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MSCI Launches Climate Change Indexes: Portfolio Products

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MSCI has launched indexes that aim to increase investors’ exposure to those companies that are providing solutions to the problem of climate change, with twice the exposure to clean technology firms, and to limit exposure to companies that are contributing to climate change.

They have 50% less exposure to thermal coal and four times less exposure to companies with carbon-intensive products than traditional indexes.

The indexes re-weight securities based on MSCI’s low carbon transition score, which measures a company’s exposure to low carbon transition risk, carbon emission and fossil fuel reserves as well as exposure to opportunities like clean technology and alternative energy. They can be used as a standalone index or as an overlay to an overall environmental, social and governance strategy.

The indexes can be used as an investment policy benchmark to guide asset allocation or passive products or to measure asset managers’ performance. They can also be used to understand the impact of climate-related risks on the risk and return drivers of portfolios and to engage with companies to improve their ESG performance.

“It is critical that the investment industry collaborates to enable the transition to a low-carbon economy, before climate change becomes a defining issue for financial stability,” said Remy Briand, head of ESG at MSCI, in a statement.

LPL Adds Advisor Sleeve to Model Wealth Portfolios Platform

With LPL Financial’s Advisor Sleeve, advisors can run their own custom models in LPL’s Model Wealth Portfolios (MWP) platform, which is similar to what they can do in LPLs Strategic Asset Management (SAM) and Strategic Wealth Management (SWM) platforms where the advisor is the portfolio manager.

The advisor can can maintain control of managing their portfolios while gaining scale and efficiency by outsourcing operational functions including trading execution and rebalancing.

Advisor Sleeve also uses the risk-scoring methodology of AdvisoryWorld, a fintech firm that LPL acquired in December, allowing advisor to build models that align to specific investment objectives. Advisor sleeve costs are included in the platform fee.

Advisor Sleeve was designed as a solution to help make managing money easier,“ said Rob Pettman, executive vice president, Products and Platform, in a statement. “The result is an easy-to-use interface that allows advisors to efficiently build their models and communicate their strategies to LPL’s institution trading team to be implemented.”

American Century Reduces Fees on Bond ETF

The fund company cut the management fee on the American Century Diversified Corporate Bond Exchange Traded Fund (KORP) from 45 basis points to 29, effective June 14.

The actively managed fund is designed for investors seeking current income and emphasized investment grade debt while dynamically allocating a portfolio of the portfolio to high yield.

“With KORP now exceeding $60 million [in assets] and attracting steady flows, we decided to reduce fees in order to provide better value to investors,” said Edward Rosenberg, senior VP and head of ETFs. As of June 21, the fund had $63.2 million in assets.

— Check out last week’s portfolio product roundup here: Fidelity Expands Model Portfolios: Portfolio Products.


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