Plus, new ETFs, Fidelity's latest offerings, and more.
State Street Joins International-Bond ETF Race
State Street Global Advisors has filed with the SEC to launch an overseas fixed-income ETF. The proposed ETF will track the Lehman Global Treasury ex-US Index, a collection of government-issued debt from countries with investment-grade ratings. While this index prominently features debt of western-European and developed Asian countries, it also has a splash of emerging economies' debt, such as that of Mexico and South Africa. The management fee will be 0.50%, and the fund will face primary competition from similar iShares and PowerShares ETFs.
Fidelity Launches Income-Replacement Funds
In a twist on traditional target-date retirement funds, Fidelity launched new investments that offer an optional annual income payout. This group of 11 fund-of-funds, with horizon dates every two years from 2016 through 2036, offers the same asset-allocation feature as traditional target-date funds, which gradually increases portfolios' fixed-income holdings as the selected year nears. But each fund will have an optional annual income payout for investors who desire an annuitylike feature, provided that, according to Fidelity, "the fund's investment strategy works as intended." In other words, Fidelity makes an implicit assumption that, if its quantitatively driven forecasts are accurate, it will have no problems offering yearly payouts that keep pace with inflation. The payments draw down an investor's principal gradually, targeting liquidation in the fund's named year.
Separately, the firm has launched a Growth and Guaranteed Income variable annuity, a similar product. Purchased as a contract via a one-time payment, the annuity's annual payout adjusts over time based on performance of stock markets and the amount of already-received payouts, both of which continuously affect the contract's value. A single-life-coverage contract will cost 1.10% of the purchased amount, which according to Fidelity is more than 30% below the industry's average annuity fee.
Morgan Stanley Veteran to Retire at Month's End
Morgan Stanley Institutional Global Value Equity's
Fidelity Shuffles Managers at Several Funds
Derek Young, comanager of Fidelity Global Balanced
The firm also announced two changes to its actively managed lineup. First, Stephen DuFour joins Fidelity Worldwide
Retirement-Focused ETFs Hit the Exchanges
TDAX Funds has launched five target-date retirement ETFs. All five ETFs track Zacks lifecycle indexes, which are geared toward investors retiring in 2010, 2020, 2030, 2040, or those already in retirement. Investors should closely examine the underlying composition of these ETFs and compare them on both the asset allocation and expense basis with actively managed target-date funds. For example, TDAX Independence 2040
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