JPMorgan Asset Management recently announced the upcoming launch of three new fixed-income BetaBuilders ETFs. The funds, which will launch in February, will provide exposure to the aggregate, investment-grade corporate, and high-yield corporate bond markets. All three will be converted from three existing actively managed ETFs. The JPMorgan BetaBuilders US Aggregate Bond ETF (BBAG) will be created from the $1.2 billion JPMorgan US Aggregate Bond ETF (JAGG). The fund, which will come with an expense ratio of 0.03%, will track the Bloomberg US Aggregate Bond Index and invest in Treasury, government-related, corporate, and securitized fixed-rate bonds from issuers worldwide. The JPMorgan BetaBuilders USD Investment Grade Corporate Bond ETF (BBCB) will be converted from the $40 million JPMorgan Corporate Bond Research Enhanced ETF (JIGB). BBCB will track the Bloomberg US Corporate Bond Index, consisting of investment-grade bonds from corporate issuers worldwide. The ETF has an expense ratio of 0.09%. The final ETF, the JPMorgan BetaBuilders USD High Yield Corporate Bond ETF (BBHY), will be created from the $400m JPMorgan High Yield Research Enhanced ETF (JPHY). BBHY will track the ICE BofA US High Yield Total Return Index, covering sub-investment-grade, corporate bonds issued in the US market. The fund has a slightly higher expense ratio of 0.15%

Finsum:JPMorgan adds to its suite of BetaBuilders ETFs with the upcoming launch of aggregate, investment-grade corporate, and high-yield corporate bond ETFs.

Morningstar recently announced that it has launched an Annuity Intelligence Center for advisors to compare and manage annuities for their clients. Sales of annuities have been booming due to higher interest rates and increased demand for retirement income. The Annuity Intelligence Center aims to simplify annuity sales and management for advisors by offering a comparison tool, educational material, and product accessibility. The platform is a partnership between Morningstar and Luma Financial Technologies, an Ohio-based fintech company with a platform for broker-dealer firms to buy and sell annuities, long-term investment options issued by insurance companies, and alternative investments. The Annuity Intelligence Center is designed for retail annuity sales and management but does not include in-plan annuities for workplace-sponsored plans. While retail annuity sales have been flourishing, in-plan annuity sales have been lagging. Jeff Schwantz, global head of channel partnerships at Morningstar, said the following in a press release, “Assets in annuities are climbing, and while these vehicles are growing in popularity, the annuity marketplace remains opaque, and advisers serving investors have difficulty evaluating their options.”

Finsum:Morningstar is looking to take advantage of a booming retail annuity market with the launch of a platform for advisors to compare and manage annuities for their clients.

It appears that the growing adoption of model portfolios is driving inflows into municipal ETFs. In fact, this year’s inflows to muni ETFs are double the average of the last three years, with total assets sitting at $105 billion. Investors added a record $27.8 billion into muni-bond ETFs this year. Mutual funds, on the other hand, lost more than $130 billion. According to estimates by Drew Pettit, director of ETF analysis and strategy at Citigroup Inc, nearly half of the inflows came from mutual fund holders selling shares at a loss to offset gains and swapping into ETFs. The continued adoption of model portfolios by advisors should contribute to even more muni ETF growth. In an article on WealthManagement.com, it was noted that model managers such as FMR LLC’s Strategic Advisers, Wealthfornt Advisors, and Creative Planning are some of the largest holders of Vanguard and Blackrock muni ETFs. Pettit indicated that advisors like automated, off-the-shelf products which allow them to focus more on client relationships and growing their business. In a recent interview he stated that “When model portfolios get their teeth into an ETF or a group of ETFs, you start to see this stable, almost constant, drip of money coming into these products. And it’s really hard to unseat that.”

Finsum:Muni Bond ETFs saw a record $27.8 billion in inflows this year as a result of the growing adoption of model portfolios by financial advisors.

While many states are rushing to adopt an annuity sales rule revision, there are still some that are using the National Association of Insurance Commissioners (NAIC) old sales rules and are not likely to move to the new version anytime soon. The NAIC adopted the Suitability in Annuity Transactions Model Regulation in 2010. The model required annuity sellers to verify that the annuities sold to consumers suit those consumers’ needs. In 2019, the SEC adopted Regulation Best Interest, which requires annuity sellers to document that they have acted in the best interests of annuity clients, rather than putting their interests first. The NAIC then adopted suitability model changes that were based on the SEC’s Reg BI standard in 2020. This has resulted in state officials that support Reg BI and those that oppose Reg BI. The states that haven’t moved to the new model are considered gray zones due to a map created that reflects the NAIC’s understanding of state adoption efforts. The states colored gray on that map indicates that they are far from implementing the NAIC’s 2020 suitability model changes. They include larger states such as California and Florida as well as smaller states such as New Hampshire and Vermont. The NAIC’s Annuity Suitability Working Group presented the implementation map Wednesday at the NAIC’s fall national meeting

Finsum:The NAIC updated its suitability model for annuity sales based on the SEC’s Reg BI, but several states are nowhere near close to adopting the new model.

Thornburg Investment Management recently introduced Thornburg Personal ESG Portfolios, a new separately managed account capability that can provide investors with the ability to emphasize ESG factors within their portfolios. The firm, which has $40 billion in client assets, said in a press release that “ESG is an organic extension of Thornburg's core investment competencies as a fundamental, bottom-up, active manager of global equities and global fixed income.” Thornburg will not outsource the ESG decisions. Instead, its analysts and portfolio managers will evaluate ESG information alongside other factors, grounded by materiality standards from the Sustainability Accounting Standards Board. The ESG Portfolios will be available through select financial advisory firms and platforms. As part of the announcement, Jason Brady, president & CEO of Thornburg investment management stated "We know that investing with ESG criteria can mean different things to different people. By addressing both these factors in Thornburg Personal ESG Portfolios, we seek to offer a unique opportunity for investors to personalize their portfolios to their ESG values."

Finsum:Investors will now have even more access to ESG-focused SMAs with the launch of the Thornburg Personal ESG Portfolios.