Latest: BBVA adds Reits to QIS range

The launch is part of the bank’s plans to expand the QIS range into new themes, sectors and assets with the objective of ‘bringing responsible and transparent investment opportunities to everyone through investable indices, wrapped according to client needs’.

The current economic environment of higher inflation rates proves challenging for investors, hungry for protection - Pablo Suárez, BBVA

"Investors have been using Real Estate as an alternative asset to diversify their traditional Bond-Equity portfolios for decades,” said Pablo Suárez (pictured), head of quantitative investment strategies at BBVA. “[the new index] offers the opportunity to gain exposure to Real Estate assets in an efficient and liquid way."

The Solactive BBVA US Reits Index tracks the performance of the US Real Estate Investment Trusts market by screening and selecting the best positioned ones that comply with a minimum liquidity threshold, filtered to avoid companies with excessive financial leverage and weighted by their market capitalisation, tilted by dividend yield.

According to Suarez, US Reits have steadily outperformed the S&P 500 during the past twenty years and tend to behave especially well in periods of high inflation, acting as a shelter, as rental fees tend to be CPI-linked.

"The current economic environment of higher inflation rates proves challenging for investors, hungry for protection,” said Suarez. “They should be looking for investments that preserve their capital by biting that raging inflation in the long run, and Reits are one of the few solutions offering that overtime. Moreover, recent interest rates rises in the US have meant significant repricing and emerging divergences between public and private markets that offer a unique opportunity to a wise investor."

UBS, Morgan Stanley bring new custom indices to US annuities market

Security Benefit Life Insurance Company (Security Benefit) has launched the Strategic Growth 7 fixed indexed annuity (FIA) with a seven-year surrender charge schedule, and index accounts based on two new custom indices developed by UBS and Morgan Stanley.

The UBS Multi-Asset Inflation Aware Index aims to provide global exposure to equities, bonds, and commodities based on a risk-based allocation approach that is informed by market sentiment regarding the changing US inflationary environment. Each asset class features its own investment mechanism—equities use an intraday rebalancing methodology, bonds leverage a dynamic weighting mechanism to adapt to changing rates, and a diversified commodity strategy is used as an uncorrelated source of potential return.

The index targets a volatility of 5% aimed at smoothing returns over time and is rebalanced daily. Asset class allocations are guided by a risk budgeting approach with target risk budgets based on current inflation estimates updated monthly.

The Morgan Stanley Global Equity Allocator Index provides exposure to global equities employing a momentum-based allocation strategy. The Index targets 10% realised volatility, and adjusts exposure to US Equities intraday, while adjusting all other allocations by the end of the day. A momentum signal is calculated for each equity component based on the risk-controlled underlying index prices and is used as an indicator of the corresponding equity futures performance.

If the Index’s US equity holdings experience significant changes in volatility intraday, the index can rebalance to bring volatility back to target - a dynamic fee mechanism built within the index allows for a larger allocation to non-cash assets and greater participation in upside performance in a cost-controlled manner.

Each product in the Strategic Growth Series will offer an Annual and two-year point to point index account benchmarked against each of these new indices.

‘Adding these two new indices and crediting strategies to the product series expands choice for potential accumulation benchmarked against an even broader range of asset classes,” said Roger Offermann (above-right), chief actuary and chief product officer at Security Benefit.

Santander debuts ESG play with environmental and social impact

Santander has launched its first ESG structured product aimed at protecting capital and generating positive environmental and social impact, SRP has learnt.

The product which has been sold to a company from the Aragon region is a 50/50 type of structure offering a guaranteed minimum return on part of the capital invested and an additional variable return linked to the performance of the Eurostoxx 50 ESG X index.

This Eurostoxx 50 ESG X index includes European companies with the highest ESG scores and excludes those that do not meet international standards, such as tobacco companies, arms companies, military contracting, or thermal coal companies.

The Spanish bank has committed to use part of the proceeds to reforesting 3.75 hectares in Albentosa (Teruel) close to the location of the company’s headquarters, to generate an additional positive environmental impact. The land, owned by the town council, will be reforested with around 3,000 trees to create a native forest.

Santander will assume all the costs as part of its goal to mobilise €120 billion between 2019 and 2025 in green financing. The project will also have a positive social impact as additional employment will be generated for the reforestation work.

The bank restructured its Green Finance division in Q2 2022 to increase the weight to its sustainable finance business by bringing the business related to investment banking (issuance of green bonds or equity investments) and sustainable financing offered by commercial banking (green finance products) under the same unit.

Santander also appointed Lucas Arangüena as group head of green finance business reporting directly to the bank’s CEO, José Antonio Alvarez (above-right).

Santander did not respond to requests for comment by press time.

Morningstar launches annuity hub powered by Luma

Morningstar has launched the Annuity Intelligence Center, an annuity transaction module within Morningstar Advisor Workstation aimed at simplifying the process of transacting annuities by financial advisors.

The platform which is powered by Luma Financial Technologies combines educational material, comparison functionality, and product accessibility to help advisors manage their clients' annuity investments.

‘Assets in annuities are climbing, and while these vehicles are growing in popularity, the annuity marketplace remains opaque, and advisors serving investors have difficulty evaluating their options,’ said Jeff Schwantz (above-right), global head of channels and partnerships at Morningstar.

The Annuity Intelligence Center will offer advisors a single solution for all annuity product types, including variable annuities, fixed index annuities (FIAs), and registered index-linked annuities (Rilas). The platform is designed to encompass the entire annuity workflow, from training and research to order entry and lifecycle management, simplifying manual processes with interactive tools.

‘The new Annuity Intelligence Center will add a new level of transparency to the industry by removing complexities and modernising workflow, including lifecycle management from pre-trade, trade, and post-trade,’ said Schwantz.

Caplight partners with Eurex for structured pre-IPO investment products

Caplight Technologies has recently secured a strategic investment from Deutsche Börse Group and is exploring collaboration opportunities with the global derivatives exchange Eurex to bring structured pre-IPO investment products to the global financial markets.

With the Deutsche Börse investment, Caplight has now raised US$10 million, including a US$5 million seed round led by Better Tomorrow Ventures that was completed in January 2022. Other investors include Fin Capital, Susquehanna Private Equity Investments, LLLP, and Clocktower Ventures.

The firm led by Javier Avalos (right), co-founders and CEO, completed the first ever call option on private company stock in 2022.

The company has also launched a tool for tracking venture-backed private company stock prices, valuations, and trading activity. Going by the name of Caplight Data, the new service provides users with access to a dataset of over 10,000 private company transactional data points, representing over US$170 billion of volume, as well as over 20,000 investment fund marks of private company stock prices.

In addition to providing price transparency, Caplight Data powers the firm’s synthetic derivative transactions. Using MarketPrice as a reference point, accredited and institutional investors can use Caplight to make long and short-directional investments on private company stock or hedge their existing investment risk.

Caplight serves accredited and institutional investors including hedge funds, venture capitalists, public investment managers, market makers, insurance companies, and private banks.