Products October 12, 2017

Investment Products and Services Launches

Columbia Threadneedle Premieres Strategic Beta ETF; and Change Finance Launches New Sustainable Investing ETF. 

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Columbia Threadneedle Premieres Strategic Beta ETF 

The Columbia Diversified Fixed Income Allocation (DIAL) exchange-traded fund (ETF), recently launched by Columbia Threadneedle Investments, will track the Beta Advantage Multi-Sector Bond Index, which provides a rules-based approach to investing in six fixed-income sectors.

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These sectors are U.S. Treasurys, global treasurys ex-U.S., U.S. investment-grade corporate bonds, U.S. mortgage-backed securities, U.S. high-yield corporate bonds and emerging market sovereign debt. DIAL’s rules-based, strategic beta investment approach aims to address investor concerns of having consistent income with downside protection, regardless of the interest rate environment.

“As the market enters a new rate regime, investors may need to adjust their fixed-income allocations and broaden their opportunity set,” notes Gene Tannuzzo, senior portfolio manager at Columbia Threadneedle. “Unlike traditional ETFs, strategic beta ETFs do more than track a benchmark. They incorporate active insights and are outcome-oriented.”

“DIAL’s disciplined process is designed to seek more sources of income and avoid the overconcentration found in traditional fixed-income benchmarks,” says Marc Zeitoun, head of strategic beta at the firm.

Columbia Threadneedle drew from its experience as a fixed-income manager to establish the strategic beta rules that are the foundation of the index, the firm says. The index is owned and calculated by Bloomberg Index Services Limited.

DIAL was launched today, October 12,  with a 90-day contractual management fee waiver and is thereafter priced at 28 basis points (bps). 


Change Finance Launches New Sustainable Investing ETF 

Asset manager Change Finance announced the release of its new exchange-traded fund (ETF). The Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free ETF (CHGX) uses diversified impact screens to invest in companies that engage in favorable business practices and socially responsible investing driven by environmental, social and governance (ESG) factors. 

CHGX’s methodology is informed by the United Nations’ sustainable development goals (SDGs), the firm reports, stating, “These standards seek to eradicate poverty, protect planetary life support, and achieve lasting peace and dignity for humanity.”

CHGX will track the performance of the Change Finance Diversified Impact U.S. Large Cap Fossil Fuel Free Index.

The index begins with the 1,000 largest U.S.-listed companies and applies a series of ESG screens to exclude companies deemed unfavorable. These include firms that operate in the oil, gas, coal or tobacco industries, among others, or that have engaged in any sort of business malpractice, according to the firm.

Donna Morton, Change Finance CEO, says, “Our investors want alignment with what they care about, without sacrificing performance. [The fund aims to steer away] from companies that are serious polluters, that have significant human or labor rights violations, and that fail to meet a variety of other social and environmental standards.” 

The fund has an expense ratio of 0.75%.

Data and Research October 12, 2017

Savings Rates Drop in the U.S.

Faced with increasing costs, Americans can still take steps to secure their financial futures, suggests a survey by PurePoint.

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Savings rates in the U.S. have plummeted to a five-year low, according to the U.S. Bureau of Economic Analysis. A recent study by hybrid digital bank PurePoint Financial finds that Americans cite rising health care costs and living expenses as the main drivers of their financial pessimism. Moreover, 64% now define the American dream as not living paycheck to paycheck, and 75% believe it is harder to get ahead today than it was five years ago. Half don’t expect to feel better about their savings five years from now.

But despite concerns for their long-term finances, nearly half of respondents don’t save in a retirement plan, and one-third save 10% or less per paycheck in a savings account. Even though technological innovations have brought a wealth of digital financial planning tools into the market, only 7% of respondents said they use a savings-specific app.

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“Sometimes in the face of uncertainty, people tend to freeze and not take any action at all,” says Pierre P. Habis, president of PurePoint. “The best advice I can give people is to always plan for tomorrow by saving what you can, ideally at least 10% of your income. But even if you can’t put that much aside, set up a system to save a set amount each month. Prioritizing saving on a regular basis can make all the difference.”

However, the survey also found that 20% qualified as “super savers” or “most likely to set aside a large portion of income regularly for savings and demonstrate consistent habits that help them successfully save.” Of these, 40% predetermine an amount that is automatically deposited into savings from each paycheck they receive.

These findings are from PurePoint’s State of Savings in America, an online survey of 6,001 adults at least 18 years of age, in the U.S. The research was commissioned by PurePoint Financial and produced by independent research firm Edelman Intelligence. It was collected between July 20 and August 3.

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