Vident’s First ETF Gathers $150M On Day 3

November 01, 2013

Advisory firm Ronald Blue & Co. helps new fund VIDI gather impressive AUM.

The new Vident International Equity ETF (VIDI) pulled in $150 million in new assets today, just its third day of trading. The nascent fund traded 6.3 million shares in a series of large blocks Friday, suggesting a single or small number of buyers moving into the fund in a coordinated fashion.

The massive inflows likely represent interest from Ronald Blue & Co., a principles-based financial advisory shop based in Atlanta, with more than $7 billion in assets under management. Ronald Blue & Co. has more than 100 financial advisors, and operates primarily in the Southeast.

The well-established firm played a key role in developing and launching both the ETF and its issuer, the nonprofit firm Vident Financial. Following the challenges of 2008-2009, Ronald Blue & Co. set out on a long-form research project to see if it could develop strategies that would provide better outcomes for clients, while aligning with the firm’s overall values.

That research led to a strategy focused on the concept of human flourishing, tempered by the principle of the inherent uncertainty of day-to-day life and led to Vident Financial.

The new ETF reflects these concepts by tilting its exposure to countries and companies that have the right environment to support growth, including low debt, strong rule of law, economic freedoms and other factors. At the same time, it incorporates a risk-management and valuation strategy developed by Lattice Strategies, an ETF-focused strategy firm based in San Francisco, to ensure that the ETF provides strong risk-adjusted returns.

The VIDI example is part of a broader trend in the ETF industry where products are developed with a specific client in mind, and then offered to the broader world in the ETF package.

The most recent and perhaps best-known example came from BlackRock, which developed a series of enhanced index strategies using the Arizona State Retirement System as an anchor client. These funds—including the iShares Enhanced U.S. Large-Cap ETF (IELG | B-78) and the iShares Enhanced U.S. Small-Cap ETF (IESM | B-54)—debuted in April.

By having an anchor client in place, ETFs can quickly gain the kind of critical mass required to attract external investors, many of whom require an ETF to have $100 million in assets or more to invest.

 

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