OppenheimerFunds in deal for fund firm that creates smart-beta ETFs

VTL manages eight ETFs and $1.7 billion, is known for funds that use rules-based approaches to select stocks that may outperform the market

Sep 9, 2015 @ 11:22 am

By Trevor Hunnicutt

In the latest move by a traditional mutual fund firm to expand into exchange-traded funds, OppenheimerFunds said Wednesday it plans to acquire the firm responsible for RevenueShares.

OppenheimerFunds' move to acquire VTL Associates is part of its bid to build so-called smart-beta ETFs, which track often-exotic underlying indexes. The firm has struggled with asset attrition in its traditional mutual fund business.

Terms were not disclosed.

The deal comes after a year of high valuations for small mom-and-pop ETF shops and index manufacturers, nearly a year after Janus Capital Group Inc. bought another ETF maker, VelocityShares. A number of mutual fund shops have watched the growth of their businesses stall as ETFs, most of which track indexes, grew to $3 trillion globally.

(More: Vanguard Group hires a smart beta expert from pioneer Research Affiliates)


Over the past year, OppenheimerFunds has lost $10 billion from its mutual fund lineup, the 13th largest in the U.S., according to Morningstar Inc. The firm manages $220 billion in all.

VTL manages eight ETFs and $1.7 billion. It also has a business in separate accounts. It's known in particular for smart-beta funds, which use rules-based approaches to select stocks that may outperform the market. Similar funds have been the source of one in five dollars that has moved into U.S. mutual funds and ETFs, according to Morningstar.

“Investors are looking to active managers for innovative solutions to add to their overall investment strategy, including products that are designed to deliver better-than-market returns with full transparency of their investment process,” Art Steinmetz, chairman and chief executive of OppenheimerFunds, said in a statement. “VTL's distinctive approach to smart beta is an outstanding addition to our compelling array of investment strategies across all asset classes.”


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