DoubleLine and Grail teaming up on active ETF

Grail Advisors LLC is partnering with DoubleLine Capital LP to launch an actively managed emerging-markets fixed-income ETF in what will be the first such fund of its kind to hit the market.
APR 14, 2011
Grail filed Wednesday with the Securities and Exchange Commission to launch the Grail DoubleLine Emerging Markets Fixed Income ETF, which is the firm’s ninth ETF, Grail chief executive William M. Thomas said in an interview at Morningstar Inc.’s annual conference in Chicago. “This is where the flows are going and what the market is demanding,” he said of the focus on actively managed bond ETFs. DoubleLine, for its part, plans to offer a number of ETFs, said Jeffrey Gundlach, chief executive of the firm, in comments to InvestmentNews at the conference. "It seems like a sensible way of growing the business," Mr. Gundlach said, althought he wouldn't say if there will be future offerings with Grail. Grail recently secured approval from the SEC to launch an actively managed international equity ETF but has put that product on the sidelines for now because of the demand for fixed-income strategies, Mr. Thomas said. Grail is in talks with a number of managers interested in looking to do actively managed ETFs and expects to launch three to five more ETFs by year-end. Specifically, many fund companies are talking to Grail about folding existing mutual funds into active ETFs, he said. Huntington Asset Advisors Inc., the investment arm of Huntington Bancshares Inc., plans to merge its nine-year-old Huntington Rotating Markets Fund Ticker: (HRIAX) into an actively managed ETF, which it just filed with the SEC to launch, once the ETF gets up and running. “We have a lot of firms talking to us about doing a similar thing,” Mr. Thomas said. “There will be more of this in coming months.” The total expenses for the emerging-markets fixed-income ETF will be 95 basis points. Overall, mutual fund companies are embracing the fact that ETFs aren’t a passing fad, Scott Burns, an ETF analyst at Morningstar, said during a conference panel discussion Wednesday afternoon. “ETFs are much more likely to overtake stocks than funds,” he said. Ultimately, it’s the fund companies that are launching ETFs, and Mr. Burns predicts that eventually, mutual fund companies will organize themselves in such a way that there is a head of active investment management and a head of passive investment management, and the mutual funds and ETFs are just vehicles to deliver the strategies. “It won’t matter what structure investors choose,” he said.

Latest News

Why financial honesty is key to harmonious relationships
Why financial honesty is key to harmonious relationships

Nearly half of single Americans think their net worth shapes their fate in dating, but the biggest financial green flags tell a different story.

Osaic hit with class action over cash sweep payments
Osaic hit with class action over cash sweep payments

The hybrid RIA is the latest firm to face allegations that it enriched itself at customers' expense by paying unfairly low interest rates in its cash sweep programs.

LPL's Rich Steinmeier turns the page on CEO firing with eye on firm's growth
LPL's Rich Steinmeier turns the page on CEO firing with eye on firm's growth

Installed after Dan Arnold's abrupt termination, the new leader at LPL Financial is highlighting the firm's refocusing on the individual advisor.

Pershing discussing move to control portion of broker-dealers’ cash.
Pershing discussing move to control portion of broker-dealers’ cash.

The clearing and custody giant is kicking the tires on new cash sweep plan with broker-dealer clients.

LPL, Raymond James boost advisor ranks anew
LPL, Raymond James boost advisor ranks anew

LPL Financial welcomes a $345 million investment and planning team from Ameriprise as RayJay's employee advisor arm adds a seasoned Well Fargo breakaway.

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.