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Portfolio > Portfolio Construction

Top Portfolio Products: Euronext, PowerShares Announce Index-Based Portfolio

By Marlene Y. Satter

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New products and changes introduced over the last week include the PowerShares NYSE Century Portfolio from Euronext and PowerShares; a municipal bond ETF from Market Vectors; and strategic asset allocation changes from Russell Investments.

In addition, Guardian Life announced a variable annuity offering access to alternative investments, and AdvisorShares announced a new ETF.

Here are the latest developments of interest to advisors:

1) Euronext, PowerShares Announce PowerShares NYSE Century Portfolio

NYSE Euronext and Invesco PowerShares Capital Management LLC have announced the launch of the PowerShares NYSE Century Portfolio (NYCC). NYCC is based on the NYSE Century Index, which includes U.S. companies that have been incorporated for at least 100 years, are listed on a U.S. exchange and have a market capitalization of at least $1 billion.

NYCC is the first fund based on the NYSE Century Index.

2) Market Vectors Launches Municipal Bond ETF

Market Vectors ETFs has announced the launch of the Market Vectors Short High-Yield Municipal Index ETF (SHYD).

SHYD seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Barclays Municipal High Yield Short Duration Index (BMHYTR), a market-size-weighted index composed of publicly traded municipal bonds that cover the U.S. dollar-denominated high-yield short-term tax-exempt bond market.

To be included in the index, a bond must have a nominal maturity of 1–10 years. Taxable municipal bonds, bonds with floating rates, and derivatives are excluded from the index. The index rules maintain a 75% weight in below-investment-grade municipal bonds and as an added liquidity feature a 25% weight in Baa/BBB-rated investment grade municipal bonds.

3) Russell Investments Makes Strategic Asset Allocation Changes

Russell Investments announced that it was implementing a series of strategic asset allocation changes to several retail product offerings in the U.S. market, including the Russell LifePoints Funds, Target Portfolio Series and Russell Core Model Strategies. For most portfolios the reallocations take effect in January 2014.

For fixed income, assets will be reallocated from core bond exposures (Russell Strategic Bond Fund (RFDAX) and Russell Investment Grade Bond Fund (RFAAX)) to equities and global high-yield bonds that represent a higher return potential with corresponding increase in risk.

For U.S. equity, overall exposure to U.S. equity will be increased, with a majority of the increase going to the small capitalization equity allocation, in an effort to compensate for the lower return expectations of fixed income markets.

International equity will take a more targeted approach to non-U.S. equity exposure, with an emphasis on emerging markets and adjustments within global equity allocations.

For alternatives, the real asset composition will be changed by decreasing commodities and increasing infrastructure allocations in an effort to maintain non-U.S. exposure levels while also offering higher return potential.

4) Guardian Life Offers VA with Access to Alternative Investments

The Guardian Insurance & Annuity Co. Inc. (GIAC), a wholly owned subsidiary of The Guardian Life Insurance Co. of America (Guardian), has introduced Guardian Investor ProFreedom Variable Annuity (B share) (ProFreedom VA), which offers alternative investment options. The annuity can be issued with a deferred income rider.

ProFreedom VA offers investment options managed by boutique brands (such as ALPS/Alerian, Mariner Hyman & Beck, and Merger (Westchester Capital Management LLC)) with options managed by larger brand names (such as Fidelity Investments, MFS and PIMCO), across different investment strategies, such as traditional, risk-managed, sector-focused and alternative investment options.

5) AdvisorShares Launches Sage Core Reserves ETF

AdvisorShares has announced the launch of the Sage Core Reserves ETF (HOLD), which is subadvised by Austin, Texas-based Sage Advisory Services.

HOLD aims to preserve capital while maximizing income. Sage seeks to achieve this objective by investing in a broad range of fixed-income securities and U.S. dollar-denominated investment-grade debt securities, with an average duration of less than one year. Sage seeks to make the ultralow-duration portfolio less sensitive to interest rate changes, and provide the ability to be flexible across credit quality and security selection, while minimizing volatility and maintaining a high level of liquidity.

Read the Jan. 10 Portfolio Products Roundup at ThinkAdvisor.

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