Russell Investments plans to start ETFs based on its benchmarks and potentially earn greater fees from the fastest-growing segment of the asset-management industry.
The company filed April 2 with the SEC to offer the ETFs derived from existing benchmarks, including the Russell Global Large Cap index.
Offering the funds directly might enable Russell to capture more revenue from ETFs, an industry segment whose assets have soared more than tenfold in the past decade to $750.1 billion at the end of February, according to data from the Investment Company Institute. Russell and other index publishers, such as Standard & Poor’s and Dow Jones, typically license their market benchmarks to money-management companies that run ETFs.
“The ETFs are the reason there are so many people developing indexes,” said Gary Gastineau, the managing member of ETF Consultants. “This is a very lucrative business.”
Steve Claiborne, a Russell spokesman, didn’t immediately return a telephone call seeking comment.
Russell’s SEC filing covers 11 funds, including the Russell Global 1000 ETF. This fund will track an index comprising the 1,000 “most investible, largest capitalization” global stocks in the Russell Global Large Cap index, according to the registration statement.
The firm licenses the use of its Russell 2000 index, based on the smallest 2000 stocks in the Russell 3000, to the iShares unit of BlackRock. The iShares Russell 2000 Index Fund had about $13.3 billion in assets as of April 1, according to the IShares website.
Russell Investments has its own money management unit that oversaw about $176 billion in assets at the end of last year. In January, the company announced the hiring of James Polisson and Andrew Arenberg as managing directors at its global ETF business.
Both were executives at iShares.