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Fund News Advisors Can Use: FAs’ Trading Activity in 2020

In this week's fund news, advisors' most highly traded securities of 2020, Vanguard's 10 basis-point, active ETF and a look at Schwab's new low-cost variable annuities.

Core bond funds, a real estate investment fund and a preferred securities fund were among the most highly traded investments of 2020, according to data aggregated from over 850 advisors using AdvisorPeak’s trading and rebalancing software.  

The top five traded securities of 2020 included the PIMCO Long Duration Fund, which provides broad exposure to longer duration fixed income; the Hartford Total Return Bond fund, which invests in investment grade debt; the Equinix REIT; the iShares Preferred and Income Securities ETF, which invests in U.S. preferred stocks; and Dominion Energy, the U.S.-based power company, which is down 13% in the last year.

Trading volume among advisors on the AdvisorPeak platform spiked in March of last year to a total $2.5 billion, compared with $1.1 billion in February and $773 million in January. The year ended with $1.2 billion in December trading volume.

But when you look at traded units, November 2020 saw the most activity, at nearly 174 million traded units. That compares with 140.8 million in March and 128.9 million in April. August was the slowest month, with nearly 57 million in traded units.

Vanguard’s New Active ETF to Charge 10 Bps

Vanguard filed this week to launch its first active ETF since 2018, and the news added fuel to the fee-wars fire, with the fund’s expense ratio of 10 basis points. Similar funds cost an average 22 basis points, Vanguard says. The Vanguard Ultra-Short Bond ETF, expected to roll out in the second quarter, will invest in higher-quality and medium-quality fixed income, including investment grade credit and government bonds, with an expected average duration of about one year.

Is a Fee War Brewing in Annuities?

Schwab introduced two new low-cost variable annuities—one for its direct clients and one available to the registered investment advisors who custody at the firm. The Schwab Genesis Variable Annuity and Schwab Genesis Advisory Variable Annuity were developed with Protective Life Insurance Company and invest in a broad line-up of 63 professionally managed investment portfolios. They have no surrender charges and feature an optional income and death benefit protection for an additional fee. They also feature a guaranteed lifetime withdrawal benefit.

The Genesis Advisory VA charges a base fee of 25 basis points, or 45 basis points with the death benefit. That compares with an industry average of 1.15%, according to a Morningstar survey.

American Century Launches Actively Managed Low-Volatility ETF

American Century, which made its first foray into the ETF market three years ago, has introduced its first actively managed low-volatility ETF (LVOL). The fund will disclose holdings on a daily basis and charge 29 basis points.

Since getting into the ETF business in 2018, the firm has amassed $3.5 billion in ETF assets, including those managed by American Century and its Avantis Investors business.

In July, American Century launched two active environmental, social and governance (ESG) ETFs using the New York Stock Exchange’s Actively Managed Solution (AMS), making it the first asset manager to use the new active semi-transparent ETF structure.

TAGS: Mutual Funds
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