Products April 7, 2022

Investment Product and Service Launches

New York Life Investments announces new brand for its private markets alternatives boutique; State Street Global Advisors launches ESG-focused ETF.

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Art by Jackson Epstein

New York Life Investments Reveals New Private Markets Alts Brand

New York Life Investments has announced Apogem Capital as the new brand for its dedicated private markets alternatives boutique, bringing together the capabilities and investment teams of GoldPoint Partners, Madison Capital Funding and PA Capital. Apogem Capital has approximately $37 billion in assets under management and provides a broad range of private capital solutions tailored to middle market companies.

Apogem Capital offers sponsors and their portfolio companies access to a streamlined suite of capital solutions. These include direct lending, junior debt, primary and secondary private equity fund investments as well as equity-co-investments, GP stakes, real assets and long/short equity.

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With the brand launch, Apogem Capital will seek to spark ideas, new strategies and new possibilities across the alternatives landscape. As a result of the combination, the New York Life Investments Alternatives brand will be retired in favor of Apogem Capital, which launches with a new brand identity, logo and website to reflect the unified brand of the boutique.

State Street Global Advisors Launches ESG-Focused ETF

State Street Global Advisors, the asset management business of State Street Corporation, has announced the launch of the SPDR Nuveen Municipal Bond ESG ETF. Sub-advised by Nuveen, the new, actively managed fund is designed to invest in municipal securities from issuers that are leaders in their sector in delivering environmental, social and governance outcomes or whose proceeds are used toward positive environmental or social projects.

“The prospect of higher taxes coupled with rising uncertainty surrounding future interest rate hikes have increased demand for actively managed municipal bond ETFs,” says Brie Williams, head of practice management at State Street Global Advisors. “At the same time demand for municipal bond exposure is growing, investors are increasingly looking beyond equities for ESG exposure.”

With over seven decades of collective experience investing in municipal bonds, Tim Ryan, Shawn O’Leary and David Blair will leverage Nuveen’s proprietary ESG Municipal Bond Scoring Tool to select bonds from issuers that are leaders in environmental stewardship, strong governance and positive social outcomes. The strategy will primarily consist of investment-grade, tax-exempt municipal securities ranging from two to 17 years in maturity issued by U.S. municipalities. To identify potential municipal bonds for investment, Nuveen utilizes a value-oriented strategy which is designed to identify higher-yielding and undervalued municipal bonds that offer above-average total return potential.

“As investors become more familiar with ESG-integrated strategies, Nuveen has created a proprietary framework that is designed to identify the municipal bond issuers that support income generation for investors and achieve positive ESG outcomes in their communities,” says Tim Ryan, municipal portfolio manager at Nuveen. “The fund is also designed to provide exposure to bonds whose proceeds are used towards positive environmental or social projects addressing critical issues including climate change, environmental degradation, inequality, poverty and justice and are aligned with the UN Sustainable Development Goals.”  

SSGA Funds Management Inc. serves as investment adviser to the new fund, and Nuveen Asset Management LLC serves as investment sub-adviser.

Data and Research April 6, 2022

Mega-Trends Have Emerged That Drive Growth in HSAs

Employee Benefit Research Institute and Fidelity data show that more account holders are investing their health savings accounts assets.

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Mega-trends are driving the growth of health savings accounts.

An Employee Benefit Research Institute webinar, “The Three Certainties of Life: Death, Taxes and Updates From The EBRI Health Savings Account Database,” examined several trends that are prompting the marketplace to continue to grow.

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EBRI’s health saving account database comprises 11.4 million HSAs, with assets totaling more than $32.9 billion, as of year-end 2020. In the last five years, the number of HSA accounts has grown more than 60% and the number of assets has grown by 250%, said Chris Byrd, executive vice president for healthcare operations at WEX, a fintech firm. “These accounts continue to grow very rapidly,” he said.

HSAs’ rapid growth since 2003, when HSAs were created, has been driven by employees wanting to cover rising health care costs in retirement. In addition, more employers have moved to high-deductible health plans that are paired with an HSA.

According to data from the Kaiser Family Foundation, 85% of people who are enrolled in an employer health plan have a general annual deductible, and the average deductible for single coverage in those plans is almost $1,700. “The context here is important: out of pocket exposure continues to rise,” Byrd said.

Plan sponsors offering an HSA have recognized that participants must save for medical expenses, which has provided fuel for trends, said William Giaconia, executive vice president for healthcare operations at Fidelity investments.

A trio of trends is driving growth, said Giaconia. First, account holders are investing their assets rather than keeping them in cash; second, plan sponsors are focusing more on employees’ financial wellness; third, there is an attendant accelerated trend in offering digital health resources and tools. “Our clients are viewing these products as not just products that employees can use to help pay for current health care expenses, but to save for future health care and other expenses in their retirement,” he said.

Fidelity reached an HSA milestone this year, as 50% of HSA assets were invested compared to 25% three years ago, he added. “We’re seeing that steady climb in invested accounts and assets,” Giaconia said.

EBRI’s database shows that in 2020, 9% of accounts held investments other than cash, compared to 7% in 2019.

The average balance for accounts with invested assets is $22,496, compared to $2,296 for accounts with no invested assets. “This as an indication that investors are using their HSA as more of a savings vehicle rather than spending vehicle,” said Jake Spiegel, research associate, health and wealth, at EBRI.

Invested accounts also have higher average contributions, higher net contributions, and “investors see their HSAs grow at a much faster pace than account holders who do not invest,” Spiegel added.

HSAs are also a way to help workers protect their retirement savings. “I don’t think it’s a surprise to anyone that about 30% or so, in our block of retirement business hardship withdrawals from retirement accounts, are for health care expense,” Giaconia said. But when plan sponsors offer both an HSA and a retirement plan, the figure is nearly cut in half, he added. “Even modest balances can really help to insulate that consumer from having to make a financial hardship withdrawal or to have a general financial hardship related to health care expenses, Giaconia said.

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