Biggest Multifactor ETF Owners: Issuers

July 30, 2019

Issuers Like Their Own Multifactor ETFs

Of course, performance isn't everything. It's entirely possible that—middling returns or no—retail investors would be buying these ETFs anyway, because they believe that much in their potential.

But 13F filing data suggests many of the most popular multifactor ETFs are owned largely by their own issuers, indicating asset managers are the ones funneling client cash into their own in-house products.

Goldman Sachs, First Trust, Franklin Templeton and John Hancock are all the largest stakeholders in their own multifactor ETFs:

 

Ownership Of Multifactor ETFs
Ticker Fund Issuer Top Holder Of Fund Outstanding Shares Owned
GSLC  Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF Goldman Sachs Goldman Sachs 9%
FXU  First Trust Utilities AlphaDEX Fund First Trust First Trust 44%
RODM  Hartford Multifactor Developed Markets (ex-US) ETF Hartford Morgan Stanley 12%
OMFL  Invesco Russell 1000 Dynamic Multifactor ETF Invesco Invesco 68%
FLQL  Franklin LibertyQ U.S. Equity ETF Franklin Templeton Investments Franklin Templeton Investments 83%
SPHD  Invesco S&P 500 High Dividend Low Volatility ETF Invesco Merrill Lynch 4%
JHEM  John Hancock Multifactor Emerging Markets ETF John Hancock ManuLife Financial 97%
IGF  iShares Global Infrastructure ETF BlackRock Northern Trust Investments 17%
AGGY  WisdomTree Yield Enhanced U.S. Aggregate Bond Fund WisdomTree Horizon Investments 7%
JHMM  John Hancock Multifactor Mid Cap ETF John Hancock ManuLife Financial 33%

Sources: ETF.com, FactSet; data as of July 26, 2019

 

The $1.2 billion Franklin LibertyQ U.S. Equity ETF (FLQL), for example, is owned 83% across two Franklin Templeton divisions: Franklin Advisers and Franklin Mutual Advisers. The $814 million John Hancock Multifactor Emerging Markets ETF (JHEM), meanwhile, is owned 97% by ManuLife Financial, parent company of John Hancock.

That's not the case for most multifactor funds launched by legacy ETF issuers like iShares, WisdomTree and Invesco. For most of these products, the largest stakeholders tend to be market makers and asset managers targeting financial advisors. The one exception is the $1 billion Invesco Russell 1000 Dynamic Multifactor ETF (OMFL), 68% of which is owned by Invesco itself.

Multifactor Revolution?

There's nothing inherently wrong with money managers buying their own book. To some extent, we ought to expect it; these companies attract clients based on the value proposition offered by their proprietary investment approaches, so why wouldn't they put clients' money into products reflecting their unique brand of thinking?

However, despite strong flows and good press, multifactor ETFs clearly remain a niche product for a niche audience. It's unclear what—if any—appeal multifactor ETFs have to a wider audience of retail investors and independent advisors; and for now, their growth appears to be hamstrung by the size of their issuers' pocketbooks.

Contact Lara Crigger at [email protected]

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