ETFs

15 years later, Nuveen Investments gets a go-ahead on ETFs

Money manager's rebooted efforts to sell ETFs get a nod from the Securities and Exchange Commission.

Fifteen years ago, Nuveen Investments Inc. asked the Securities and Exchange Commission for permission to sell exchange-traded funds. This week, the regulator said yes.
In a move that will likely clear the way to Nuveen offering its own ETFs for the first time, securities regulators said they are likely to approve the firm’s February application to bring its stock-picking and other strategies to a market whose fast growth has been driven in part by fee-based financial advisers.
That application came 15 years after Nuveen pioneered, then dropped, efforts that could have culminated in bringing the first bond exchange-traded funds to market.
Unlike some of its peers in the mutual fund business that are building ETF lineups for the first time, Nuveen was an early pioneer of the structure.
It first asked for permission to offer index-based ETFs in 2000, at the time developing proposals for what could have been the very first bond ETFs. Those products now enjoy tremendous popularity — ETFs are a $3 trillion market globally — a boon to BlackRock Inc., the Vanguard Group Inc. and State Street Corp., among other firms.
Over the last several years, Fidelity Investments, JPMorgan Chase & Co., New York Life Insurance Co. and others, have worked to catch up. They’ve bought or partnered with competitors — or started projects of their own — to construct businesses that can thrive in the deeply competitive marketplace. Scores more have filed with the SEC to obtain the necessary permissions to launch ETFs legally.
UNIT SHUTTERED IN 2002
Nuveen shuttered its ETF unit in 2002, facing pressure to focus on businesses that could make more money. Its top executives took those plans to other firms, including PowerShares Capital Management and Claymore Securities Inc., the basis of multibillion-dollar ETF franchises now owned by Invesco and Guggenheim Partners, respectively.
Nuveen is under no obligation to produce the funds once it gets the formal go-ahead, which usually happens within weeks after an initial approval by SEC staff. At the very least, the approval gives the firm an advantage over competitors who haven’t gone through the process.
In an interview earlier this year, one the firm’s product-development executives told InvestmentNews that Nuveen is merely exploring the possibility of adding to its product set, which includes mutual funds and some ETFs run in collaboration with State Street.
TIAA-CREF completed its acquisition of Chicago-based Nuveen in October, merging two companies with distinct cultures but a common goal to increase their sales among advisers. ETFs may be key to doing that as the investments have been a popular option deployed in accounts on which investors pay a fee to their adviser, in part because of their perceived low cost.
Nuveen’s proposal said its initial funds would be actively managed investment strategies targeting large caps, the biggest publicly traded companies. Nuveen spokeswoman Kathleen Cardoza didn’t immediately return a request for comment.