Allspring braces to leap into active ETF space

Allspring Global Investments, the mutual fund manager overseeing $570 billion in assets, has signaled its intentions to enter the active ETFs market.

On Thursday, Allspring filed a request with the SEC for exemptive relief to offer dual-share mutual fund/ETF asset classes. Currently, the firm’s portfolio of $423 billion in fixed-income and money market assets, $135 billion in equity assets, and $12 billion in multi-assets doesn’t include allocations to active ETF strategies.

Rick Genoni, Allspring's global head of product development and innovation, is spearheading the firm's expansion into ETFs. Genoni, who joined Allspring in 2022, has extensive experience in the ETF sector, having previously led global ETF strategy and strategic relationships at Franklin Templeton and served as head of ETF product management at Legg Mason.

The regulatory filing aligns Allspring with other major asset managers such as PGIM, Fidelity Investments, Morgan Stanley Investment Management, and Dimensional Fund Advisors, all of whom have shown interest in this strategy.

“An ETF share class has the potential to allow another mechanism to rebalance the portfolio in a tax-efficient way to lower or eliminate cap gains distributions,” Gerard O’Reilly, DFA’s chief executive and chief investment officer told InvestmentNews in July last year, when his firm applied for ETF share class exemptive relief.

The parade of asset managers knocking on the SEC’s door for dual-share class approval has grown steadily longer since Vanguard's patent on the structure expired in May last year. For mutual fund players making overtures to adopt the model, the ability to launch new ETFs would unlock a massive opportunity to attract new clients, as well as gain additional distribution scale and tax efficiencies.

Aside from Allspring, Principal Global Investors, which already offers active ETFs, and Charles Schwab also filed their own requests this week with the SEC to launch their own dual share class ETFs. Last week, Franklin Templeton submitted an application for the same exemption.