ETF niche players combine to form nearly $8 billion suite of specialty funds

Two specialty ETF providers are joining forces to further develop their unique corner of the market.

Amplify ETFs, a $4.2 billion asset manager, is acquiring the ETFs of ETF Managers Group, which oversees $3.5 billion.

The deal brings under one roof more than a dozen popular thematic ETFs that offer concentrated exposure to areas such as marijuana, blockchain, artificial intelligence and precious metals.

“These kinds of small ETF firms with a couple of hit products can be pretty valuable,” said Eric Balchunas, ETF analyst at Bloomberg Intelligence.

“Combined, the two firms have a dozen solid hits,” Balchunas said. “They aren’t core positions, but they are good satellite positions. And satellite strategies are less fee-sensitive because Vanguard is never going to compete in these areas. And being first to market with good volume is the equivalent of beachfront property.”

A few of the hot ETFs from ETF Managers Group include ETFNG Alternative Harvest (MJ), ETFNG Prime Junior Silver Miners (SILJ), ETFNG Prime Mobile Payments (IPAY), and Etho Climate Leadership (ETHO).

From Amplify, the list includes Amplify High Income (YYY), Amplify Lithium & Battery Technology (BATT), Amplify Online Retail (IBUY) and Amplify Transformational Data Sharing (BLOK).   

“ETFMG will boost Amplify's thematic lineup and support advisors that want to take a diversified approach to long-term trends,” said Todd Rosenbluth, director of research at VettaFi.

“As more large asset managers enter the ETF market with strategies known in the mutual fund world, a broad lineup can help,” he added.

Christian Magoon, founder and chief executive of Amplify ETF, described ETFMG as on par with Amplify in terms of launching innovative strategies.

"ETFMG has created an impressive roster of strategies and we are excited to acquire its ETFs as these strategies align well with our commitment to being at the forefront of ETF industry growth and innovation,” Magoon said in a statement. “We look forward to expanding the access and awareness of this compelling and differentiated product set.”

The transaction is expected to close later this year pending necessary approvals, including requisite approvals by fund boards and and ETF shareholders. Terms of the deal were not disclosed.