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December 19, 2013 at 10:39 AM
New products and changes introduced over the last week include an actively managed equity fund from Vanguard; a long-short fund from Newberger Berman; new fund names and indexes for 10 of Invesco’s existing funds and the closure of 4 others; and private placement opportunities from Miller Tabak on the FNEX.com platform.
Here are the latest developments of interest to advisors:
1) Vanguard Adds Actively Managed Equity Fund
Vanguard has announced the launch of its Global Minimum Volatility Fund (VMVFX), designed to provide long-term capital appreciation with lower volatility relative to global equity markets. VMVFX, which will be solely managed by the in-house equity investment group, will employ quantitative models to evaluate the securities in the fund’s FTSE Global All-Cap Index (USD Hedged) benchmark in order to construct a global equity portfolio.
It is expected to invest approximately half of its assets in foreign company stocks and the other half inU.S.company stocks, and to use forward currency contracts to hedge most of its non-U.S. positions to the U.S. dollar. VMVFX offers two share classes. Investor shares will have an estimated expense ratio of 0.3% and require a minimum initial investment of $3,000, while admiral shares will have an estimated expense ratio of 0.2% and require a minimum initial investment of $50,000.
2.) Vanguard Expands Admiral Shares to Dividend Appreciation Fund
Vanguard also says its $22.8 billion Vanguard Dividend Appreciation Index Fund is now available in Admiral Shares (VDADX), expanding number of Vanguard funds that offer these “ultra-low-cost shares” to 84.
The estimated expense ratio for Admiral Shares of the Dividend Appreciation Index Fund is 0.10%.
“With Admiral Shares, investors are paying mutual fund fees that are among the lowest available,” said Vanguard CEO Bill McNabb, in a press release. “Making this share class an option for more than half of our fund family demonstrates our commitment to reducing the cost of investing for our clients whenever possible.”
More than $700 billion—about one-third of Vanguard’s more than $2.4 trillion in U.S. fund assets under management—is currently held in Admiral Shares.
Currently, 50 index funds and 34 actively managed funds offer Admiral Shares. To qualify for Admiral Shares of Vanguard Dividend Appreciation Index Fund, retail investors are subject to a $10,000 minimum investment requirement; advisors and institutions are not subject to a minimum.
3.) Neuberger Berman Rolls Out Long-Short Product
Neuberger Berman Group has launched the Neuberger Berman Long Short Multi-Manager Fund (NLMIX, NLMAX, NLMCX). The new fund “seeks long-term capital appreciation with a secondary objective of principal preservation by allocating its assets to a select group of external hedge fund advisers that employ distinct long short strategies investing primarily in equity securities of companies throughout the world.”
Unlike traditional hedge funds, Neuberger Berman says, the fund provides daily liquidity, lower investment minimums ($1,000 for Class A and C shares), and 1099s for shareholders, while offering full transparency of portfolio holdings without a performance-based management fee.
It employs the risk management and monitoring, mix of managers and long short strategies, and operational due diligence traditionally available only to institutional and high-net-worth investors through traditional hedge funds.
The fund is managed by members of the Neuberger Berman Hedge Fund Solutions group serving the needs of institutional and high-net-worth investors since 2002, including David Kupperman, Ph.D., managing director; Jeff Majit, managing director; Ian Haas, senior vice president; Fred Ingham, managing director; and Eric Weinstein, managing director. The team currently manages the $630 million Neuberger Berman Absolute Return Multi-Manager Fund, introduced in 2012. Overall, Neuberger Berman currently manages over $42 billion in mutual fund assets.
“We believe ‘liquid alternatives’ – hedge fund strategies in a mutual fund format – can present attractive solutions for investors who have not been able to access traditional hedge funds as well as for defined contribution plan sponsors seeking to provide their participants with a full range of investment options,” said David Kupperman, in a statement.
