Daily ETF Watch: Legg Mason To Self Index

Legg Mason recently filed for exemptive relief to launch self-indexed funds, a follow-up to the firm’s original filing to market actively managed and index-based ETFs in 2010 and 2012, respectively. Crucially, the firm has yet to launch any funds.

The latest 40-APP filing follows a standard format, detailing plans for self-indexed funds targeting domestic and foreign fixed income, 130/30 strategies and long/short strategies. Similar filings have been made recently by Charles Schwab, ARK Investment Management, Recon Capital and Coefficient Capital (also known as AlphaClone).

Legg Mason is a large firm known for its active management approaches; as of the end of April 2015, it had $707 billion in assets under management.

Like so many fund firms that enjoyed vast success in the heyday of the open-end mutual fund, Legg Mason is clearly trying to find its way in the brave new world of ETFs. The challenge is to market ETFs without undermining their existing franchises. Much like J.P. Morgan has done, it appears the sweet spot for such firms are enhanced beta, factor-focused-type index ETFs based on in-house indexes.