Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. MONEY MANAGEMENT
January 20, 2014 12:00 AM

Subadvisory deals open ETF doors for many firms

Ari I. Weinberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    In early January, State Street Global Advisors, which manages $392 billion in SPDR ETFs, launched three actively managed exchange-traded funds with MFS Investment Management. That same week, Emerging Global Advisors and The TCW Group announced plans to market three emerging markets investment-grade bond index ETFs under the EGShares brand with TCW serving as subadviser.

    Similar deals among money managers, banks and investment advisers have allowed entry into the exchange-traded product business that might otherwise have been difficult because of the lengthy regulatory requirements to a launch a new fund.

    “The overarching goal of these partnerships is to leverage complementary strengths,” said Ben Johnson, director of passive funds research at Morningstar Inc., Chicago.

    Other recent tie-ups include BlackRock subadvising on Fidelity Investments' sector ETFs and GSO/BlackStone's role as subadviser to State Street on an actively managed senior loan ETF. That fund closed 2013 with more than $600 million in assets, making it the second largest ETF launch that year.

    “As GSO (the Blackstone unit specializing in credit investing) evaluated expanding its reach to more clients, it became clear that the ETF option offered greater transparency and intraday liquidity versus a traditional mutual fund,” said Lee Shaiman, a managing director for GSO/Blackstone in New York.

    These partnerships contribute to the efforts of State Street and others to shift the thinking about ETFs from consideration of active vs. passive and “think instead about whole solutions for an investment portfolio,” said Jim Ross, senior managing director of SSgA and global head of SSgA's ETF business in Boston. Mr. Ross highlighted an ongoing affiliation with Nuveen Investments as subadviser to a set of SPDR bond funds first launched in October 2007.

    Mr. Ross added that while State Street takes the lead on marketing, sales and distribution for SPDR products, determining the expense ratio for subadvised products is a joint conversation that looks at the competitive landscape among active and passive products through a traditional market cycle.

    Also in 2007, Invesco PowerShares introduced a momentum fund based on an index developed by Dorsey, Wright and Associates LLC, a Richmond, Va.-based money management and research company. The two partners increased their ties this past December when PowerShares announced plans to move 10 ETFs to DWA indexes from NYSE indexes.

    The willingness to partner on exchange-traded products is largely a function of the dynamics of the market and the cost of building expertise. For example, Fidelity Investments expanded on a previous partnership with BlackRock, offering iShares ETFs commission-free on Fidelity platforms, to include a subadvisory role for the 10 MSCI sector index ETFs launched in October. The funds have attracted $367 million in assets. Nine Select Sector SPDRs from SSgA now hold $79 billion in assets.

    The new Fidelity ETFs were designed to complement the company's existing set of actively managed sector mutual funds, now marshaled by SelectCo, Fidelity's Denver-based business unit focusing specifically on sector investing. Fidelity is also planning actively managed bond ETFs outside of SelectCo.

    “With our focus on active sector investing, launching a whole suite of broad-based passive products would not have been the right choice,” said Anthony Rochte, president of Fidelity SelectCo.

    One of the prime advantages of partnering is time, particularly in the quantitative- and technology-driven winner-take-all realm of ETPs. But for money managers that would prefer not to team up with ETP heavyweights, some smaller firms also come with open arms.

    Exchange Traded Concepts LLC, an Oklahoma City-based company salvaged from the shuttering of FaithShares Advisors, provides several money managers and registered investment advisers with ETFs through its already-attained regulatory exemptive relief, the required clearance from the U.S. Securities and Exchange Commission for mutual funds seeking to trade as ETFs.

    For example, Horizons ETFs, a unit of Korea's Mirae Asset Financial Group, worked through ETC to launch two funds in the U.S., and VelocityShares, which partnered with Credit Suisse for exchange-traded notes based on the CBOE Volatility Index, works with both ETC and Denver-based ALPS for white-label ETFs.

    Garrett Stevens, chief executive officer of ETC, said the business is about much more than just renting relief.

    “Our clients are looking for both customer service and product expertise,” he said. The company hosts 10 ETFs and $1 billion in assets through its three series trusts. n

    Related Articles
    Skepticism needed when evaluating new strategies
    Mirae Asset chooses client portfolio manager
    Recommended for You
    MassMutual_Logo_i.jpg
    MassMutual becomes equity investor in Kudu
    ONLINE_180819917_AR_0_ZXNMFGHRAFDD.jpg
    Westwood to acquire Salient Partners for $35 million
    Intermediate Capital inks new ESG, sustainability leader
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 23, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Crossroads: Politics, Inflation, & Bonds
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 23, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference