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Portfolio > Mutual Funds > Equity Funds

Matthews Asia Merges Two Funds Due to Asset Overlap: Portfolio Products

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What You Need to Know

  • The Matthews Asia Emerging Asia and Asia Small Companies funds are being combined into a new emerging markets fund.
  • FTSE Russell is adding Chinese government bonds to its World Government Bond Index.
  • Pacer ETFs and AllianzIM roll out the April series of buffer ETFs.

Matthews Asia is merging its $144 million Matthews Emerging Asia fund into the $234 million  Matthews Asia Small Companies fund on or near April 30, 202,1 in a tax-free reorganization following approval by the firm’s board of trustees.

The succeeding fund will be named the Matthews Emerging Markets Small Companies Fund, which aims to invest at least 80% of its net assets in the common and preferred stocks of small-capitalization companies located in emerging market countries.

These generally include every country in the world except the U.S., Australia, Canada, Hong Kong, Israel, Japan, New Zealand, Singapore and most of the countries in Western Europe.

The reorganization, which does not require shareholder approval, is designed to address the fact that Asia now represents roughly 75% of the emerging markets small capitalization universe, which resulted in an increasing overlap between the investment strategy of the firm’s emerging markets Asia fund and small company fund.

Further changes are possible if they’re required by the SEC to approve the amendment to the registration statement.

Robert Harvey, lead manager of Matthews Emerging Asia Fund, will become a co-manager of the new fund, along with Jeremy Sutch, who had been a senior research analyst at Matthews Asia. Vivek Tanneeru, who had been lead manager of Matthews Asia Small Companies Fund, will be the lead manager of the new fund.

CFRA Launches 5 ESG-Focused Model Portfolios

CFRA, a leading provider of independent investment research, has rolled out five new ESG-focused model portfolios, which join an existing roster of 15 equity and ETF model portfolios.

The five new model portfolios include U.S. and Europe Climate Change Friendly Model Portfolios, U.S. and Europe Women’s Participation Model Portfolios and a Global ESG Asset Allocation Model Portfolio.

The climate change friendly portfolios focus on companies that “have lower carbon exposure, are less dependent on fossil fuels, and meet our rigorous internal screening and analysis processes,” said Paul Beland, head of equity research at CFRA.

The included companies rank in the top two ratings (four or five star) of CFRA’s STARS (Stock Appreciation Ranking System) framework,  a qualitative stock selection methodology based on fundamental equity research conducted by CFRA’s equity analysts. 

The women participation portfolios include four- and five-star companies that also  receive CFRA’s highest proprietary forensic accounting scores and most important, have  women in key leadership positions.

The Global ESG Asset Allocation ETF Model Portfolio includes both stock and bond ETFs selected from a universe of more than 125 indexed and actively managed ESG funds based on assessments of risk, reward and cost attributes and seen as having the  highest likelihood of outperforming its respective asset category. 

All the new model portfolios will  be managed by CFRA’s expert Portfolio Management Committee, a 12-member team with an average of more than 20 years’ relevant experience per person. 

FTSE Russell Adjusts World Bond Index

FTSE Russell will be adding Chinese government bonds to the FTSE World Government Bond Index (WBCI) over a 36-month phase-in period beginning Oct. 29, 2021.

The global indexing firm had previously added Chinese A shares, which trade in China and are priced in Renminbi but accessible to U.S. investors, to its FTSE Emerging Index, beginning in June  2019 and completed a year later.

The addition of the Chinese government bonds to the WBCI is a result of the firm’s semi-annual country classification review of countries.

As part of that review, FTSE Russell said Malaysia was removed from the watch list and  retained its membership in the WGBI; India and Saudi Arabia were added  to the watch list for  potential inclusion in the FTSE Emerging Government Bond Index (EMGBI).

Also, the FTSE Fixed Income Country Classification Process was extended to inflation-linked markets. In addition, Russia and Vietnam remain on the watch list for global equity market reclassification

Pacer, AllianzIM Roll Out More Buffer ETFs

Pacer ETFs has launched the April series of its Pacer Swan SOS ETF family. The launch includes the Pacer SOS Conservative  (PSCW), Moderate (PSMR) and Flex (PSFM) ETFs, which have upside caps as well as buffers to reduce market risk over the 12-month target period from April 1, 2021, to March 31, 2022.

All three ETFs target the SPDR S&P 500 ETF Trust. The caps, after fees and expenses are 8.35%, 9.73% and 15.29% for  PSCW, PSMR and PSFM, respectively.

The downside buffers protect losses between 5% and 30% for PSCW, the first 15% of losses for PSMR and the first 20% of losses for PSFM, which drops to zero after a 40% loss.

“Market’s whipsawed through 2020, prompting investors to re-prioritize their portfolio goals and seek new ways to grow capital,“ said Pacer ETFs Distributors President Sean O’Hara, in a statement. “The Pacer Swan SOS series has been curated specifically to satisfy this market need.”

AllianzIM, a wholly owned subsidiary of Allianz Life Insurance Company of North America, announced new upside caps for its April series of Buffered Outcome ETFs suite, which are also based on the performance of the S&P 500 between April 1, 2021, and March 31, 2022.

The AllianzIM U.S. Large Cap Buffer 10 April ETF (AZAA) has a cap after fees and expenses of 12.26% and a net buffer of 9.26% (the gross buffer is 10%). The AllianzIM U.S. Large Cap Buffer 20 ETF has a cap, after expenses of 5.71% and a net buffer of 19.26% buffer.

“Despite markets reaching record highs to start 2021, investing at these levels can pose even further risks to investors amid continued uncertainties across equities and bonds … ,” said Brian Muench, president of AllianzIM in a statement. He added that the Buffered Outcome ETFS help  investors to stay invested because of the “level of risk mitigation” they provide.

Check out last week’s portfolio product roundup here: BlackRock’s iShares, Schwab Adding International Equity ETFs: Portfolio Products


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