Daily ETF Watch: Barclays, Elkhorn Team Up

July 24, 2015

Barclays and Elkhorn Investments announced in a press release on Thursday that they had entered into a strategic partnership. While Barclays has several exchange-traded notes trading on U.S. exchanges, it exited the exchange-traded funds business in late 2009 with the sale of Barclays Global Investors—and thus its iShares business—to BlackRock. The new deal will bring Barclays back into the ETF space, though not necessarily as an issuer.

Elkhorn Investments just launched its first ETF, the Elkhorn S&P 500 Capital Expenditures ETF (CAPX), a few months ago, but the firm was founded by Ben Fulton, who until recently was at the head of Invesco PowerShares.

The press release doesn’t explicitly explain the nature of the relationship, noting initially that “[the] partnership is designed to extend Barclays’ product availability by bringing together its extensive experience in creating distinctive investment concepts with Elkhorn’s independent product expertise.”

However, the statement also says that the partnership will allow the firms to offer clients “access to additional products based on Barclays’ strategies” and points out that Barclays has launched a Women in Leadership index and formed additional relationships with Roubini Global Economics and Nobel Laureate Robert Shiller. That suggests that the financial behemoth will provide Elkhorn with indexes to underlie its products.

Barclays, of course, is known for its fixed-income indexes, many of which were acquired from Lehman Brothers after Lehman declared bankruptcy. However, it also offers alpha-generating strategy indexes for different asset classes. It’s partnered with Shiller to create an index based on his CAPE metric, and that index now underlies the Barclays ETN+ Shiller CAPE ETN (CAPE). An in-house Barclays index also underlies its Barclays Women in Leadership ETN (WIL).

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