Investment Products and Services Launches
T. Rowe Price Chooses Linedata to Oversee Net Asset Value; Columbia Threadneedle Presents Target-Date Solution; and more.
KBS Introduces Online Platform for Investment Trust
KBS debuted its direct-access online platform—KBSDirect.com—for accredited investors and advisers to invest in KBS Growth & Income Real Estate Investment Trust (REIT), a professionally managed portfolio of institutional-quality commercial real estate properties, with no load or upfront fees to investors. To date, the REIT has three equity properties valued at approximately $150.4 million.
KBS created KBSDirect.com to provide accredited investors and advisers the opportunity to invest directly in KBS Growth & Income REIT, a tax-efficient vehicle with access to risk-adjusted return profiles, the firm says. With its 100% no-load feature and investor-aligned structure, KBS Growth & Income REIT provides accredited investors and advisers with a real estate investment vehicle that seeks to comply with the U.S. Department of Labor (DOL) fiduciary rule.
“Across almost every investment sector, online platforms have increased transparency and reduced transaction costs,” says KBS Chairman Peter Bren. “KBSDirect.com will save time for advisers and investors and opens a simplified, user-friendly direct investment portal. This technology is a mega-shift in the investment universe and makes KBS’s longstanding value proposition even more rapidly accessible and appealing to advisers and accredited investors, with no upfront loads or commissions to investors.”
The first investment opportunity on the KBSDirect.com portal is KBS Growth & Income REIT Inc., a public reporting, non-traded REIT with a targeted asset value of $1 billion to $1.2 billion.
According to KBS CEO Chuck Schreiber, the upfront fees and commissions have been eliminated thanks to KBSDirect.com’s leading-edge technology.
“The innovative structure of KBS Growth & Income REIT offered on KBSDirect.com ensures that 100% of the investor’s capital will be invested directly into the REIT,” Schreiber says. “KBSDirect.com is consistent with our 25-year commitment to deliver investment products that are aligned with the best interests of our investors and that capitalize on our deep expertise and established track record in local real estate markets nationwide. KBS, a national real estate company, will be one of the first institutional-grade sponsors to offer investors and advisers the opportunity to invest directly, through KBS’ online portal, in real estate investments similar to those that have been made available to KBS institutional investors for more than 25 years. These include public pension funds, corporate pension funds and sovereign wealth funds.”
Accredited investors in KBS Growth & Income REIT will participate in KBS’ national real estate platform, which targets well-located assets in markets with strong population and job growth, the firm says.
More information can be found here.
T. Rowe Price Chooses Linedata to Oversee Net Asset Value
Global solutions provider Linedata announced that it has been selected by T. Rowe Price to deliver comprehensive oversight to enhance T. Rowe Price’s net asset value (NAV) across its range of investment offerings.
T. Rowe Price’s current oversight processes and expertise will be further enhanced by automated controls that systematically highlight exceptions and are scalable as its business evolves, the two companies say says.
Linedata Navquest will offer oversight, validation, testing and contingency for the full range of middle office and fund accounting functions, developed from more than 70 customizable controls, using a client’s own rules. Linedata Navquest will also have the ability to highlight the specific NAV component that may be responsible for a discrepancy, supporting remediation.
Cathy Mathews, treasurer of T. Rowe Price funds, says, “NAV accuracy is of paramount importance. Selection of Linedata Navquest reflects our commitment to provide accurate NAVs to our customers by implementing an automated, scalable tool that will allow us to target risks and continuously refine our oversight processes.”
Arnaud Allmang, head of asset management North America at Linedata, says, “Linedata Navquest is in demand by leading mutual fund managers because its robust, scalable and highly configurable technology and tools for middle office and fund accounting oversight are designed to flexibly solve the challenges of NAV control that today’s complex investment firms must navigate.”
Columbia Threadneedle Presents Target-Date Solution
Columbia Threadneedle Investments announced the launch of a new target-date solution for the retirement marketplace, the Columbia Adaptive Retirement Series. Based on the firm’s proprietary adaptive risk allocation methodology, the solution aims to provide investors with capital appreciation and current income consistent with the target retirement year while seeking to smooth the ride through volatile markets.
In developing this new retirement solution, Columbia Threadneedle says, it employed its investment approach that allocates risk rather than capital in multi-asset portfolios to provide stronger diversification benefits than does a traditional target-date portfolio.
Risk allocation seeks to distribute risk across four major asset classes: global equity, global inflation-hedging assets, global interest rates and global spread assets. Columbia Threadneedle incorporates this into several investment solutions, most notably the Columbia Adaptive Risk Allocation Fund. According to the firm, the methodology employs a rules-based market state classification designed to identify exceptions to normal market conditions and offers the ability to reallocate risk systematically and meaningfully as market conditions change. Aligning portfolio allocations with the current market environment provides investors with a potentially superior risk-return profile, the firm says.
The Adaptive Retirement Series currently consists of five target-date funds (TDFs), spanning the 2020, 2030, 2040, 2050 and 2060 vintages; five-year vintage funds may be added at a later date. The funds seek exposure to a global portfolio of stocks, bonds and inflation-hedging assets—commodities, TIPS [Treasury inflation-protected securities] and real estate investment trusts (REITs). The target-date funds offer competitive pricing, with a net expense cap of 0.50% for zero-revenue-sharing Institutional 3 Class shares and 0.68% for Advisor Class shares through July 31, 2019. The Adaptive Retirement Series is available initially in a mutual fund and may become available subsequently in a collective investment trust (CIT).
“We believe that a risk-allocated investment offers a potentially superior risk-return profile relative to a capital-allocated investment,” says Jeff Knight, global head of investment solutions and senior portfolio manager at Columbia Threadneedle. “We have designed a systematic process that determines when and how the investment will respond to changing market conditions.”
The Adaptive Retirement Series also offers an approach to the life-cycle concept of asset allocation. Target-date strategies typically offer a glide path that automatically reallocates assets to a more conservative profile as the target retirement date approaches. Conventional target-date strategies reduce the allocation to equities over time. This approach can lead to inferior diversification at both ends of the glide path, with high concentration to equity risk at one end and high exposure to interest rate risk at the other, the firm explains. The Columbia Threadneedle solution is said to maintain a diversified risk allocation throughout the life cycle, reducing aggressiveness along the glide path without sacrificing asset-class diversification.
More information can be found here.
Fidelity Debuts Short-Term Bond Funds and Share Classes
Fidelity Investments announced the launch of the Fidelity Short-Term Bond Index Fund, a short-duration bond fund. The company also introduced two lower-priced share classes—Institutional and Institutional Premium classes—to three existing Fidelity bond index funds: Fidelity Long-Term Treasury Bond Index Fund, Fidelity Intermediate Treasury Bond Index Fund and Fidelity Short-Term Treasury Bond Index Fund.
“Fidelity is committed to providing a choice of low-cost index options, and we continue to build out that offering to meet investors’ needs, “says Colby Penzone, head of investment product, Fidelity Investments. “With this new fund and the addition of these two lower-priced share classes, we are reinforcing our message to shareholders that we are firmly committed to providing them with high‐quality index funds that are among the lowest-cost in the market.”
According to the company, Fidelity Short-Term Bond Index Fund seeks a high level of current income consistent with preservation of capital by attempting to replicate the performance of the Bloomberg Barclays U.S. 1 – 5 Year Government/Credit Bond Index. It normally invests at least 80% of assets in securities included in the index. Fidelity Short-Term Bond Index offers four classes: Investor, Premium, Institutional and Institutional Premium.
Brandon Bettencourt and Jay Small, who manage Fidelity’s existing bond index funds, will also co-manage the Fidelity Short-Term Bond Index Fund.
With the launch of the new fund, Fidelity now offers 22 competitively priced stock and bond index mutual funds, the company says.
The investment minimums for each of Fidelity’s four index mutual fund share classes are:
- Investor: $2,500
- Premium: $10,000
- Institutional: $5 million
- Institutional Premium: $100 million
Victory Capital ETF Gives Exposure to High-Dividend Emerging Market Stocks
Victory Capital launched the VictoryShares Emerging Market High Div Volatility Wtd ETF [exchange-traded fund] (CEY), which began trading on the Nasdaq Stock Market today. The new ETF offers exposure to high dividend-yielding emerging market stocks and seeks to provide investment results that track the performance of the CEMP Emerging Market High Dividend 100 Volatility Weighted Index, before fees and expenses.
“The CEMP index methodology combines fundamental criteria and volatility weighting in an effort to outperform traditional cap-weighted indexing strategies,” Victory Capital explains. “Rather than weighting stocks by size, which results in concentration in the largest companies in the index, the CEMP methodology weights stocks based on volatility—standard deviation over the past 180 trading days. The goal is to offer investors a more balanced approach to achieving broad market exposure,” Victory Capital says. To be included in the index, a company must have been profitable over the past four quarters.
“Investors seeking income now have the option to further diversify their portfolios with dividend-yielding emerging market stocks,” says Mannik Dhillon, president of VictoryShares and solutions. “With many emerging market companies currently out-yielding their U.S. counterparts, we believe it’s an appropriate time to consider a risk-conscious, tax-efficient approach to investing in high income-producing emerging market equities.”
The VictoryShares platform includes 14 strategic beta ETFs, 12 of which use a volatility weighted approach. VictoryShares’ three inaugural volatility weighted ETFs achieved their three-year track record in July and have earned 5-Star Overall Morningstar RatingsTM in their respective categories as of September 30. The three inaugural ETFs are:
- VictoryShares US 500 Volatility Wtd ETF (CFA)
- VictoryShares US 500 Enhanced Volatility Wtd ETF (CFO)
- VictoryShares US EQ Income Enhanced Volatility Wtd ETF (CDC)
“We believe the simplicity and efficacy of our volatility weighted methodology has resonated with investors and contributed to AUM [assets under management] growth of approximately 107% for our VictoryShares ETF platform year-to-date,” Dhillon says.