporate Bond 2021 Index; and NASDAQBulletShares USD Corporate Bond 2022 Index.

Read the June 15 Portfolio Products Roundup at AdvisorOne.

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For direct insights on the role of ETFs in client portfolios from multiple experts—including Rick Ferri, Ron Delegge, Skip Schweiss and more—we invite you to register for AdvisorOne’s premiere advisorcentric Virtual ETF Summit, which starts July 23 (and get multiple hours of CFP Board CE).