Today, Natixis has unveiled its first three actively managed ETFs that do not disclose their holdings daily. The new funds are all based on existing Natixis mutual funds and include the following names, tickers and expense ratios:
- Natixis Vaughan Nelson Select ETF (VNSE), 0.85%
- Natixis Vaughan Nelson Mid Cap ETF (VNMC), 0.90%
- Natixis U.S. Equity Opportunities ETF (EQOP), 0.90%
The ETFs list on the NYSE Arca Exchange.
Nick Elward, Natixis’ head of institutional product and ETFs, notes that the new ETFs are all near clones of successful existing mutual funds offered by the issuer.
“We looked across our 20+ affiliate family,” Elward said regarding how Natixis selected which mutual fund strategies to repackage as ETFs. Ultimately, these first strategies were selected based on the limitations on the types of portfolios allowed by the SEC, the length of their track records as mutual funds and the reputations of their portfolio managers were, he says.
VNSE is very similar to a nearly $200 million Natixis mutual fund with Class A shares trading under the ticker VNSAX at a net expense ratio of 1.15%. The ETF will hold 20-40 securities. Meanwhile, VNMC is very similar to the $266 million VNVAX, which has a net expense ratio of 1.24%. The ETF targets midcap companies generally falling within the market capitalization range of the Russell Midcap Value Index or that have market capitalizations of $15 billion or less, according to its prospectus.
The Vaughan Nelson approach is described in the fund documents as a “bottom-up value oriented investment process” that targets companies that are undervalued, have attractive and sustainable dividends and have a positive return on capital and stable or improving returns.
EQOP is a clone of a traditional mutual fund trading under the ticker NEFSX with $878 million in assets and a net expense ratio of 1.17%. The fund combines the expertise of two subadvisors, with Harris Associates targeting a large-cap value portfolio and Loomis Sayles managing an all-cap growth portfolio.
All three of the new ETFs are cheaper than their mutual fund counterparts by 27 to 34 basis points.
The funds join a dozen existing active ETFs that rely on different models for nontraditional portfolio disclosure. The Natixis products all use the model the firm developed with the NYSE for “nontransparent” actively managed ETFs. It disguises a manager's trading activity through a proxy portfolio, which has different security names and weights than the fund's actual holdings, but which performs substantially the same. This proxy portfolio—which consists of the fund's actual holdings, but on a five- to 15-day lag, as well as additional names that do not appear in the real fund at all—is published every day, and can be used for intraday pricing and hedging.
“At Natixis, we believe that actively managed products can produce better outcomes for investors, and by working with the NYSE, we can now combine those benefits with the many attractive features of ETF vehicles,” said David Giunta, the US CEO for Natixis Investment Managers, in a press release.
Contact Heather Bell at [email protected]