QuantShares To Be Acquired By Boston Firm

May 22, 2013

QuantShares gets a lifeline from Mosaic, another Boston-based firm.

FFCM LLC, the investment advisor behind the QuantShares family of specialty ETFs, agreed to be acquired by Boston-based Mosaic Investment Partners, reinvigorating a four-fund QuantShares lineup that hasn’t pulled in many assets, with a capital infusion that should preserve the franchise and lead to product launches this year.

The company’s four ETFs are well regarded in the sense that serious minds in the ETF industry see the market-neutral concept as serious. But with only $22 million in assets, the funds can’t be money makers. Boston-based FFCM also shuttered three ETFs in 2012 that hadn’t gathered many assets, putting a finer point on the realities of having low-asset funds.

The bottom line is that the company probably needed some sort of alternative financing, and it seems to have found it in Mosaic, a financial services firm that manages $5.8 billion for institutions, family offices, endowments and foundations, according to a press release from FFCM. Terms of the acquisition weren’t disclosed.

“Our current ETF lineup will remain intact and we will continue to create new liquid alternative ETFs and managed ETF solutions, which are seeing tremendous asset growth as investors look for uncorrelated investment returns,” QuantShares Chief Executive Bill DeRoche and its Chief Financial Officer Chuck Martin said in the press release.

The two said demand for “liquid alternative” investments has increased in the past two years, and reaffirmed that FFCM’s “exemptive relief” gives it the legal right to market ETFs, allowing the company to create inexpensive tools for investors to decrease volatility in their portfolios and increase their risk-adjusted returns.

“We believe that becoming part of Mosaic will position QuantShares as the leading provider of liquid alternative ETFs in the market and we look forward to the launching of a number of new products in 2013,” DeRoche and Martin said.

The company’s four existing ETFs, and their assets are as follows:

  • QuantShares U.S. Market Neutral Anti-Beta ETF (NYSEArca: BTAL), $13.7 million
  • QuantShares U.S. Market Neutral Momentum ETF (NYSEArca: MOM), $1.22 million
  • QuantShares U.S. Market Neutral Size ETF (NYSEArca: SIZ), $3.81 million
  • QuantShares U.S. Market Neutral Value ETF (NYSEArca: CHEP), $3.94 million


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