Fuse Blog

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1) New York Life Investments Partners with CBRE Investment Management to Launch MainStay CBRE Global Infrastructure Megatrends Fund

PR Newswire  |  10/27/2021

Because… Infrastructure is a small asset category with $15.9 billion in mutual funds and $11.3 billion in ETFs. The S&P Global Infrastructure Index generated returns of 20.95% and 5.60% for the 1- and 3-year periods, respectively, as of November 3, 2021, lagging the S&P Global Broad Market Index’s 33.43% and 15.16% in the two respective periods. Despite the underperformance, sales of Infrastructure funds stayed positive this year as well as last year. It is worth noting that infrastructure ETFs attracted significantly more flows than their mutual fund counterparts. Infrastructure ETFs garnered $4.1 billion in the first three quarters, compared to $277 million into Infrastructure mutual funds. During 2020, Infrastructure ETFs collected $952 million, more than doubling the flows of $456 million into Infrastructure mutual funds. Lazard Global Listed Infrastructure Portfolio, the largest Infrastructure mutual fund with assets of $7.2 billion, was hit by YTD withdrawals of $1.2 billion. Global X U.S. Infrastructure Development ETF, the largest Infrastructure ETF with assets of $4.3 billion, absorbed $3.3 billion in the same time period.

2) Dimensional Converts the Tax-Managed U.S. Marketwide Value Portfolio II into an ETF

SEC Filings  |  10/29/2021

Because… DFA ranked #11 among all ETF providers at the end of September. Its ETF assets of $39.5 billion were $5.3 billion behind WisdomTree’s $44.7 billion. Since Tax-Managed U.S. Marketwide Value Portfolio II had assets of $8.2 billion as of October 2021, DFA could have a chance to surpass its closest competitor and move into the top 10 after the conversion. This will be the firm’s seventh conversion. It converted four U.S. Equity mutual funds in June and two International Equity mutual funds in September. These six ETFs had combined inflows of $752 million in 3Q21, according to Morningstar data. Dimensional Tax-Managed U.S. Marketwide Value Portfolio II suffered net outflows of $19 million this year through September and $136 million in 2020. Dimensional Tax-Managed U.S. Marketwide Value Portfolio, which was merged into its sibling Tax-Managed U.S. Marketwide Value II Portfolio on October 15, 2021 had a net intake of $8 million after suffering net redemptions of $583 million last year. It will be interesting to see if the conversion will improve fund sales.

3) Franklin Templeton to Acquire Lexington Partners, a Global Leader in Secondary Private Equity and Co-Investments

Franklin Templeton  |  11/1/2021

Because… Besides Franklin Templeton, T. Rowe Price is planning to buy Oak Hill Advisors, an alternative credit specialist. Macquarie Asset Management also announced last month an agreement to acquire alternative investment firm Central Park Group. These deals suggest that traditional asset managers are increasingly focusing on bolstering their alternative asset capabilities. According to Morgan Stanley, the private capital industry, which includes private credit, private equity, venture capital, and infrastructure, grew to $7.4 trillion at the end of 2020, and could hit $13 trillion by 2025. We believe the appetite for M&As like these will not abate going forward. Double-digit returns of the domestic equity markets have boosted companies’ cash reserves. Firms that are hoarding cash are looking to put money to work, so they are actively seeking opportunities to expand their product lines. Experienced alternative investment managers will continue to be acquisition targets. The need for revenue diversification, the challenges from passively managed products, and the lack of in-house talent have all driven fund firms to consider deals as a viable option for business growth.