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Portfolio > Portfolio Construction

Fidelity Launches New Bond Model Portfolios: Portfolio Products

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Fidelity Investments further broadened its lineup of portfolio construction capabilities for advisors in the fixed income space with a new suite of bond model portfolios including four strategies using mutual funds and exchange-traded funds.

The new model portfolios were “designed to maximize risk-adjusted total return as well as accommodate a range of risk preferences, including duration and credit risk,” the company said. They also supplement Fidelity’s Bond Income Model Portfolio, launched in 2019, that “aims to maximize risk-adjusted yield,” it noted.

The newcomers are: Fidelity Short Multi-Sector Bond Model Portfolio, with a net expense ratio of 0.32% for Class I and 0.30% for Class Z (designed to provide a lower duration bond portfolio with a focus on investment-grade mutual funds/ETFs complemented by a limited allocation to non-investment grade); Fidelity Core Bond Model Portfolio, with a net expense ratio of 0.37% for Class I and 0.31% for Class Z (designed to provide a core bond portfolio focused on a diversified allocation to investment-grade mutual funds/ETFs); Fidelity Core Plus Bond Model Portfolio, with a net expense ratio of 0.38% for Class I and 0.33% for Class Z (designed to provide a diversified bond portfolio with a focus on investment-grade mutual funds/ETFs complemented by a limited allocation to non-investment grade); and Fidelity Dynamic Bond Model Portfolio with a net expense ratio of 0.37% for Class I and 0.36% for Class Z (designed to provide a diversified bond portfolio of fixed income mutual funds/ETFs while offering greater investment flexibility through duration and credit allocation), the company said.

The additions to Fidelity’s line come as “demand for model portfolios continues to grow among advisors,” it said, pointing to Cerulli data that indicated 95% of advisors said they always or sometimes used asset allocation models for specific strategies or objectives.

Envestnet, Invesco Join Forces for 7 New Model Portfolios

Envestnet and Invesco teamed to introduce seven new model portfolios on the Envestnet platform that the companies said “optimize the advantages of both active and passive fund management.”

The Invesco PMC ActivePassive Portfolios were “designed for a variety of investor objectives and risk profiles, from capital preservation to moderate growth to aggressive,” the firms said. They include: Invesco PMC ActivePassive — Aggressive with a net expense ratio of 0.52%; Invesco PMC ActivePassive — Capital (0.51%); Invesco PMC ActivePassive — Conservative (0.51%); Invesco PMC ActivePassive — Conservative Growth (0.52%); Invesco PMC ActivePassive — Growth (0.51%); Invesco PMC ActivePassive — Moderate (0.52%); and Invesco PMC ActivePassive — Moderate Growth (0.51%)

Each portfolio includes a combination of actively managed mutual funds from Invesco and low-cost, tax-efficient index funds that Envestnet PMC has identified as “best in breed,” they said.

The Invesco PMC ActivePassive Portfolios are the only Envestnet PMC-managed ActivePassive portfolios available with liquid alternatives, and they are an “evolution” of the ActivePassive suite of portfolios built in partnership between Envestnet PMC and OppenheimerFunds, the companies said.

Following Invesco’s purchase of OppenheimerFunds, completed last year, Envestnet PMC’s portfolio managers now have additional funds and capabilities to select from, “giving them more flexibility in how they express their investment views,” the companies said.

FTSE Russell Adds New Government Bond Index

FTSE Russell launched its first government bond index designed to adjust country weights based on climate risk consisting solely of European Monetary Union (EMU) countries, it said.

The FTSE Climate Risk-Adjusted European Monetary Union Government Bond Index expands the global index, data and analytics provider’s lineup of climate risk-adjusted government bond indexes and follows the launch of its “Climate WGBI” in July.

The new index was developed in response to customer demand and “applies a robust methodology by providing a forward-looking assessment of the climate risks faced by sovereigns within the EMU,” the company said.

It was developed using climate scores from Beyond Ratings, London Stock Exchange Group’s environmental, social and governance analytics provider, FTSE Russell said.

Impax Adds SmartCarbon to 3 Pax World Funds

Impax Asset Management, investment advisor to Pax World Funds, started incorporating SmartCarbon — a proprietary, risk-based investment approach for managing exposure to companies with fossil fuel reserves on their balance sheets — to the management of three funds.

The affected funds are the Pax ESG Beta Quality Fund (total expense ratios of 0.90% for Investor and Class A and 0.65% for Institutional), Pax ESG Beta Dividend Fund (total expense ratios of 0.90% for Investor and 0.65 for Institutional) and Pax MSCI EAFE ESG Leaders Index Fund (total expense ratios of 0.80% for Investor and 0.55% for Institutional).

The three Pax funds using SmartCarbon have, because of the move, become “fossil fuel free, replacing energy company holdings with a diversified basket of energy efficiency” stocks, the company said.

SmartCarbon uses a multi-scenario approach to compute an expected valuation of energy firms that are likely to be affected by future climate-related regulation, Impax said. It was created in 2015 by the London-based Impax team in collaboration with Carbon Tracker, an independent financial think tank specializing in the impact of the energy transition on capital markets, and Imperial College of London Business School, Impax said.

Impax now offers nine fossil fuel free Pax World Funds across equity and fixed income portfolios, global, international and domestic strategies — including active, smart beta and index-based approaches, it noted.

New Broadridge Private Cloud Uses IBM Tech

Broadridge Financial Solutions and IBM Services signed an agreement to bring new cloud-based solutions to Broadridge’s clients in the financial services industry.

As part of the strategic collaboration, The Broadridge Private Cloud is being created, powered by IBM, and fintech Broadridge will “transition a significant portion” of its global infrastructure to IBM, the companies said.

The “key milestone” in Broadridge’s cloud strategy will enable it to “better provide powerful industry solutions to leading financial institutions around the world, with improved speed to market, flexibility, and resiliency,” according to the companies.

“Accelerating its shift to a hybrid cloud model will enable Broadridge to further deliver next-generation” software-as-a-service solutions to its clients, according to the companies.

— Check out last week’s portfolio product roundup here: Pacific Global ETFs Adds Income-Focused Fund: Portfolio Products


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