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Vanguard Cuts Fees on Retirement Trusts: Portfolio Products

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What You Need to Know

  • Vanguard expects the price cut to save investors $20 million.
  • Meanwhile, Seeds in partnership with JUST Capital and Pacific Life also introduced sustainable investing products.
  • Pershing's alts platform added a startup investment vehicle.

Vanguard has reduced fees on Vanguard Retirement Trusts by 5% to 10%, which is equivalent to 0.25-0.50 basis points, depending on which Trust program a client is invested in.

The price cut, which took effect April 1, should save investors $20 million, according to the fund giant. The trusts, which are available to certain tax-qualified and government plans, offer multiple price points so that clients can reap the benefits of lower fees as plan assets grow, which is  just one mechanism for reducing investor costs.

The second is broad fee reductions across all the Collective Investment Trust (CIT) programs, which include the Vanguard Retirement Trusts. Since 2006, Vanguard has issued broad CIT fee reductions four times.

Vanguard Target Retirement Trusts are separate from Vanguard Institutional Target Retirement Funds, which are mutual funds. In December, Vanguard lowered the minimum investment on Vanguard Institutional Target Retirement Funds to $5 million from $100 million, expanding low-cost options for participants in 401(k) and 403(b) retirement plans.

Fintech Firm Seeds Partners With Paul Tudor Jones’ Nonprofit

Seeds, a financial technology firm whose client experience platform helps advisors offer clients an intentional and personalized investing experience, has partnered with JUST Capital to deliver insights on impact investing to advisors and their clients.

JUST Capital, co-founded by Paul Tudor Jones, is a nonprofit that tracks and analyzes practices of large companies in an effort to build a more just economy for all stakeholders — workers, customers, communities, the environment and shareholders.

The new partnership helps advisors who are users of Seeds provide clients with an analysis of how their existing portfolios align with an investor’s values on, say, human rights or efforts to address climate change and then present a more tailored portfolio as an alternative.

“A lot of impact reporting is either too generalized, too specific, or just generally misses the mark in trying to captivate the client,” said Seeds CEO Zach Conway, in a statement. “Thanks to JUST’s research, we can now select from metrics that we know will speak to a broad investor base. Then the platform can automatically tailor the message to each client.”

“Anyone can put an ESG label on a product and claim it scores well,” said Kristen O’Grady, Seeds’ head of product and chief operating officer. “We wanted to partner with an outside firm to validate our portfolio impact, rather than just claim it ourselves.”

Advisors pay a “small monthly” fee to use Seeds, which can be “more competitive” depending on their engagement with the platform, according to Conway. Clients pay a management fee of 55 basis points or less, depending on the size of their assets.

Pacific Life Introduces Sustainable Bond Framework

Pacific Life, which provides insurance products, annuities and mutual funds, has introduced a Sustainable Bond Framework under which it can issue sustainable bonds through the capital markets group of its institutional division.

The company will use the framework “to expand the breadth and depth of its sustainable activities by financing existing and future investments that can really make a positive environmental and social difference to the world around us,” said Joe Krum, vice president and managing director, Institutional Capital Markets Group.

Proceeds of sustainable bond issuance will be allocated to existing and future investments or to finance eligible projects for green buildings, renewable and energy efficiency, sustainable water and wastewater management, terrestrial and aquatic biodiversity conservation, clean transportation, access to education and affordable housing. Investors will be updated annually on the allocation of net bond proceeds.

Pershing Platform Adds Israeli Venture Investment Offering

BNY Pershing Alternative Investments Network has added the OurCrowd 50 (OC50), a diversified investment vehicle designed to provide investors access to startups across a variety of sectors, stages and geographies. OurCrowd is headquartered in Jerusalem.

RIAs and other financial intermediaries in the U.S. can offer OurCrowd’s venture capital opportunities to their clients for a minimum that will be at least $50,000. OurCrowd invests a minimum $1 million.

The next OC50 Fund will provide investment opportunities across multiple dynamic growth industries, including health care technology, transportation, agriculture, communities, enterprise, robotics and artificial intelligence.

Earlier OC50 Fund series included Beyond Meat and Lemonade, which eventually went public. Six companies in the first OC50 Fund, which launched in 2017, have completed their exits, generating an average 2.6 times gross return on invested capital as of the end of 2020.

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