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Parametric Adds Tax-Managed Product With Low Minimum: Portfolio Products

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What You Need to Know

  • The Parametric Tax Harvest Core SMA product has a relatively low $100,000 minimum.
  • Two active fixed income funds also launched: the Gavekal Asia Pacific Govt Bond ETF and VectorShares Min Vol ETF.
  • ALPS Advisors has introduced an actively managed large-cap value ETF.

In yet another example of the growing market for direct indexing, Parametric Portfolio Associates, the direct indexing business owned by Morgan Stanley following its purchase of Eaton Vance, has launched a product that extends the firm’s offerings of tax-managed solutions for separately managed accounts (SMAs) to portfolios of $100,000 or more. The minimum for Parametric Tax Harvest Core is lower than that of most tax-managed custom SMAs available in the market today.

“We are introducing Tax Harvest Core to bring the benefits of tax-managed custom SMAs to more advisors and a greater number of their clients,” said Rob Ciro, managing director, product management at Parametric, in a statement. “The end result we seek is better aftertax returns for clients.”

The Harvest Core product provides ongoing tax management and sector-level customization to two large-cap strategies: one benchmarked to the S&P 500, composed of the 500 largest U.S. companies, or about 80% of the total U.S. market cap; the other benchmarked to the Russell 3000, made up of the 3,000 largest companies, equivalent to 98% of the total U.S. market cap.

The portfolios invest in sector ETFs and use systematic tax-loss harvesting and other tax management strategies to enhance after-tax performance. Advisors and their clients can customize each portfolio by restricting sectors, funding positions with cash or securities and accessing charitable giving options. On-demand reporting of pre- and after-tax performance, gains and losses and tracking errors versus benchmarks is also available.

Two Actively Managed Bond Funds Launch

Exchange Traded Concepts LLC has launched the Gavekal Asia Pacific Government Bond ETF (AGOV), and OBP Capital’s Spinnaker ETF Series has added the VectorShares Min Vol ETF (VSPY), a fixed income alternative. Both are listed on the NYSE.

The Gavekal ETF invests at least 80% of its net assets plus in Asia-Pacific government bonds from approximately 17 countries, including China, India, South Korea, Japan and Vietnam, plus Russia, as well as bonds from supranational entities such as the World Bank, Asia Development Bank and Asian Infrastructure Bank and ​​corporate Chinese bonds through a Bond Connect Co. Ltd. program known as “Bond Connect.” That program allows foreign investors such as the fund to invest in such bonds through a Hong Kong account.

The ETF will emphasize bonds with relatively higher yields and seek an average portfolio duration of at least five years. Its expense ratio total fund operating expense is 0.50%. Gavekal Capital Ltd., a limited liability company based in Hong Kong, is the ETF’s subadvisor.

The VectorShares Min Vol ETF (VSPY) is a fixed income alternative that invests 90% of its assets in ultra-short duration bond instruments and the remaining 10% in S&P 500 call and put options, which are never net short the market and have a maximum 10% loss. he options, which are automatically balanced based on market levels, utilize their inherent leverage to drive market-like returns while the ultra-short duration fixed income dampens volatility.

As the market increases in price, the long positions are decreased, and vice versa. The ultra-short fixed income component can hold highly rated short-term corporate and muni debt, certificates of deposit and Treasuries. A synthetic Spot VIX portfolio made up of options is designed to offset losses on the long positions in periods of market volatility. The ETF has net annual operating expenses of 1.10%

SS&C ALPS Advisors Adds Active Large-Cap Value ETF

SS&C Technologies Holdings’ wholly owned subsidiary ALPS Advisors has introduced an actively managed large-cap value ETF, which invests primarily in U.S. companies that subadvisor Hillman Capital Management (HCM) believes have competitive advantages but have temporarily fallen out of favor for reasons that are considered non-recurring or short-term, or whose value is not well known or fully recognized by the public.

The fund will typically hold approximately 45 stocks that are equally weighted and that consist of top-ranked stocks among the eligible universe based on qualitative and quantitative measures. The portfolio is rebalanced as needed to maintain each holding’s target weight. Total annual fund operating expenses are 0.55%.

Fintech Firm Introduces Pair of U.S. Climate-Change-Focused ETFs

A female-led green fintech firm, iClima, has launched its first set of U.S.-listed ETFs: the iClima Global Decarbonization Transition Leaders ETF (CLMA) and the iClima Distributed Renewable Energy Transition Leaders ETF (SHFT).

Both trade on the NYSE, have a net expense ratio of 0.65% and focus on companies generating revenue from providing solutions to climate change. Both evaluate stocks based on their carbon dioxide equivalent — called CO2e — which is a measure of emissions from greenhouse gases, including methane and nitrous oxide as well as carbon dioxide.

“The next generation of climate-change investment does not revolve only around emissions reduction, instead, it’s laser-focused on the leading companies that provide products and services that enable emissions avoidance altogether,” said Gabriela Herculano, iClima co-founder and CEO.

CLMA is designed as a core holding and invests in green energy, green transportation, water and waste improvements, decarbonization enabling solutions and sustainable products. It holds over 150 stocks.

SHFT, a more concentrated portfolio with 50 stocks, invests in green solutions that are updating and ultimately replacing our inefficient, outdated energy grid. They include firms involved in the decentralization of the power sector, digitalization of energy solutions and decarbonizing of energy sources.

Direxion Adds ETF of Low-Priced Stocks

Direxion has launched the Direxion Low Priced Stock ETF (LOPX), which invests in 50 companies with share prices between $2 and $5 at the time of purchase and tracks the Solactive Two Bucks Index. The stocks tend to be in the small- to mid-cap range of the market, with higher return potential on average, coupled with higher volatility.

“LOPX provides a way for Main Street investors to take advantage of stocks neglected by Wall Street research, which may be ripe for potential outperformance,” said David Mazza, managing director, head of product at Direxion, in a statement. The ETF has a net expense ratio of 0.50%.


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