State Street Global Advisors, the second-largest provider exchange-traded products, unveiled its first actively managed ETFs on Thursday. The firm has launched three ETFs of ETFs that are tactically managed by SSgA's Investment Solutions Group.
“We're at the beginning of a large bullish market for tactical-allocation products,” said Christopher Goolgasian, head of U.S.
portfolio management at the unit, which works primarily with institutional clients. “Investors have been asking: What could they have done differently to avoid the credit crisis? And one of the answers would've been to be tactical,” he said.
While bond guru Bill Gross has generated the majority of active-ETF headlines for launching an ETF version of the $252 billion Pimco Total Return Bond Fund (PTTAX), many experts see actively managed ETF portfolios as the bigger opportunity in the active-ETF space.
Model ETF portfolios already have taken off with advisers in the
separately managed accounts space. According to Morningstar Inc., there are currently 330 model ETFs, a third of which were launched in the last year, and they have a combined total of $22 billion in assets.
Meanwhile, actively managed ETFs have a total of $5 billion, or less than 1% of total ETF assets.
“It's not about where active ETFs sit today,” said James Ross, global head of ETFs. “It's about what the potential is. We've already seen significant developments with traditional mutual funds' coming to active ETFs, and we fully expect to participate in that growth.”
The SPDR SSgA Multi-Asset Real Return ETF (RLY) comprises various commodity, natural resources and inflation protection ETFs, the SPDR SSgA Income Allocation ETF (INKM) is made up of ETFs that have an income component such as high-yield and
dividend-paying stocks, and the SPDR SSgA Global Allocation ETF (GAL) will invest in various asset classes across the globe.
The real-return and income ETFs charge 0.7% annually, and the global-allocation ETF will charge 0.35%.
The ETFs have no fixed allocations and will be adjusted based on a series of quantitative and fundamental factors. Mr. Goolgasian expects the tactical strategy to result in around 40% turnover annually.
