Investment Products and Services Launches

JULY adds Stadion ETF to platform; Nationwide increases fund offerings with new ETF; and Fairpointe Capital releases ESG-centralized approach.

Stadion Money Management announced that July Business Services (JULY), a national retirement plan recordkeeper, has added Stadion’s managed account solution, StoryLine, built with SPDR exchange-traded funds (ETFs), to its retirement platform.

JULY provides custom plan design and hands-on services for plan setup, operation and administration.

StoryLine, built with SPDR ETFs, is a retirement planning solution built specifically for 401(k) participants in adviser-sold plans. StoryLine offers plan level customization with the option of participant level customization, which Stadion sees as a distinct improvement over “one size fits all” target-date strategies. StoryLine, which made its market debut in 2016, has approximately $600 million in assets under management (AUM) and approximately 1,100 plans through year end.

“We are excited about adding Stadion as a solution for personalized participant account management to our open architecture retirement platform,” says John Humphrey, JULY’s president and CEO. “Stadion’s experience and approach to simplifying participant investing aligns nicely with JULY’s strategy of making retirement planning easy for employers and participants.”


Nationwide Increases Fund Offerings with New ETF


Nationwide added another Strategic Beta exchange-traded fund (ETF) option that seeks to provide investors with improved risk-adjusted returns by enhancing diversification. The new Nationwide Maximum Diversification Emerging Markets Core Equity ETF (MXDE) is the latest Strategic Beta ETF since Nationwide launched three others in 2017.

“The Nationwide Maximum Diversification Emerging Markets Core Equity ETF seeks to identify the exact combination of stocks within the emerging markets universe that will maximize the diversification benefits of a portfolio while retaining the full equity risk premium,” says Chris Graham, chief investment officer for Nationwide Funds. “In other words, by building portfolios which seek to minimize idiosyncratic risk exposure from specific stock, sector, factor or country bets, this fund is expected to deliver higher risk-adjusted returns.”

Like the Nationwide Maximum Diversification U.S. Core Equity ETF (MXDU) launched last year, the Nationwide Maximum Diversification Emerging Markets Core Equity ETF (MXDE) seeks to deliver higher risk-adjusted returns relative to market cap-weighted strategies by creating a more diversified risk allocation aimed at capturing the full equity risk premium. Both funds track an index developed by TOBAM that applies liquidity and socially responsible investment (SRI) screens in determining the investable universe. Based on a patented, proprietary mathematical formula, the TOBAM Diversification Ratio, TOBAM weights individual stocks to minimize the correlations among holdings, resulting in the creation of the “most diversified portfolio,” given a 50% active share constraint.

The benchmark for the new fund is the MSCI Emerging Market Index and the listing exchange is NYSE Arca.

“Since the end of 2015 the MSCI Emerging Market index has outperformed the S&P 500 Index by 19% on a total return basis,” says Graham. “We think emerging markets are a great option to help advisers combat their clients’ home bias investing and further diversify their portfolio.”


Fairpointe Capital Releases ESG-Centralized Approach


Fairpointe Capital LLC has introduced the Fairpointe ESG [environmental, social, and governance] Equity Strategy. The strategy integrates structured ESG analysis with Fairpointe’s bottom-up, fundamental valuation-based approach to investing and is managed by Mary Pierson, Frances Tuite, and Thyra Zerhusen.

“We have long been proponents of investing in companies with principled corporate governance practices,” says Mary Pierson, co-CEO of Fairpointe Capital.  “Adding this concentrated ESG strategy was a natural progression for us. Ultimately, we believe that when good governance leads, responsible social and environmental actions follow.”  

Fairpointe focuses on corporate governance, actively voting proxies and engaging with management regularly. “We believe this gives us a voice to improve corporate behavior—and ultimately leads to less risk and potentially better performance,” says Fran Tuite, portfolio manager. The strategy unites Fairpointe’s governance investing philosophy with consideration of environmental and social actions.

The managers use a proprietary system to rate companies, which includes the MSCI ESG database combined with their own extensive research.