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T. Rowe Teams With State Street on Active ETFs: Portfolio Products

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T. Rowe Price has introduced its first ETFs via a series of four nontransparent active equity funds.

They are the Blue Chip Growth ETF (TCHP, with a net expense ratio of 0.57%); Dividend Growth ETF (TDVG, 0.50%); Equity Income ETF (TEQI, 0.54%); and Growth Stock ETF (TGRW, 0.52%), all  listed on the New York Stock Exchange Arca.

The ETFs use the same investment strategies and portfolio managers that manage their corresponding mutual funds, but their expense ratios are slightly lower.

(Related: T. Rowe Price Gets SEC’s OK on Nontransparent ETFs)

State Street said it was appointed to serve as service provider for the four active ETFs.

“Active ETFs are an important strategic initiative for T. Rowe Price, serving as a potential avenue for growth and a complement to our existing offerings, including mutual funds, separately managed accounts and collective investment trusts,” Scott Livingston, head of Global ETF Product for the asset manager, told ThinkAdvisor.

T. Rowe Price hadn’t introduced  active ETFs until now, because it “could not do so in a way that would protect the intellectual property of our investing approach and the interest of our investors,” according to Livingston.

“That changed recently when the SEC gave approval to our proprietary process that allows us to package our active investments strategies in an ETF wrapper while protecting our investment intellectual property,” he added.

WisdomTree ETF News

Several enhancements have been made to the WisdomTree Modern Tech Platforms Fund, which has been renamed the WisdomTree Growth Leaders Fund to “better reflect its positioning.”

One of those enhancements is a lower price. The ETF’s net expense ratio has been reduced to 20 basis points from 45, but its ticker on the NYSE Arca remains PLAT.

“Platform companies are transforming business and the enhancements we’ve made to PLAT better position the fund in the important growth category,” according to Jeremy Schwartz, global head of research at WisdomTree.

“PLAT will continue to seek to provide exposure to high growth, mid and large market capitalization companies – more than the typical FAANG stocks – and now includes a growth screen criteria to emphasize the growth leaders aspect of it, in addition to providing lower fees,” he said in the announcement.

Franklin Templeton’s Latest Green Bond Fund

Franklin Templeton has launched the Franklin Municipal Green Bond Fund, which is listed on the Nasdaq (FGBKX, with a net expense ratio of 0.46%).

The new fund seeks to maximize income exempt from federal income taxes by investing in green bonds, including climate bonds, sustainability bonds and environmental impact bonds, the company said.

The fund will invest at least 80% of its net assets in muni green bonds, it noted. U.S. muni green bond issuers include states, cities, municipal water and sewer enterprises, transportation systems, universities and hospitals.

“The muni green bond universe is expanding, and for investors, green bonds provide an opportunity to dedicate capital to projects and programs that have a defined environmental purpose,” according to Ben Barber, director of municipal bonds for Franklin Templeton Fixed Income.

The fund also may have up to 100% of its assets in securities that pay interest subject to the federal alternative minimum tax, Franklin noted. Its managers will “leverage the same fundamental, bottom-up research analysis employed throughout the team’s range of municipal bond strategies,” the company added.

TrueMark Lists Second Structured Outcome ETF

TrueMark Investments has introduced the TrueShares Structured Outcome (August) ETF (AUGZ on the Cboe, 0.79% net expense ratio).

This is the second ETF in the firm’s True-Shares structured outcome product suite and it is sub-advised by SpiderRock Advisors, a Chicago asset management firm specializing in option overlay strategies.

The new fund seeks to provide investors with returns (before fees and expenses) that track the S&P 500 Price Index, while seeking to provide a buffer of 8-12% on that index’s losses over the fund’s one-year investment period, TrueMark said.

In practice, the fund advisor will target the buffer at 10% of index declines over the investment period following the first day of trading while also allowing for uncapped upside participation, it noted.

“An uncapped structure can offer several advantages in certain market environments, including higher correlations over time to upside movements in the underlying index compared to capped strategies, and the ability to capture the outsized growth years, or right tail events, that are so vital to long-term, compounded returns,” according to TrueMark CEO Michael Loukas.

Beneficient’s Alts Platform

The Beneficient Company Group has launched a platform and suite of private trust solutions that the subsidiary of GWG Holdings said seeks  “simple, rapid, and cost-effective liquidity solutions for owners of alternative assets.”

With Ben, high-net-worth individuals and small-to-mid-sized institutions — often locked into alternative assets for 10-12 years or more — can “overcome many of the traditional barriers to liquidity that existed within the asset class in order to redeploy their capital on their own terms,” the firm said. Investors in these assets have typically relied mainly on secondary funds for their liquidity needs, it noted.

Operating as a permanent financial services company, Ben “seeks to empower” alternative asset owners with a “complete offering of standardized trust solutions solely focused on their liquidity needs,” it said.

Its first trust solution, the Ben ExchangeTrust, is designed to offer liquidity for 100% of a fund’s NAV via equity or debt securities through a tax-free or taxable exchange.

Its Liquidity Bond  consists of the secured debt of GWGH, with a fixed maturity of four years and an option to exchange the bond for GWGH common stock after six months and may pay an interest rate of up to 6% per year in cash monthly.

Defiance Adds Junior Biotech ETF

Defiance ETFs introduced the Defiance Nasdaq Junior Biotechnology ETF (IBBJ, with a net expense ratio of 0.45%).

IBBJ tracks the Nasdaq Junior Biotechnology Index, offering investors exposure to small and mid-cap “junior” companies with a market capitalization under $5 billion, Defiance said.

IBBJ provides “the next generation of investors with targeted exposure to disruptive themes… offering exposure to the junior disruptors in the biotech space, and allowing investors to express either a short- or long-term view,” according to Defiance ETFs CEO Matthew Bielski.

Russell Teams With Vestmark on SMAs

Russell Investments selected Vestmark to power the design, construction and management of new Personalized Managed Accounts that Russell said can be customized to meet a wide variety of client needs.

Initially featured are six, tax-managed separately managed accounts that Russell said “leverage technology to help meet both growth and optimal after-tax outcomes.”

The solutions include three actively managed equity SMAs, two direct-indexed SMAs and a core equity SMA that Russell said combine active and lower-cost direct indexing.

“Each will provide financial advisors with the opportunity to customize their high-net-worth investors’ portfolios to individual preferences,” it said. The SMAs are expected to launch in the fourth quarter of 2020.

The PMA solutions will feature dedicated portfolio managers, quantitative research analysts and service teams, centralized trading and implementation, and automated year-round tax management including tax-loss harvesting, wash sale minimization, tax-smart turnover and managing holding periods, the company said.

— Check out last week’s portfolio product roundup here: Parametric Introduces Custom Core Fixed Income


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