ETF Issuer Solutions Plans Long/Short ETF

By
Cinthia Murphy
November 12, 2012
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An unknown player comes out of the woodwork with plans to offer active ETFs.

ETF Issuer Solutions, a new firm, headed by two executives previously from Factor Shares, filed a petition with U.S. regulators to market actively managed exchange-traded funds, saying its first ETF would be a long/short strategy designed to weather all market conditions.

That initial ETF, the AltShares U.S. Long/Short Fund, would invest primarily in ETFs and other exchange-traded products, but would also tap into global fixed income and equities, currencies, closed-end funds and cash equivalents, according to the filing from the New York-based firm.

The strategy, which would introduce ETF Issuer Solutions to an expanding roster of ETF providers vying for investor assets in a quickly growing ETF market, is designed to “preserve and grow capital, independent of market direction,” according to the prospectus.

ETF Issuer Solutions is, indeed, the latest relatively unknown firm to come out of the woodwork to bring to market actively managed funds.

Headed by Matt Brown and Bill Smalley, the new ETF company is hoping to get exemptive relief to offer third-party ETFs in a way similar to Exchange Traded Concepts, as well as proprietary technology solutions linked to fund administration and distribution.

Many have suggested that the next big wave of growth in the ETF industry would come from active strategies, which still represent only a small minority of the total U.S.-listed ETF investor assets that stood at just shy of $1.278 trillion as of Nov. 9, according to data compiled by IndexUniverse.

The filing isn’t unlike Radiance’s similar petition recently filed with the Securities and Exchange Commission to market actively managed ETFs. The U.S. Bancorp-backed newcomer is also taking steps to include passive strategies in its plans, but its first fund would be an actively managed strategy.

ETF Issuer Solutions will serve as investment advisor to the AltShares U.S. Long/Short Fund, the filing said. 

Correction: A previous version of this article referenced Factor Shares as "now-defunct." The company has changed ownership, but it is not "defunct." We apologize for the error.

ETF DAILY DATA

Massive inflows into U.S. equity funds on Monday, Dec. 22, propelled total ETF assets to a new record.

'SPY' raked in more than $12 billion Monday, Dec. 22, pacing State Street's issuer-leading inflows on the day, as total U.S.-listed ETF assets jumped to $2.005 trillion.

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