GMO ETF Move Is a Sign of the Times
As ETFs gain appeal, investors will get access to a wider range of asset managers.
In case there was any doubt about the momentum of the ETF industry, GMO, the $70 billion investment firm founded by Jeremy Grantham, continues to expand its ETF footprint.
The fact that an investment shop known for sophisticated strategies designed for wealthy individuals and institutions is homing in on exchange-traded funds says everything you need to know about the direction of investor assets and the larger financial services landscape.
GMO's QLTY ETF
Boston-based GMO entered the ETF arena a year ago with the GMO U.S. Quality ETF (QLTY), which has already grown to more than $1.2 billion.
With three more ETFs hitting the market this week and at least two more in registration, GMO’s focus is evident.
It was just a day earlier that $18 billion Dallas-based investment manager Westwood Holdings Group announced its plans to ramp up its ETF business that currently includes two ETFs launched in May of this year.
Westwood, a 40-year-old asset manager of separate accounts and 13 mutual funds, has entered into a joint venture specifically to develop an ETF lineup.
It’s not a coincidence that all roads lead toward ETFs.
ETFs Keep on Winning
The Vanguard Group, the second largest ETF issuer behind BlackRock, is among those asset management conglomerates with legacy mutual fund platforms that are steadily bleeding assets, as ETFs swell in popularity quarter after quarter.
The Malvern, Pa.-based Vanguard announced recently its plans to shutter its mutual fund platform for retail investors by the end of next year.
Presented by Vanguard as an “upgrade,” the goal is to transition investors from the mutual fund platform to the Vanguard brokerage platform where they will have access to ETFs, among other things.
The writing is on the wall, according to the latest research from Morningstar that showed nearly $70 billion flowing into ETFs in August, while nearly $45 billion was pulled out of mutual funds.
Over the first eight months this year, ETFs took in nearly $590 billion and mutual funds bled $217 billion.
For investors and financial advisors, this all adds up to more access to low-cost strategies offered by increasingly sophisticated asset managers, including some that have never before been accessible by retail-class investors.