Products December 3, 2020

Investment Product and Service Launches

Domini Impact Investments releases mutual fund and ASI launches several ESG-focused funds.

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Art by Jackson Epstein

Domini Impact Investments Releases Mutual Fund

Domini Impact Investments LLC, an investment adviser specializing exclusively in impact investing, has launched the Domini International Opportunities Fund.

This new mutual fund combines core exposure to international equity markets through the lens of the impact investor, with an allocation to solution-oriented companies helping to address some of the greatest sustainability challenges. This fund was built to capitalize on the success of the U.S. equity strategy used by the Domini Impact Equity Fund since December 2018.

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“We are excited to replicate the approach of the Domini Impact Equity Fund for use in another region. Investors can now geographically diversify their portfolios while helping promote universal human dignity and ecological sustainability around the world,” says Carole Laible, CEO of Domini.

The Domini International Opportunities Fund combines two investment strategies:

Through its “core” strategy, the fund invests across developed international markets, primarily in Europe and the Asia-Pacific regions, and across most industries in a broad, diversified selection of companies that demonstrate strong environmental and social performance relative to their peers, as determined by Domini’s proprietary research and analysis of each company’s impact.

Through its “thematic solutions” strategy, the fund adds opportunistic exposure to a select number of solution-oriented companies in which Domini has strong long-term conviction and that it determines support certain sustainability themes, including the low-carbon transition, access to clean water, sustainable food systems, financial inclusion and more. 

Under normal market conditions, Domini expects to allocate approximately 80% to 95% of the fund’s net assets to the core strategy and the remaining 5% to 20% to the thematic solutions strategy. 

All the fund’s investments are evaluated on environmental and social factors using proprietary research guided by Domini’s Impact Investment Standards. These standards, with fundamental goals of universal human dignity and ecological sustainability, serve as the foundational framework for the research used across all of Domini’s investment strategies.

The fund will also leverage Domini’s engagement experience to amplify its impact. As with all Domini funds, it will use a combination of engagement tools, including the disciplined use of proxy voting and direct dialogue with corporate management teams.

Laible and Domini’s Founder and Chair Amy Domini serve as co-portfolio managers for the fund. Its investor shares (ticker: RISEX) and institutional shares (ticker: LEADX) are open to investment as of November 30.

ASI Launches Several ESG-Focused Funds

Aberdeen Standard Investments (ASI) has launched four equity mutual funds as part of a move to cement its position as a market leader in ESG investing.

The Sustainable Leaders Funds will seek to generate strong long-term performance by investing in financially attractive companies that have been identified as current and emerging leaders in managing environmental, social and governance (ESG) risks and opportunities. In addition to identifying current or emerging sustainable leaders through bottom-up fundamental research, limited negative screens will be used to rule out a list of unacceptable activities, which are believed to give rise to risks that clients should avoid exposure to. 

The funds are called: Aberdeen International Sustainable Leaders Fund, Aberdeen US Sustainable Leaders Smaller Companies Fund, Aberdeen US Sustainable Leaders Multi Cap Fund and Aberdeen Emerging Markets Sustainable Leaders Fund.

Ralph Bassett, head of North American equities, explains, “Globally we are respected for our history and capability in responsible investing. This suite of products will allow us to showcase the best of our fundamental research in a form being demanded by North American clients. We believe that ESG analysis and corporate engagement can mitigate risks and enhance returns for our clients, as companies with robust ESG practices tend to enjoy long-term financial benefits.”

Products December 3, 2020

BoA Planning Retirement Plan Managed Account Service for 1Q21

While Bank of America had offered a managed account solution with Morningstar as the investment manager, this is the first time it is using a retirement planning solution from its chief investment office.

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Bank of America has submitted a filing with the Securities and Exchange Commission (SEC) to offer Personal Retirement Strategy, an online advisory program available to participants of plans that use Bank of America as their recordkeeper and Merrill Managed, its managed account service, as their qualified default investment alternative (QDIA). Bank of America expects to bring this to market in March 2021.

“This is the first time we are making our managed account service and a retirement planning solution from our chief investment office accessible to retirement plans,” says Tom Matarazzo, head of institutional retirement advisory programs and financial wellness solutions at Bank of America. “Prior to this, we offered Advice Access, which leveraged Morningstar’s advice and guidance. This new program, which took two years to develop, is part of our Financial Life Benefits strategy and the journey we have been on in giving participants intuitive help to achieve their retirement goals. It will use Merrill’s goals-based retirement planning to give individuals personalized retirement planning advice.”

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Merrill will act as a discretionary investment manager under Section 3(38) of the Employee Retirement Income Security Act (ERISA). Thus, under the program, Merrill is a fiduciary to the participant.

Personal Retirement Strategy will use data received from the plan sponsor and from participants, if provided. Data will include, but is not limited to, the participant’s account balance and contribution rate, salary, savings outside of the plan, retirement age and desired retirement income. Participants can input data about themselves at the interactive website www.benefits.ml.com.

The program provides investment advice and guidance through goal funding status analysis, retirement income planning, retirement tax illustration and asset allocation recommendations. Merrill will also provide participants information about the steps they can take to improve their goal funding status. The goal is to replace 85% of each individual’s projected salary at retirement throughout their years of retirement. If participants are not satisfied with that metric, they can customize the annual retirement income goal to either a different percentage or a target dollar amount.

Merrill Managed uses goals-based asset allocation to select the most efficient asset allocation to invest each individual’s plan assets with a 75% probability of achieving their goal funding status. This approach is designed for an investor with a medium risk tolerance.

Merrill will re-examine each managed account’s investments every 90 days, and will reallocate and rebalance assets as appropriate to help each individual meet their annual retirement income goal.

Matarazzo notes that the program is designed for every stage of a person’s working life, even to take them through retirement, and, as such, it will offer retirement income solutions and a suggested withdrawal hierarchy for those who are retired.

Participants can restrict or limit the sale of certain securities or holdings within their plan.

The Merrill Managed fee is 0.25% of the assets, which can be negotiated with plan sponsors, Matarazzo says. There is no additional charge to participants or the plan sponsor. Matarazzo says this is a competitive price, as most managed accounts charge 40 to 65 basis points (bps). “There is no fee for the planning, which I think is a key differentiator,” he says.

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