Firm’s exemptive filing covers actively and passively managed funds.
Another big name is targeting the ETF industry: Russell Investments has filed for sweeping exemptions with the Securities and Exchange Commission that would allow it to create actively managed as well as index-based ETFs.
The July 2 filing designates Russell Investment Management Company as the adviser to the funds and Russell Financial Services as the distributor. It makes several requests, beyond the basic operation of ETFs, such as allowing funds of funds operated by Russell to buy shares of the ETFs in amounts beyond what is normally allowed under SEC guidelines and allowing ETFs launched by Russell to use the firm’s own indexes.
The filing specifies that the funds could cover domestic stocks, international stocks or fixed income. It also says that the holdings of each fund for the prior day, whether passive or actively managed, will be made available on a daily basis. No individual funds were actually described in the filing.
A subsidiary of Northwestern Mutual, Russell Investments has a total of $136 billion under management, no small sum by any means. Given that the firm already has its own family of well-known indexes (some of which already underlie ETFs from other providers) in addition to operating traditional mutual funds, entry into the ETF arena seems a natural fit.
The field is seeing quite a few newcomers looking to break into ETFs, with Pimco rolling out its first fund and Old Mutual filing for its own funds. With Russell’s involvement in institutional management, there could be a bigger push for wider inclusion of ETFs in 401(k)s.
A 40-APP filing is one of the first filings a fund company must make before it can offer ETFs. Once the exemptions are granted by the SEC, the issuer can then file prospectuses for new funds.
You can read Russell’s 40-APP filing here.
--Contributed by Heather Bell