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Portfolio > Portfolio Construction

DWS Group Launches First S&P 500 ESG ETF for US Investors: Portfolio Products

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The DWS Group has expanded its ESG product lineup with the launch of Xtrackers S&P 500 ESG ETF (SNPE), the first such ETF available for U.S. investors. (UBS launched a similar product for European investors in April.)

The underlying Index seeks to target 75% of the float market capitalization of each Global Industry Classification Standard Industry Group within the S&P 500 Index, using an ESG score as the defining characteristic, according to the fund’s prospectus.

“By bringing this to the market we’ve given investors the ability to put ESG at the core of their portfolio where we see investing trends heading,” said Luke Oliver, DWS head of index investing, Americas, in a statement. The fund has an expense ratio of 0.11%.

“We’ve priced it as a core holding and that speaks to the DWS commitment to ESG. This ETF was designed so investors can use it in place of core benchmarks,” said Oliver.

The ETF excludes S&P 500 companies that are involved in the production or sale of tobacco or are engaged in the business of “controversial weapons,” which it lists as cluster weapons, landmines, biological or chemical weapons, depleted uranium weapons, white phosphorus weapons and nuclear weapons, in its prospectus. 

Also excluded are companies that fall within the bottom 5% of the United Nations Global Compact score ranking, or within  the lowest 25% of ESG scores from each GICS Industry Group.

Principal Introduces Its First Interval Fund

Principal Global Investors launched its first interval fund, which is a type of closed-end fund that provides investors exposure to less liquid investments while repurchasing a percentage of investor shares quarterly. 

The Principal Diversified Select Real Asset Fund invests primarily in private real assets, including infrastructure, natural resources, and real estate and conducts quarterly repurchase offers of 5% to 25% of the fund’s outstanding shares as net asset value. (A higher level of repurchase offers can be allowed by the fund’s board of trustees.)

“Throughout 2019, we have encouraged clients and investors to re-evaluate risk within their portfolios. Offerings like DSRA are designed to help investors address market uncertainty and volatility,” said Mike Beer, executive director of Principal Funds.

According to Principal, the fund’s managers take a longer term approach and avoid fire sales of assets at cheap prices during times of sudden, massive redemptions, which can help boost returns and investors gain access.

The new fund is available in three different share classes:

  • A shares (PDSRX), minimum $25,000; 3.36% net expense ratio, 5.75% maximum sales charge
  • I shares (PDSKX), minimum $100,000; 3.06% net expense ratio
  • Y shares (PDSYX ), minimum $100,000 2.85% net expense ratio

Eaton Vance Announces Strategic Initiative Within Parametric Unit

Eaton Vance Corp. announced a strategic initiative within its Parametric Portfolio Associates LLC (Parametric) and Eaton Vance Management (EVM) investment affiliates to strengthen its rules-based, systematic investment strategies, customized individual separate accounts and wealth management solutions. 

 The initiative has three principal components:

  • Rebranding EVM’s rules-based, systematic investment-grade fixed income strategies as Parametric and aligning internal reporting consistent with the revised branding;
  • Combining the technology and operating platforms supporting the individual separately managed account (SMA) businesses of Parametric and EVM; and
  • Integrating the distribution teams serving Parametric and EVM clients and business partners in the registered investment advisor (RIA) and multi-family office (MFO) market.

Based on assets under management and fee revenue for the fiscal quarter ended April 30, 2019, $39.8 billion of systematically managed fixed income assets and associated annualized management fee revenue of $70.1 million will, over a transition period, transfer from EVM to Parametric.  

On a pro forma basis, Parametric’s managed assets will increase to $285.0 billion and its annualized management fee revenue will grow to $462.1 million, representing approximately 61% and 31%, respectively, of Eaton Vance’s consolidated totals as of and for the fiscal quarter ended April 30, 2019. 

Investments to support the company’s growing individual SMA business and expanded distribution in the RIA/MFO channel are expected to be offset by increased revenue growth and cost savings resulting from greater operating efficiencies.

“By simplifying our brand architecture, strengthening our SMA operating infrastructure and expanding our distribution reach into the RIA and multi-family office marketplace, we expect to drive accelerated business growth for years to come,” said Thomas E. Faust Jr., Eaton Vance chairman and CEO.

The strategic initiative being announced today will be implemented over the balance of 2019 and early 2020. Eaton Vance does not expect the initiative to result in reduced headcount. 

Oranj Unifies Trading and Rebalancing Technology Under a Single Platform

More than two years after Oranj acquired a majority interest in the TradeWarrior trading and rebalancing technology, the company has fully integrated TradeWarrior within the Oranj platform at no additional cost.

During the interim, Oranj fired the former CEO of TradeWarrior who subsequently sued; Oranj countersued; and now both parties appear to be moving on.

“Rebalancing is an important and powerful tool for advisors and often times it can be an expensive luxury some advisors don’t deem necessary. Advisors no longer have to choose between cost and convenience,” said David Lyon, founder and CEO, Oranj. 

With this integration, advisors formerly using the legacy TradeWarrior technology will have access to Oranj’s full suite of modern capabilities including account aggregation, digital onboarding, a fully redesigned investor portal, and the diverse model marketplace. They will also benefit from enhancements Oranj has added to the rebalancing technology, including support for FIX trading direct to the custodian, additional order types, such as limit orders, and thinly traded funds, advanced cash management and account-level security equivalents.

Apex Clearing Launches Crypto Platform for Brokers, Advisors

Apex Clearing Corp. and Apex Crypto have launched a cryptocurrency platform that provides broker-dealers and financial advisors a way to introduce digital currency trading into their clients’ portfolios.

The platform, available to all Apex clearing clients, allows crypto assets to be held in separate accounts and investors to transition between trading equities and trading cryptocurrencies in just a few clicks.

“Our integration with Apex Crypto helps financial firms give their clients a streamlined way to invest in a wider variety of asset classes that feels like part of their core portfolio, while still being handled on a separate platform for regulatory purposes,” said Bill Capuzzi, CEO at Apex Clearing, in a statement.

The platform currently offers access to four crypto coins — Bitcoin, Bitcoin Cash, Ethereum and Litecoin — and is available to investors in 40 states and the District of Columbia, with additional states expected to join in the future.

”It’s never been easier to buy or trade cryptocurrency,” said Edward Haravon, chief operating officer at Apex Crypto.

Overstock’s tZero Launches Mobile App for Digital Currencies

Overstock’s subsidiary tZero, a cryptocurrency-focused alternative trading system, has introduced a crypto app that allows users to buy, sell and hold digital currencies efficiently and securely, directly on their mobile phone.

The  launch supports Bitcoin and Ethereum trading and is compatible with iOS devices, with Android compatibility coming soon. The app includes a Private Key Recovery System, which allows funds to be restored if a user loses his or her private keys or smartphone.

”Wth tZero’s Private Key Recovery System, your digital coins are truly held by you, in your wallet, rather than on an exchange in a pot with other fungible tokens,” said Patrick Byrne, founder and CEO, in a statement.

“Not only is this more secure (if your coins are held in your wallet and not on an exchange, people cannot steal your tokens by hacking an exchange), but in addition, it is more true to the cypherpunk ethos of decentralization through cryptography.”

Health Savings Administrators Launches Investor-Focused HSA

Health Savings Administrators, an HSA provider, has introduced the Investor Focus HSA , which has a curated lineup of 42 funds from Vanguard and Dimensional.  

Among the 42 funds are 12 U.S. equity funds, one sector equity fund, 14 allocation funds (including several target date funds), seven taxable bond funds and one money market option. Expense ratios are 25 basis points for active funds and 10 basis points for passive funds, for an overall weighted average of 11 basis points compared with a 47-basis-point weighted average cited by Devenir Research 2018 Year-End HSA Market Report. The funds have a average Morningstar rating of 3.96 out of five stars.  

CircleBlack Integrates RightCapital Into Its Platform

CircleBlack, a wealth management platform for financial advisors, has integrated RightCapital, a next-generation financial planning tool that provides advisors with the ability to create custom, comprehensive financial plans, into its platform.

Advisors who use RightCapital to help clients with financial and tax planning will be able to pull in daily account information and holdings data through the CircleBlack platform, allowing them to work more efficiently and deliver real-time information to their clients.  

“The integration allows seamless movement for the advisor between a client portfolio on CircleBlack and their plan on RightCapital without the advisor having to search or open multiple tabs,” said John Michel, CEO of CircleBlack.

CircleBlack’s technology is designed to give advisors a complete 360-degree overview of every client’s portfolio, reporting, billing and rebalancing in one easily accessible location — and deliver actionable intelligence that can build trust between advisors and clients.

RightCapital’s financial and tax planning software helps advisors create robust retirement plans using advanced Monte Carlo simulations, optimize Social Security, offer tax-efficient drawdown strategies and Roth conversions, and manage their clients’ tax liabilities, budgets and debt pay-off strategies. 

— Check out last week’s portfolio product roundup here:  MSCI Launches Climate Change Indexes: Portfolio Products.


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