Capitalize, the first independent platform to transfer retirement assets, has added new individual retirement account (IRA) partners to its platform, including Betterment. The firm continues to accelerate activity on its platform and is on track to process several hundred million dollars of rollover volume over the next 12 months. Betterment’s low-fee and easy-to-use IRAs will now be directly available to Capitalize users looking for an IRA in which to consolidate their legacy 401(k) assets. The Capitalize platform continues to demonstrate substantial volume growth driven by strong consumer adoption of its free rollover platform that combines the company’s proprietary technology with leading customer service. The platform is also increasingly being adopted by employers and other channel partners focused on the importance of offboarding during a period of increased labor market turnover.
Grayscale Investments plans on applying to convert the world’s biggest bitcoin fund into a spot exchange-traded fund (ETF) early this week. Grayscale’s ETF would be backed by actual units of the cryptocurrency, not simply linked it via derivatives contracts such as futures. Should the proposal gain approval, it would be a further expansion of the leading cryptocurrency as a recognized investible asset. Some analysts predict that the $38.7 billion Grayscale Bitcoin Trust (GBTC), whose shares already trade in public stock markets, has no chance of winning approval anytime soon for its current plan to convert into an ETF backed by the cryptocurrency. Once the filing is made, the SEC will have 75 days to review it.
Robinhood is unveiling a new feature that allows its users to make automatic recurring crypto investments if they choose to do so. Many people like to use automated investing, which is otherwise known as “set it and forget it,” so they do not have to manually make the decision to purchase assets. The set-it-and-forget-it strategy is a common one that allows people to specify an amount of money to invest in an asset at a particular interval. For example, you could choose to invest $50 every Monday in a particular stock, ETF, or virtual coin. Automated investing at regular intervals is not only convenient, but it eliminates the problem of trying to time the market. If you buy a little bit of a particular asset on a regular basis, sometimes you will end up investing when the price is down and other times you will end up investing when the price is up. This technique is also called “dollar-cost averaging.” This strategy can be especially valuable for more volatile assets that tend to have big shifts in prices — such as cryptocurrencies. Unfortunately, Robinhood investors didn’t have the option to use set-it-and-forget-it investing with cryptocurrencies.
Fidelity Investments announced the launch of four new thematic exchange-traded funds (ETFs) . The four passively managed, self-indexed ETFs utilize Fidelity’s quantitative capabilities, including its proprietary indices.
- Fidelity Clean Energy ETF (FRNW) normally invests at least 80% of its assets in securities included in the Fidelity Clean Energy Index℠ and in depositary receipts representing securities included in the index. The Fidelity Clean Energy Index℠ is designed to reflect the performance of a global universe of companies across the market capitalization spectrum that distribute, produce or provide technology or equipment to support the production of energy from solar, wind, hydrogen and other renewable sources.
- Fidelity Cloud Computing ETF (FCLD) normally invests at least 80% of its assets in securities included in the Fidelity Cloud Computing Index℠ and in depositary receipts representing securities included in the index. The Fidelity Cloud Computing Index℠ is designed to reflect the performance of a global universe of companies across the market capitalization spectrum that provide products or services enabling the increased adoption of cloud computing, characterized by the delivery of computing services over the internet.
- Fidelity Digital Health ETF (FDHT) normally invests at least 80% of its assets in securities included in the Fidelity Digital Health Index℠ and in depositary receipts representing securities included in the index. The Fidelity Digital Health Index℠ is designed to reflect the performance of a global universe of companies across the market capitalization spectrum providing healthcare records management, connected healthcare devices, surgical robotics, telemedicine, and other technology-enabled healthcare products and services.
- Fidelity Electric Vehicles and Future Transportation ETF (FDRV) normally invests at least 80% of its assets in securities included in the Fidelity Electric Vehicles and Future Transportation Index and in depositary receipts representing securities included in the index. The Fidelity Electric Vehicles and Future Transportation Index is designed to reflect the performance of a global universe of companies across the market capitalization spectrum engaged in the production of electric and/or autonomous vehicles and their components, technology, or energy systems or engaged in other initiatives that aim to change the future of transportation.
Refinitiv has launched Wealth Practice 360, a solution designed to provide an efficient workflow and better insights on demand for wealth advisors. Wealth Practice 360 uses a sophisticated set of services that aggregate client information from multiple sources including back-office systems, CRM, financial planning tools, held away assets, and social media activity to deliver a 360 view of an advisor’s book of business. Many wealth firms struggle with disparate data sources and lack of system integration. This disconnected and siloed workflow hinders the advisor’s ability to deliver timely, relevant, and personalised insights to clients in an engaging manner. Wealth Practice 360 addresses these and other industry challenges, as it connects the traditionally disparate sources of information together into a single consolidated view. Client data is combined with a firm’s proprietary data and Refinitiv’s market data and news to generate insights and ideas that advisors can take proactively to their clients. A client data layer then powers single screen user experiences. The client data layer offers a flexible data model and connectivity tools to radically simplify the connection of data from multiple systems for display on single screens.
Charles Schwab is piloting a direct indexing separately managed account (SMA), with expected availability to advisors and investors sometime next year. Called “Schwab Personalized Indexing,” the SMA is currently undergoing testing with select Schwab employees and affiliates. Schwab Personalized Indexing “is designed to provide exposure to a client-selected equity market segment while seeking to enhance after-tax returns relative to the client’s designated index.” The SMA provides access to three different indices, including one environmental, social and governance (ESG) offering, and has a $100,000 minimum investment per account. Strategies available in the pilot include the Schwab 1000 Equity, a strategy designed to track and mimic the Schwab 1000 Index, a float-adjusted market capitalization weighted index that includes the stocks of the 1,000 largest publicly traded companies in the United States; the S&P Small Cap 600, a strategy meant to track and mimic the S&P SmallCap 600 Index, a float-adjusted market capitalization weighted index that seeks to measure the small-cap segment of the U.S. equity market; and the MSCI KLD 400 Social, an ESG strategy designed to track and mimic the MSCI KLD 400 Social Index, a capitalization weighted index of 400 U.S. securities that provides exposure to companies with outstanding ESG ratings and excludes companies whose products have negative social or environmental impacts.
For many years, companies that offered robo advising were leery of allowing too much human tinkering with the low-cost ETF portfolios that were their core offering. The approach was largely “set it and forget it” investing in passive, low-cost index funds or ETFs. Now the pendulum is swinging toward allowing users more personalization and flexibility. This past year, Wealthfront gave clients access to a wider array of socially responsible investments, as well as more of Cathie Wood’s ARK funds, the Grayscale Bitcoin Trust BTC and Grayscale Ethereum Trust. The two crypto funds, which carry high fees of 2% and 2.5%, respectively, are the most popular funds on Wealthfront’s platform. Robos are getting creative with new services. Wealthfront’s “Self-Driving Money” divvies up cash between different accounts for different pre-set goals, and will alert customers if they have excess cash that they might want to invest. Another new feature rolled out recently is Edelman Financial Engines’ “Downside Defender,” where clients set a minimum level for their account value, and as their portfolio approaches that number, the portfolio automatically sells stocks and buy bonds. Even low-cost index fund giant Vanguard is taking a more active stance, announcing recently that it would launch three new active funds later in 2021 that would only be available on its its hybrid robo platform.
- Betterment is revamping how advisors can create their own custom model portfolios and dropping a key asset minimum tied to the process, an effort that may up the appeal of its custody platform for registered investment advisory firms. Advisors who custody assets with Betterment previously could use the company’s proprietary model portfolios, certain outside asset managers’ models, or create their own. But the latter choice was a somewhat labor-intensive process for Betterment’s staff and for the advisors. It also came with a hefty $2.5 million asset minimum per portfolio.
- The new customized portfolio tool is available to advisors at no additional cost. Advisors can build customized portfolios for clients from more than 1,500 ETFs. Each portfolio can have up to 10 different risk tolerance levels for clients. Advisors can also choose a migration strategy for moving client assets to a new model portfolio, avoiding capital gains taxes if possible. Betterment’s software will give advisors an estimated tax impact of their chosen migration strategy. Individual stocks and bonds as well as cryptocurrencies are not available on the platform, though the firm is considering how to expand what’s available to advisors. The firm has been focused on improving transitions, pointing to the ability for advisors to move assets between portfolios as well as consolidate assets on the platform. Betterment is also working on the ability for advisors to override Betterment’s capital markets expectations and use their own projections.
- Betterment for Advisors is dropping investment minimums and overhauling its software, in a move that could be setting the table for Betterment to begin offering direct indexing capabilities for advisors. Advisors no longer have to meet a $2.5 million investing minimum, which was once required for access to custom model portfolios. Additionally, Betterment has overhauled its backend systems, reducing the need for advisors to work directly with the Betterment trading and investing teams and making it easier for advisors to build their own portfolios by accessing the over 1,500 available ETFs.
- Advisors can select from a menu of ETFs (for all practical purposes, individual securities are not yet supported on the platform), adjust the allocation for those funds to match up to 10 different client risk levels, decide how quickly to transition from an existing portfolio to a new portfolio—and to consider tax consequences during that transition—as well as assign the portfolio to a client. Presently, advisors are bound to Betterment’s capital market assumptions, but they will soon be able to review and edit those assumptions too. Tasks such as tax-loss harvesting and rebalancing are already automated. When first announcing the feature, Betterment cited cost of portfolio construction and maintenance as the reason it required a minimum.
KB Asset Management, the investment arm of KB Financial Group, South Korea’s largest financial company, has introduced the country’s first blockchain-focused mutual fund. The KB Global Digital Chain Economy fund will invest in three main areas. One area of investment is companies that make the hardware required to support blockchain activities, such as Nvidia, AMD and Intel. A second arm is software companies providing blockchain-based services. Those include IBM, Amazon and Baidu. The third investment segment covers companies that use blockchain technology within their own businesses. PayPal, Square, NTT Data and Tencent were identified. The fund will invest predominantly in U.S. companies, with smaller allocations placed in Japanese, European and Chinese firms.