Investment Product and Service Launches

Vanguard modifies advisory arrangement for Explorer Value Fund; FTSE Russell unveils Green Revenues model; Franklin Templeton Investments introduces LibertyShares strategic beta ETFs; and more.

Vanguard Modifies Advisory Arrangement for Explorer Value Fund

Vanguard announced modifications to the investment advisory arrangements of the Explorer Value Fund.

Sterling Capital Management LLC will no longer serve as an adviser to the fund, according to the firm, and the portion of the portfolio formerly managed by Sterling (approximately 31% of fund assets) has been equally apportioned to existing managers Frontier Capital Management and Cardinal Capital Management.  

Vanguard Explorer Value Fund is a small- and mid-capitalization value fund, and the investment objective and principal investment strategies of the fund will remain the same. The expense ratio of the fund is not expected to increase as a result of the advisory change, Franklin Templeton notes.

The fund has employed a multi-manager structure since its inception in 2010. Its current managers, Cardinal, headquartered in Greenwich, Connecticut, and Frontier, headquartered in Boston, specialize in small- and mid- cap investing. 

“Vanguard believes the combination of high-caliber investment management teams with differentiated but complementary strategies can reduce portfolio volatility, provide potential for long-term outperformance, and mitigate manager risk,” the firm explains. “The multi-manager approach was first adopted by Vanguard in 1987, and 18 of Vanguard’s actively managed U.S.-domiciled equity funds currently employ this structure.”

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NEXT: Green Revenues Model from FTSE Russell

Green Revenues Model from FTSE Russell

The new Green Revenues model from FTSE Russell “tracks the global transition to a green economy.”

The data model tracks companies that generate green revenues, described by the firm as “a critical component missing from current sustainability models.” Built on the “LCE data model,” the new analytical tool measures the green revenues of 13,400 public companies, representing 98.5% of total global market capitalization. 

Revenues from a broad range of large-, mid- and small-capitalization companies in 48 developed and emerging markets are mapped to 60 new green industrial subsectors, with FTSE Russell assigning each company in the model a low carbon industrial indicator (LOWCII) factor, representing the ratio of its green revenues to its total revenues.

“Existing sustainability models are limited to tracking traditional ESG measures or focus on excluding hydrocarbon producers or heavy CO2 emitters from portfolios,” the firm explains. “FTSE Russell’s Green Revenues framework, based on the LCE data model, allows users to track revenues from goods, products and services that help the world to adapt to, mitigate or remediate the impact of climate change, resource depletion or environmental erosion.”

According to the model, more than 2,400 public companies already generate green revenues from one or more of the 60 green industries. “The model shows large cap companies increasingly involved in the delivery of green goods, products and services,” FTSE Russell finds. “Analysis of the FTSE Global Equity Index Series shows that nearly 7.2% ($2.9 trillion) of the index value is derived from green revenues, compared to 8.3% ($3.5 trillion) from emerging markets.”

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NEXT: Franklin Templeton Introduces LibertyShares Business 

Franklin Templeton Introduces LibertyShares Business

Franklin Templeton Investments has launched LibertyShares, a new line of business offering strategic beta exchange traded funds (ETFs).

First up from LibertyShares is the LibertyQ suite of ETFs, which includes “three multi-factor core portfolio funds and one fund that focuses on stocks with high and persistent dividend income.”

According to Franklin Templeton, the new strategic beta ETFs use proprietary LibertyQ indices, “which are unique indices that have employed a research-driven approach in customizing their factor weightings. The multi-factor LibertyQ indices are constructed with four factors—quality, value, momentum and low volatility—which together are designed to pursue lower volatility and higher risk-adjusted returns over the long term versus relevant cap-weighted benchmarks.”

Patrick O'Connor, head of global ETF business for Franklin Templeton, says many of the firm’s clients have embraced the ETF wrapper for its benefits, “including liquidity, tax efficiency and transparency, and now they are looking for more than what a traditional market cap-weighted index can offer.”

The three core multi-factor LibertyQ funds use factor weighting as follows: quality (50%), value (30%), momentum (10%) and low volatility (10%), “seeking to capture desirable, long-term performance attributes.” The three core funds include:

  • Franklin LibertyQ Global Equity ETF – Tracks the LibertyQ Global Equity Index, which offers global equity exposure and seeks to achieve higher risk-adjusted returns than the MSCI ACWI Index.
  • Franklin LibertyQ Emerging Markets ETF – Tracks the LibertyQ Emerging Markets Index, which offers broad emerging markets exposure and seeks to achieve higher risk-adjusted returns than the MSCI Emerging Markets Index.
  • Franklin LibertyQ International Equity Hedged ETF – Tracks the LibertyQ International Equity Hedged Index, which offers international developed markets exposure and seeks to achieve higher risk-adjusted returns than the MSCI EAFE Index.

The index for the Franklin LibertyQ Global Dividend ETF was constructed using proprietary dividend and quality screens, which account for not only long-term dividend sustainability and growth, but also for underlying balance sheet strength.

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NEXT: Lazard Asset Management Expands Multi-Asset Offerings

Lazard Asset Management Expands Multi-Asset Offerings

Lazard Asset Management LLC announced the expansion of its multi-asset offerings with the launch of the Lazard Global Dynamic Multi Asset Portfolio.

According to the firm, the fund “marries our macroeconomic insight to our bottom-up security selection across the global capital markets opportunity set to seek strong risk-adjusted returns for our investors.”

“We are focused on constructing a portfolio with the objective of delivering a consistent level of volatility regardless of market environment,” explains Jai Jacob, managing director and portfolio manager/analyst for Lazard. “We put risk management at the center of our approach by targeting volatility to an 8% to 12% band. We feel that this approach helps alleviate drawdown risk, which is one of the major concerns for global investors.”

The Lazard Multi Asset team was formed in 2007 and manages portfolios for clients across the globe, including the Lazard Retirement Global Dynamic Multi Asset Portfolio, which utilizes the same investment strategy as the mew fund. The Lazard Retirement Global Dynamic Multi Asset Portfolio is part of the Lazard Retirement Series family of funds.

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