Investing May 25, 2017

Managed Account Users Plan More Confidently

Research from Fidelity suggests personalized, goals-based advice pairs well with the use of managed accounts.

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According to the Fidelity Managed Accounts Survey, the overwhelming majority of investors who use them (89%) believe that using a managed account simplifies their investing process.

Survey respondents cite the top three benefits of owning a managed account as “having confidence my portfolio is properly diversified; being able to talk to a financial professional about my investments; and having confidence I’m on track to meet my investing goals.”

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“Working with a professional money manager can benefit even the most seasoned investors by taking the emotion out of their financial decisions,” explains Rich Compson, head of managed accounts at Fidelity. “We hear time and again from investors—particularly nervous ones—that a managed account has helped them stay properly allocated during stressful times when they otherwise would have overreacted, like in volatile markets.”

The survey results show investors “don’t have to have a complicated portfolio to reap the benefits of a managed solution.” In fact, according to Fidelity, just 10% of survey respondents “say their financial needs are very complex.”

Fidelity’s survey examined triggers that prompted people to make the move from do-it-yourself investing to a professionally managed account. They cite “lack of skill, will or time to manage my own investments” as the most prominent reason, at 31%, followed by a desire for a financial professional to tell them what to do (23%) and a life event (22%). Investors of all ages report that a family member or friend (30%), a financial adviser (25%) or their company’s retirement plan (20%) introduced them to a managed account.

While on average respondents started investing around age 30, pivotal life events such as marriage, change in job status or birth of a child commonly serve as the triggers pushing an investor to use professionally managed investments. And as Fidelity lays out, “managed accounts offer more than a point in time solution, as 72% of Baby Boomers surveyed have invested in a managed account for more than 20 years.”

Fidelity’s data shows users of the structure on average hold 68% of their total investable assets in a managed account, with Baby Boomers reporting the highest average at 77%. Millennials hold 64% of their assets in a managed account compared to Gen Xers at 62%.

Products May 25, 2017

Putnam to Launch Alternative Strategies Funds

The new funds aim to provide advisers and their clients with portfolio construction tools designed to help them navigate varying market conditions.
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Putnam Investments will release several mutual funds that adhere to three alternative strategies aiming to provide advisers and their clients with portfolio construction tools designed to help them navigate varying market conditions. These funds will be sub-advised by PanAgora Asset Management and are expected to be available in the marketplace in the third quarter of this year.

The Putnam PanAgora Risk Parity Fund seeks total return under varying economic conditions through strategic allocation across asset classes. It is a multi-asset solution seeking to balance the fund’s portfolio risks and generate more stable returns and greater downside protection than more traditional multi-asset approaches. The fund allocates to equities to preserve capital during economic contraction by allocating to nominal fixed income, and to protect from inflation with commodities and inflation-linked bonds.

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The Putnam PanAgora Market Neutral Fund pursues uncorrelated alpha by investing in long/short equity strategies. It is a systematic long/short global equity market neutral strategy that seeks to generate attractive absolute returns that are uncorrelated to general equity markets by identifying and exploiting multiple inefficiencies that exist in global markets. The fund will pursue a similar approach as the PanAgora Diversified Arbitrage strategy, which was incepted in 2010 for the institutional marketplace. 

The Putnam PanAgora Managed Futures Fund seeks absolute return through a managed futures strategy that is designed to provide meaningful diversification to traditional asset classes. It seeks absolute return through a managed futures strategy that is designed to provide meaningful diversification to traditional asset classes. The fund utilizes systematic long/short exposure to liquid futures and forwards across commodities, equities, fixed income and currencies.

“We have entered an era when the marketplace increasingly understands the need for innovative investment approaches,” says Robert L. Reynolds, president and CEO, Putnam Investments. “These three new products will give mutual fund investors and their advisers access to strategies that have been used successfully by the institutional market for many years. In broadening its slate of alternative offerings, Putnam will be bringing the specialized investment capabilities of our affiliate, PanAgora Asset Management, to our clients.”

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