Below is a look at some changes major distributors have made to their platforms this month that may have flown under your radar, collected from Distributor Profiles, a service of sister publications Ignites and FundFire.
Morgan Stanley’s E*Trade Unit Lets Investors Buy ETFs in Pieces
Morgan Stanley’s online brokerage unit has launched an automatic investing program that allows investors to buy fractional shares from a select group of “All-Star” exchange traded funds.
There are 100 ETFs eligible for the program, which lets investors move a set amount of money into their accounts at set intervals, such as monthly.
The minimum requirement to use the recurring investment service is $25 per scheduled deposit.
The eligible funds listed on the firm’s website include a range of asset classes and investment styles such as:
- broad-based index funds from BlackRock’s iShares, Vanguard, Charles Schwab;
- smart-beta strategies from Invesco and WisdomTree;
- thematic funds from Ark Investment Management and GlobalX;
- active fixed-income options from J.P. Morgan Asset Management and Pimco;
- and commodity strategies from Abrdn and VanEck.
The funds must stay on the E*Trade recordkeeping platform to accommodate fractional shares.
E*Trade already allows investors to accumulate fractional shares of mutual funds.
Schwab Shaves Fees on Fixed Income ETFs
Charles Schwab chopped fees on five of its proprietary fixed-income ETFs from five basis points to four, according to its recent regulatory filing. In all, the index-tracking funds represent about $13 billion in assets.
The ETFs impacted are the:
- $9 billion Schwab Short-Term U.S. Treasury ETF
- $3.4 billion Schwab Intermediate-Term U.S. Treasury ETF
- $690 million Schwab 1-5 Year Corporate Bond ETF
- $339 million Schwab 5-10 Year Corporate Bond ETF
- $101 million Schwab Long-Term U.S. Treasury ETF
Schwab cut the fees following the recent price reductions on similar products from competitors Vanguard and State Street.
Fidelity Makes It Easier for Clients to Group Retirement Assets
Next quarter, Fidelity plans to make it easier for clients with multiple retirement accounts to see all their information in one place.
The firm plans to start to use personal information included in the accounts to identify appropriate investment strategies, taking into consideration the allocations across an individual’s existing workplace savings plan accounts.
The new policy aims to identify an appropriate investment strategy for plan participants with two or more accounts as well as those who have not enrolled or reviewed data in a Fidelity account online.
In the case of a participant who is not active on their account, the firm will use the client’s information from where they were previously enrolled or most recently enrolled.
The retirement plans are serviced by the Fidelity Personalized Planning & Advice at Work unit, which provides ongoing discretionary investment management.
Fidelity also formed a new registered investment advisor named Fidelity Diversifying Solutions to manage a series of new asset-allocation products, including strategies built on commodity-linked derivatives, according to a recent Securities and Exchange Commission filing.
The newly registered unit will advise the forthcoming Global Macro Opportunities and Risk Parity funds.
The Global Macro Opportunities fund uses fundamental analysis to invest in “themes that provide asymmetric payoffs driven by market divergence versus secular, cyclical and geopolitical trends,” according to the filing.
The Risk Parity fund uses quantitative analysis to balance growth, inflation, real rates, and liquidity.
The funds can invest up to 25% of their assets in an unnamed Cayman Islands-registered Fidelity subsidiary that invests in commodity-linked total return swaps based on the value of commodities or commodities indexes and in other commodity-linked derivative instruments, the filing added.
J.P. Morgan Taps BlackRock for In-House Funds; Wins Custody Biz
J.P. Morgan also added BlackRock as a subadvisor to the Six Circles Tax Aware Bond Fund and Six Circles Credit Opportunities Fund, which it manages in-house and uses within fee-based programs. The funds invest in U.S. Treasuries and government agency bonds.
Separately, BlackRock has tapped J.P. Morgan’s asset servicing unit to custody part of its $2.3 trillion U.S. ETF business.
BNY Mellon and Citi were also added as custodians, joining State Street as its post-trade service provider.
The three new custodians will begin taking on iShares back-office work in the second half of 2022 in a transition that is expected to take 18 months to complete, according to a press release.
J.P. Morgan is responsible for 30% or $690 billion of assets. Citi will take 40% or $920 billion, BNY Mellon will custody 15% or $345 billion, while State Street, the current custodian, will supervise 15% of iShares’ assets.
BlackRock said the move helps protect against concentration risk.
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