New ETF Issuer WBI Pulls In $1B-Plus

August 29, 2014

Fund issuer surprises with huge money inflow into 10 new funds.

New ETF issuer WBI—the manager of the Absolute Shares Trust—had more than $1 billion flood into its range of 10 actively managed ETFs just one day after the funds launched.

The firm, which acquired the exemptive relief necessary to market ETFs from Illinois-based Millington Securites, launched its ETFs on the New York Stock Exchange on Aug. 27 with just $2.5 million in assets. But the company had significant demand lined up in advance. By ETF.com’s tally, between $75 million and $144 million flowed into each of the 10 funds on their first two days of trading.

The asset haul by WBI, a firm that had been marketing actively managed money management services for about a decade, is one of the more impressive in the 21-year history of the U.S. ETF industry.

The SPDR Gold Shares (GLD | A-100), the gold bullion ETF, pulled in its first $1 billion in assets in just three days, while Bill Gross’ Pimco Total Return ETF (BOND) attained its $1 billion-in-assets milestone in just under three months.

Closer to home, the WBI launch resembles the quick asset gathering by the Vident International Equity Fund (VIDI | D-52), a quasi-active enhanced beta security that screens stocks along ethical lines. It gathered its first $500 million inside of two weeks by dint of its relationship with Ronald Blue & Co., a Georgia-based advisory firm that plowed sizable client assets into VIDI from the first.

Vident’s “bespoken” launch, to borrow the ETF industry’s preferred term, is precisely what New Jersey-based WBI has done with its 10-fund launch. The firm, which has around $3 billion in assets in separately managed accounts and in mutual fund strategies, was able to segue some of those pre-existing client assets into the new ETFs, a company source told ETF.com.

A bit more than half of the $1 billion came from existing client assets, Don Schreiber, the firm’s chief executive officer and founder said in a telephone interview.

The 10 funds offer quantitatively driven active approaches to different areas of the market. They have high annual expense ratios for ETFs—between 1 percent and 1.08 percent a year. But the securities are designed to justify that by providing better risk-adjusted long-term returns.

The firm’s clients are mostly other advisors serving the individual and high net worth market, Schreiber notes. That fact makes WBI an instant presence in the world of so-called ETF strategists, who market model ETF portfolios to advisors with individual and institutional clients.

About 5 percent of the $1.9 trillion now invested in U.S.-listed ETFs is linked to ETF strategists, and the segment is the perhaps the fastest-growing part of the expanding ETF universe.

The funds and their assets under management as of August are as follows:

  • WBI SMID Tactical Growth Shares (WBIA): $92 million
  • WBI SMID Tactical Value Shares (WBIB): $75 million
  • WBI SMID Tactical Yield Shares (WBIC): $97 million
  • WBI SMID Tactical Select Shares (WBID): $80 million
  • WBI Large Cap Tactical Growth Shares (WBIE): $108 million
  • WBI Large Cap Tactical Value Shares (WBIF): $90 million
  • WBI Large Cap Tactical Yield Shares (WBIG): $111 million
  • WBI Large Cap Tactical Select Shares (WBIL): $101 million
  • WBI Tactical Income Shares (WBII): $144 million
  • WBI Tactical High Income Shares (WBIH): $137 million

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