Radiance Asset Management, a firm backed by U.S. Bancorp, plans to enter the exchange-traded fund market as a purveyor of active as well as passive ETFs, making it the latest upstart to try to gain a toehold in the competitive world of ETFs.
The company filed one petition with U.S. regulators to bring to market actively managed ETFs, the first of which would be a domestic equity ETF that hones in on companies that show “growth potential.”
In a separate filing, the firm has also requested permission to launch index-based ETFs that would target institutional as well as retail investors, although Radiance didn’t detail what its initial passively managed fund might look like.
Radiance joins a flurry of newcomers who have set their eyes on the quickly growing U.S. ETF market and are keen on tapping into booming investor demand for exchange-traded products, which are hailed for their low costs, transparency and tax efficiencies relative to mutual funds.
Active ETF Plans
Radiance is looking to enter the ETF space with the actively managed Domestic Equity ETF.
The proposed fund might invest in everything from U.S.-company common stocks, ETFs, preferred stocks, direct equity interests in trusts, partnerships, joint ventures and convertible debt instruments, according to the filing submitted to the Securities and Exchange Commission.
Other ETFs covering domestic and global equities, fixed income, currencies and “other assets” might follow.
Still, the exemptive relief filings from Radiance come at a time when the barriers to entry appear to be growing. This year, ETF shutterings have accelerated to a record pace, and rollouts have slowed significantly in the latter half 0f 2012.
Part of the challenge is that precious few firms control the lion’s share of assets, and there aren’t any signs that that is about to change.
The top three ETF firms by assets—for example, iShares, State Street Global Advisors and Vanguard—command more than 80 percent of the $1.278 trillion in assets linked to 1,400-plus ETFs.
But hope springs eternal, as filings from newcomers continue to roll in.
Just this week, Pyxis Funds, a Dallas-based money management firm, launched its first ETF, and the company set the bar high by challenging an Invesco PowerShares ETF with its Pyxis/iBoxx Senior Loan ETF (NYSEArca: SNLN).
Radiance’s funds would be distributed by Milwaukee-based broker-dealer Quasar Distributors, the filing said.
The in-kind stock transaction used in the Duracell deal lies of at the heart of every ETF, and has the same benefit: tax efficiency.
Stock investors are used to splits, but why all the reverse splits in ETFs?
Falling gas prices and a strong buck may boost retail stocks, but the favorite ETF may not be the best play.
An alluring new bond ETF focused on China’s mainland credit market comes with a few caveats.