1) BlackRock Launches iShares Robotics and Artificial Intelligence ETF BlackRock | 6/28/2018
Because…The new iShares fund (IRBO) is the fifth ETF (including a leveraged ETF) that invests exclusively in robotics and artificial intelligence (AI). ROBO Global Robotics & Automation Index ETF (ROBO) and Global X Robotics & Artificial Intelligence ETF (BOTZ) already had assets of more than $2 billion, thanks to their strong performance in 2017. IRBO may not surpass ROBO and BOTZ in assets soon, but its expense ratio of 0.47% is much lower, which can pose a serious threat to the incumbents. Both ROBO and BOTZ lost more than $100 million in the past three months, but the robotics and AI industry should hold much potential in the long run. We believe more ETF providers will join the foray to explore opportunities in this market segment.
2) PGIM Advocates for Institutional Approach to DC Investing Planadviser | 6/29/2018
Because… According to research from CEM Benchmarking published earlier this year, defined benefit (DB) funds outperformed defined contribution (DC) plans by 0.46% from 2007‐2016. The gap narrowed from the 1.80% net return difference from 1998‐2005. While DC plans nearly caught up to DB plans in terms of improving performance and reducing costs, one area - risk management - is hard for DC plan participants to enhance if they hold investments outside of target-date funds. DB plans are managed by professionals who have the expertise and tools to analyze and hedge various risks in the changing market and regulatory environment.
3) Hennessy Advisors, Inc. to Acquire the BP Capital TwinLine Funds PR Newswire | 7/10/2018
Because… This is Hennessy’s third fund adoption in the past three years, after acquiring three Rainier funds in 2017 and two Westport funds in 2016. The firm had the third highest profit margin among 24 publicly traded asset managers FUSE tracks for the 12-month period ending March 2018. However, the investment boutique does not offer any bond funds and two International Equity funds are exposed to Japan only, making it unable to capitalize on industry flows into these asset classes. Hennessy held 65% of its assets in U.S. Equity and 20% in Sector Equity as of May 31, 2018. While fund adoptions can build scale and expand the product line, the lack of asset class diversification is creating a strong headwind in the current market environment.