1) Precidian Comments on U.S. SEC Approval of ActiveShares PR Newswire | 4/8/2019
Because… Precidian filed for non-transparent ETFs initially in October 2014 and amended the application seven times in the past four and a half years. The SEC approval is a big step forward for the firm and a reward for its commitment and persistence. Nine fund companies have signed licensing contracts with Precidian, including BlackRock, JP Morgan, Capital Group, American Century, and Legg Mason. With the green light, we anticipate other models, such as those from Fidelity, T. Rowe Price, and Blue Tractor, to gain the regulatory clearance too. While each sponsoring firm wants more asset managers to adopt its approach, will investors take the bait? A Bloomberg article, “Stock Pickers Love ETFs That Hide Assets, But Investors May Not” pointed out that “investors may not be eager customers given reservations about products with limited disclosure.”
2) Principal to Acquire Wells Fargo Institutional Retirement & Trust Business Principal | 4/9/2019
Because… The $1.2 billion deal is the latest example of consolidations in the recordkeeping industry. It is expected to help Principal expand scale and lower the recordkeeping cost, thus improving its competitive position. The acquisition will turn the firm into the seventh largest DC recordkeeper by assets, the third largest by number of DC participants, the fourth largest by number of DC plans, and the largest by number of DB plans. Principal’s DC assets under administration will grow from the current $200 billion to $359 billion with the percentage of assets in plans of more than $1 billion rising from 12% to 19%, and the share of assets in small and mid-sized plans (assets between $10 million and $1 billion) increasing from 62% to 65%.
3) Betterment for Advisors to Offer Dimensional Funds PR Newswire | 4/11/2019
Because… DFA funds will be the first mutual funds on Betterment’s platform, which currently offers ETFs from BlackRock, Vanguard, and Schwab. The robo-advisor not only spent months developing technology to accommodate mutual fund trading, but also decided to charge no additional transaction fees, indicating its commitment to pursuing advisors. Advisors are required to receive training before being approved to access the DFA funds. DFA was the fourth best-selling asset manager this year through March. Its net inflows of $8.5 billion in the first quarter already surpassed half of its 2018 intake of $16.6 billion, according to Morningstar data. The partnership will be a win-win situation for both. Betterment could benefit from advisors’ cult-like devotion to DFA, while DFA could reach out to more advisors that use the digital advice platform.