Nuveen Building Up Its ETF Operation
One of the investment gurus responsible for the American Stock Exchange's popular index-fund lineup has left the exchange for a new job at asset manager John Nuveen Co., a move signaling the mutual-fund industry's growing acceptance of exchange-traded products.
Gary L. Gastineau, joined the Chicago fund company later in March to launch a business in exchange-traded funds, which have become some of the most widely traded products on the Amex. There, ETFs have grown to more than $30 billion in assets since being launched in the early 1990s. Gastineau joined the Amex about five years ago as senior vice president of new product development.
Nuveen is pushing more aggressively into exchange-traded funds. So far, all of the Amex's ETFs follow stock-market indexes like the Standard & Poor's 500, but exchange officials have recently talked to fund firms about varieties based on actively managed mutual funds.
While Nuveen isn't expected to create clones of these index funds, the firm is considering exchange-traded funds based on some of the 17 index portfolios it recently introduced as unit investment trusts. Those investment offerings include indexes devoted to technology, pharmaceutical and financial services stocks. Nuveen is also expected to work on new exchange-traded investment offerings, following both index funds and ones run by stock-pickers. "The exchange-traded fund is very important to the future of the business," said Tim Schwertfeger, Nuveen's chairman and chief executive.
How big could it get? On March 6, Gastineau informed Amex, a National Association of Securities Dealers unit, of his intention to take the Nuveen job, based in New York. "The potential was so great [at Nuveen] that there wasn't any point in talking about" staying, he said. The firm oversees $71 billion, mostly in bond funds.
Nuveen hopes to launch the first of its new exchange-traded stock-index funds by the end of this year, pending regulatory approval, Gastineau said, declining to talk further about what types of new index strategies will be offered.
Nuveen's push into this area comes as numerous traditional sellers of mutual funds are exploring the possibility of listing some sort of fund on a stock exchange.
Salomon's New Index Man
Salomon Smith Barney hired Ian Toner late in 1999 to promote its indexes on a global level. Toner was previously the director of marketing at Intersec Research, an investment management consulting firm in London. As director of marketing at Salomon Smith Barney, Toner is based in London. His responsibilities include cultivating relationships with consultants and investment professionals, particularly institutional fund managers, as well as increasing the efficiency of the index sales team's distribution channels. He reports to both Tom Nadbielny, head of the global equity index group in Salomon's New York offices, and to Albert Richards, head of European equity research in London.
Deutsche Asset Shuffle Slows
Deutsche Asset Management's aggressive hiring spree (see Indexes Jan.-Mar. 2000) may have slowed down a little, but the company continues to woo experts from its competitors in an effort to bolster its ranks. Patrick Cannon, 31, previously of Barclays Global Investors, joined Deutsche Asset Management in early February as a Director and Head of US Equity Indexing. Previously Cannon was a Principal and Head of Small Cap Equities at BGI and oversaw approximately $45 billion in indexed assets. He was also a member of the global index investment sub-committee.
Index People Become Authors
John Bogle, best known as the founder of Vanguard Group and as a leading indexing advocate, has completed another book. It will be published by McGraw-Hill and is scheduled for release in September. John Bogle on Investing: The First 50 Years will be the first title in the Great Ideas in Finance series. The book is a collection of Bogle's writings and speeches, including his 1951 thesis written for Princeton University. The Foreword will be written by former Chairman of the Federal Reserve Board Paul A. Volcker. Previous books by Bogle include Bogle on Mutual Funds and Common Sense on Mutual Funds. The sequel is not expected to be available for some time.
Ted Cadsby, president and chief executive of CIBC Securities Inc. of Canada, published a book on index investment in the last half of 1999. The Power of Index Funds is written for individual investors and advocates the use of index strategies in portfolios. However, he also offers advice on investing in actively managed funds and creating a balance in one's portfolio between active and index strategies.