Madison Investments Issues First ETF With Eye Toward Advisors

The $23 billion asset manager enters the field with the Madison Dividend Value ETF (DIVL), with three more launches planned.

Madison Investments, a 49-year-old Wisconsin-based asset management firm with nearly $23 billion in AUM, is migrating into ETFs as a means of capturing a share of the registered investment advisor space. 

The launch today of the Madison Dividend Value ETF (DIVL) kicks off a four-week rollout of four income-focused ETFs, which are similar but not identical to some of the firm’s separately managed accounts offered through the various brokerage channels. 

“This is a natural extension of what we do; we want to make sure everyone who wants access to Madison has access,” said Patrick Ryan, president of Madison mutual funds and ETFs. 

Of Madison’s total assets under management, approximately $20 billion is in separate accounts, with the remaining $3 billion spread across a dozen mutual funds and variable insurance trust accounts.  

Ryan noted the migration into ETFs is specifically geared toward financial advisors, which are by far the biggest users of ETFs. 

“ETFs are becoming a bigger piece of the industry, and in terms of relevance, ETFs are something you want to be part of in the future,” he explained. “One area we need to target better is the RIA space, because we traditionally haven’t had a big presence there.” 

Madison Investments Strategies 

To manage the relationship with the wirehouse distribution channels while also going after independent advisors with the new ETFs, Ryan said Madison Investments was careful to ensure the investment strategies are distinct from one another. That will likely continue to be the case as the firm moves deeper into the ETF industry. 

“Our largest distribution partners preferred that these ETFs were a little different from our SMAs,” he said, adding that Madison plans to “leverage our relationships with the different wirehouses where we have great shelf space.” 

While technically starting from scratch, Ryan noted the new ETFs are “closely aligned” with some of the existing SMA strategies: “The SMA track records give us something to point to ever if we can’t put that out there. I think the assets will come in relatively quickly.” 

The Madison Dividend Value ETF, like the three Madison ETFs coming behind it, is a fully transparent active strategy. 

The fund, managed by John Brown and Drew Justman, has an expense ratio of 0.65% and invests in stocks with relative dividend yields that fall within the top 25% of their historic range, with a focus on high quality companies, strong balance sheets and durable competitive advantages. 

Over the next three weeks, the asset manager will launch the Madison Covered Call ETF (CVRD), which has an expense ratio of 0.90%; the Madison Aggregate Bond ETF (MAGG); and the Madison Short Term Strategic Income ETF (MSTI), both of which charge 0.40%. 

Contact Jeff Benjamin at @[email protected]