Products August 15, 2019

Investment Product and Service Launches

Northern Trust enhances securities lending offering; Global X adds ETF suite to Model Market Center; and Cohen & Steers makes changes to REIT mutual fund.

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Art by Jackson Epstein
Art by Jackson Epstein

Art by Jackson Epstein

Northern Trust Enhances Securities Lending Offering

Northern Trust (NTRS) has developed a pricing engine utilizing machine learning and statistical techniques to drive revenue growth for clients, by forecasting the loan securities rate in the securities lending market.

Built on a hybrid-cloud platform that allows processing of data, the algorithm leverages strategic market data points from multiple asset classes and regions to project the demand for equities in the securities lending market. Northern Trust global securities lending traders are able to leverage these projections, together with their own market intelligence, to automatically broadcast lending rates for 34 global markets to Northern Trust’s extensive network of borrowers, thereby enhancing revenue opportunities for lending clients. 

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“Northern Trust continues to invest in emerging technologies to bring enhanced value to our clients,” says Pete Cherecwich, president of Corporate and Institutional Services at Northern Trust. “The use of machine learning in our global securities lending business enables greater pricing efficiency that helps clients improve revenue across portfolios. This enhances Northern Trust’s broad suite of securities financing capabilities, providing borrowers with highly automated, low transaction cost trade execution solutions in this cost-conscious market.”

Global X Adds ETF Suite to Model Market Center

Global X ETFs has added a suite of seven exchange-traded fund (ETF) model portfolios to the TD Ameritrade Institutional Model Market Center.

Model Market Center allows investors to access model portfolios from third-party model providers, with the ability to customize the models as needed through an integration with TD Ameritrade’s rebalancing platform, iRebal on Veo.

“We are excited to expand the availability of our model portfolios to more investors through this innovative platform,” says Jon Maier, CIO at Global X ETFs. “We hope that investors will be able to utilize the model portfolios to meet their needs and we are excited to be working with TD Ameritrade Institutional.”

The portfolios, which allocate across ETFs managed by Global X ETFs and other asset managers, are designed as packaged solutions to help serve investors’ needs. The model portfolios joining the Model Market Center platform include: Equity Thematic Disruptors ETF Model Portfolio; Equity Income ETF Model Portfolio; and five risk-based Core Series models: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive.

Cohen & Steers Makes Changes to REIT Mutual Fund

Cohen & Steers is making key enhancements to its real estate investment trust (REIT) mutual fund, Cohen & Steers Realty Shares.

The expense ratio for the fund has been reduced by approximately 10% and Class A, C, I, R and Z shares are now offered alongside legacy Class L shares. 

Cohen & Steers Realty Shares has delivered an 11.7% annualized total return since its 1991 inception through June 30, outperforming the FTSE Nareit Equity REITs Index and the S&P 500 Index. With top-quartile performance in its Morningstar category for the first, third, fifth and 10-year periods, the fund garners a four star overall Morningstar rating.

The new share classes provide investors with access to the fund through brokerage, advisory and retirement platforms. The fund is available on advisory platforms at most major intermediaries, and brokerage availability is expected to expand with the addition of Class A and C shares. The Class L shares, to which existing shareholders have been mapped, are available to new investors as well. 

“The U.S. REIT market has evolved considerably over decades, with the disruptive impact of technology and demographic shifts creating new opportunities in emerging property sectors such as cell towers, data centers and rental housing,” says Tom Bohjalian, senior portfolio manager and head of U.S. Real Estate Investments. “We believe this is an attractive time to consider allocating to REITs with an active manager, with healthy fundamentals and defensive characteristics potentially driving favorable absolute and relative returns.”

Benefits August 15, 2019

Stakeholders Urged to Push Retirement Policy for Presidential Election

Retirement industry sources, during a webcast, discussed ways to strengthen national retirement policy.

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Retirement industry sources spoke about the increasing demand for consistent and dependable national retirement policy in a webcast recently hosted by The American Academy of Actuaries.

The session, moderated by Eric Keener, chairperson of Retirement System Assessment and Policy Committee at the Academy of Actuaries, began by pointing out the disparity in workplace retirement plans. Just less than 50% of private-sector employers are currently offered any access to retirement savings, he said. Instead, plan sponsors are letting an employee rely on personal savings to fund for the future. Additionally, because retirement savings programs are managed by different pillars of government, whether on a state or federal level, changes to individual programs can be complex and difficult to interpret.

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The group called for a collective change on current national retirement policy, starting with alterations to the country’s Social Security system. The Social Security 2100 Act, a current bill in Congress intended to cut taxes and safeguard Social Security checks for future retirees, would increase taxes and lessen retirement savings for employees, argued Romina Boccia, director of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation. Without the higher taxes associated with the Act, American workers at all income levels would be better off funding retirement with personal savings. For example, a worker making $24,353 would accrue $63,748 in additional benefits under the Act, but would save $78,526 in additional savings sans higher taxes, amounting to a difference of $14,778 in funds.

Theresa Ghilarducci, professor of Economics at The New School for Social Research, focused on an inadequacy in workplace retirement plans, citing a “do-it-yourself” approach and government tax policy as the main culprits. This failure in the retirement system has caused dissolutions of union plans, along with unstable retirement account balances, Ghilarducci noted.

“Most people in the past 75 years have gotten the majority of their retirement security from the Social Security system,” she said. “We’ve built a voluntary system based on the employer and household level. It’s a system that has really crumbled, as unions have lost their power.”

Stabilizing retirement savings will heavily rely on a strong Social Security system and on the preservation of pension plans, Ghilarducci added. “Most people really like Social Security and defined benefit (DB) plans because they can’t take it out. People really like the idea that they can’t borrow from both,” she said.

Additionally, Ghilarducci proposed bringing back the now-defunct myRA, a savings account launched in 2015 for workers without workplace retirement savings plans. It was cut in 2017 by the U.S. Department of Treasury, due to low demand and investments.

James Lockhart, senior fellow and co-chair of the Commission on Retirement Security and Personal Savings at the Bipartisan Policy Center, offered Commission recommendations for retirement savings plans, including promoting personal savings for short-term needs, facilitating lifetime-income options, and the use of home equity for retirement consumption, among others. He argued how advocating for a better reverse mortgage for workers can help facilitate home equity.

“Just to put it in perspective, Americans own more than $15.8 trillion in home equity, and then have $17.6 trillion in defined contribution (DC) and individual retirement accounts (IRAs). There’s about $14 trillion in household debt,” he reasoned.

Moving forward, experts agreed on expanding financial education in higher education to strengthen its comprehension, and also encouraged the use of federal savings plan, including opening the Thrift Savings Plan to private-sector employees. Looking at the 2020 presidential election, experts said the public will need to drive that conversation among candidates.

“Push retirement policy for the presidential election,” said Ghilarducci. “We need to really start raising public awareness to start doing a better need for retirement policy.”

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