Art by Jackson Epstein

Aegon Asset Management Announces Global Integration

Aegon Asset Management announced that it will integrate its European and U.S. businesses.

The creation of a globally integrated structure follows the merger of its senior European management team in 2018, which carries responsibility for Aegon Asset Management, Kames Capital and TKP Investments.

This final step to establish a globally integrated structure will see the simplification of the firm’s current operating model that features regional executive committees to create a global operating management board headed by Aegon Asset Management global chief executive Bas NieuweWeme.

Distribution and operations teams will similarly be managed on a coordinated, global basis.

The investment teams will be organized across four investment platforms for which the firm has uniquely differentiated capabilities and believes it can be globally competitive: Fixed Income, Real Assets, Equities and Multi-Asset & Solutions. There will not be any changes to the investment process nor to the people managing client portfolios.

Each investment platform will be led globally by a chief investment officer who will have a seat on the management board. The existing investment teams will remain in place and continue to manage the portfolios currently entrusted to them, albeit with greater global perspective and deeper research inputs. To maximize the impact of its highly respected ESG capabilities, the firm will transition its Responsible Investing team from the CEO to the CIO domain, in order to be even closer to the investment process and ESG product development.

The new structure will also see the Kames Capital and TKP Investments brands retired in 2020 as the firm moves to the Aegon Asset Management brand. The business says it will remain committed to its fiduciary and multi-manager services, by rebranding to AAM Fiduciary Services & Investment Solutions and AAM Multi-Management, respectively.

“The changes allow us to be more responsive to the changing markets and the evolving needs of our investors, while avoiding duplication of effort,” says NieuweWeme. “The efficiencies we realize can be invested in our client proposition and service, with competitive pricing and investment in our systems and processes so that they remain best-in-class for our clients.”

Avantis Investors Launches Additional Mutual Funds

Avantis Investors by American Century Investments has launched five low-cost mutual funds that share the same strategies with the Avantis exchange traded funds (ETFs) it rolled out in late September.  

Expense ratios for the five funds are identical to their corresponding ETFs: Avantis International Small Cap Value (AVDVX) charges 0.36%; Avantis International Equity (AVDEX) charges 0.23%; Avantis Emerging Markets Equity (AVEEX) charges 0.33%; Avantis U.S. Equity (AVUSX) charges 0.15%; and Avantis U.S. Small Cap Value (AVUVX) charges 0.25%.

“Our goal is to deliver low-cost, broadly diversified solutions in a variety of formats, including mutual funds and ETFs,” says Avantis Investors Chief Investment Officer Eduardo Repetto. “We want advisers and their clients to be able to choose the optimal vehicle to fit their circumstances.”

Information about the five funds, which all seek long-term capital appreciation, follows:

Avantis International Small Cap Value primarily invests in a broad group of non-U.S. small cap value companies believed to have higher expected returns across developed market countries, sectors and industries. The portfolio is designed to help investors achieve higher expected returns by investing in non-U.S. developed small cap companies believed to be trading at low valuations and with higher profitability ratios, seeking broad diversification across companies, industrial sectors and countries in order to mitigate concentration risk.

Avantis International Equity primarily invests in a diverse group of companies of all market capitalizations, across non-U.S. developed market countries, sectors and industries, emphasizing investment in companies believed to have higher expected returns. The portfolio is designed to help investors achieve higher expected returns and broad diversification by investing in a broad set of large, mid and small capitalization companies across non-U.S. developed countries. Aiming to increase expected returns, the strategy deviates from market capitalization weights by overweighting securities believed to be trading at lower valuations and with higher profitability ratios.

Avantis Emerging Markets Equity invests in a diverse group of companies of all market capitalizations, across emerging market countries, sectors and industries, emphasizing investment in companies believed to have higher expected returns. The portfolio is designed to help investors achieve higher expected returns and broad diversification by investing in a broad set of large, mid and small capitalization companies across emerging market countries. Aiming to increase expected returns, the strategy deviates from market capitalization weights by overweighting securities believed to be trading at lower valuations and with higher profitability ratios.

Avantis U.S. Equity invests in a diverse group of U.S. companies of all market capitalizations, across sectors and industries, emphasizing investment in companies believed to have higher expected returns. The portfolio is designed to help investors achieve higher expected returns and broad diversification by investing in a broad set of U.S. large, mid and small capitalization companies. Aiming to increase expected returns, the strategy deviates from market capitalization weights by overweighting securities believed to be trading at lower valuations and with higher profitability ratios.

Avantis U.S. Small Cap Value invests in a broad group of U.S. small cap value companies believed to have higher expected returns across sectors and industries. The portfolio is designed to help investors achieve higher expected returns by investing in U.S. small cap companies believed to be trading at low valuations and with higher profitability ratios, seeking broad diversification across companies and industrial sectors in order to mitigate concentration risk.

Vanguard Launches International Bond Index Fund

Vanguard has announced plans to launch a new, broad market international bond index fund, Vanguard Total International Bond II. The fund will serve as the international fixed income component for the firm’s Vanguard Target Retirement series and LifeStrategy Funds.  

The Vanguard Total International Bond II Index Fund will mirror the investment strategy of Vanguard Total International Bond Index Fund and will seek to track the same benchmark index, the Bloomberg Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged). 

“As our Target Retirement series and LifeStrategy Funds have grown, they have become increasingly large shareholders of their underlying index funds,” says Vanguard Chief Investment Officer Greg Davis. “We believe it is in the best interest of shareholders to segregate the transaction costs produced by these funds of funds from the costs generated by other investors in the Total International Bond Index Fund.”

Upon launch in early 2020, Vanguard Total International Bond II Index Fund will receive new cash flows from the Vanguard Target Retirement series and LifeStrategy Funds. The fund of funds’ current holdings in Vanguard Total International Bond Index Fund will be transitioned to the new fund in a prudent and tax-sensitive manner over time. The investment strategies, asset allocations, glide path, and expense ratios of the funds of funds will not change.