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Fund News Advisors Can Use: Just Invest, QMA Bring Custom ESG, Tax Management to RIAs

In this week's funds news, PGIM and SEI get into the direct indexing game and "The Convexity Maven" joins Simplify Asset Management.

QMA, the quantitative equity managers in PGIM, the asset management busines of Prudential, has partnered with direct indexing tech company Just Invest to launch PGIM Quant Select, a separately managed account service that allows registered investment advisors to build customized portfolios around traditional factor strategies, environmental, social and governance (ESG) factors and tax management.

The new offering combines QMA’s active equity management with Just Invest’s online platform; advisors can offer the accounts to clients with a $50,000 minimum.

“This partnership will benefit RIAs by combining tax management, ESG customization and active portfolio management on a client-friendly platform,” said Jonathan Hudacko, CEO of Just Invest.

PGIM Quant Select lets advisors and their clients customize their ESG exposure through specific stock restrictions and values-based investing.

2020 was a pivotal year for direct indexing, with some of the biggest players in asset management and financial services, including Morgan Stanley and BlackRock, making broad inroads. These companies are betting that the technology to create customizable portfolios for individual clients without, theoretically, abandoning the rules-based characteristics or risk profile of an index is an option that will resonate with investors.

This week, O’Shaughnessy Asset Management, a quant-based money management firm in Stamford, Conn., announced that its custom indexing platform Canvas has reached more than $1 billion in assets under management, since launching a year ago.

“The Convexity Maven” Joins Simplify Asset Management

Harley Bassman, who’s known in the industry for his investment commentary “The Convexity Maven,” has joined Simplify Asset Management, which specializes in options-based exchange traded funds, as managing partner.

Bassman spent 26 years of his career with Merrill Lynch, where he created, marketed and traded derivative and structured products. He also created the MOVE Index, the standard measure for interest rate volatility. Most recently, he was at PIMCO, managing liquid alternatives products.

Simplify made its first foray into ETFs in September, launching the Equity PLUS Convexity suite of funds. The firm now has $150 million in assets.

“We said early in our existence that our goal is for Simplify to be the authority on options. By adding someone of Harley’s caliber, we are accomplishing just that,” said Paul Kim, CEO of Simplify, in a statement. “There is no better source for insight and education around options and volatility than Harley’s writing, and he is a tremendous fit with our education-driven mission, the solutions we’ve created, and those we are in the process of creating.”

SEI Launches Three Direct Indexing Strategies

SEI has launched three direct indexing strategies intended to allow advisors to personalize an index within their client accounts. The new strategies, which are managed by SEI’s investment management unit, include The Systematic U.S. Large Cap Core Strategy, which tracks the Russell 1000 Index, with about 150 securities; The Systematic U.S. All Cap Core Strategy, which tracks the Russell 3000 Index with about 250 underlying securities; and the Systematic International Developed Core Strategy, which tracks the MSCI EAFE Index with about 150 underlying securities.

Within these strategies, advisors can screen for ESG, socially responsible investments or faith-based investments. They can also use them for tax-loss harvesting.

A Mystery Trader

In early December, an unknown institution withdrew $7 billion from Vanguard’s S&P 500 ETF (VOO). This week, the ETF took in $8.7 billion in one day, according to reports by Bloomberg. The publication says this move points to another massive over-the-counter trade.

“A large institution arrives with, say, 200 equities that are in the S&P. They work with a broker to get that morphed into a VOO position,” Dave Nadig, chief investment officer at data provider ETF Trends, told Bloomberg. “The most likely reason for a trade like this is liquidity. All ETFs are much easier to manage, from a liquidity perspective, than any basket of individual securities.”

The iShares Core S&P 500 ETF saw similar activity, with roughly $8.3 billion leaving the fund in mid-December and $7.6 billion going into the fund this week.

TAGS: ETFs Equities
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