AllianceBernstein makes late push into ETFs

AB plans to launch active ETFs in the U.S. later this year, and it has recruited Noel Archard from State Street to head the effort.

In the category of better late than never, it looks as if AllianceBernstein is getting into the ETF space.

The 55-year-old Nashville, Tennessee-based asset management company, which has approximately $700 billion under management in mutual funds and separate accounts, Wednesday announced the hiring of Noel Archard, who will join next Monday from State Street Global Advisors to become global head of ETF and portfolio solutions at AB.

Onur Erzan, AllianceBernstein’s head of global client group, in an email that the company plans to introduce its first active exchange-traded funds in the U.S. later this year.

“We entered the Australian ETF market in April 2021 and will continue to explore opportunities for expanding our presence there,” Erzan said. “Over time, we expect active ETF adoption in other regions of the world will accelerate and we plan to be well positioned as a market leader.”

AllianceBernstein didn’t make anyone available for an interview, but according to the announcement, Archard will be responsible for bringing AB’s investment capabilities to the active ETF marketplace. He will report to Erzan.

“Over the last decade, we have continuously evolved our investment platforms to better meet changing client investment goals; thoughtfully listening to their needs and providing the solutions they seek,” Erzan said in the announcement.

“Establishing the firm’s first-ever Global Head of ETFs and Portfolio Solutions role and adding Noel to the team creates an opportunity for AB to generate an innovative and differentiated offering in a crowded space — as we have done successfully in different parts of the market like retail SMAs, income and sustainable investing,” he added.

Nate Geraci, president of The ETF Store, said, “This is yet another example of a traditional active management shop finally capitulating and committing to ETFs.”

“AllianceBernstein will be arriving extremely late to the ETF party, so it makes sense to bring in someone of Noel’s pedigree in an attempt to make up for lost time,” Geraci said.

By bringing on Archard, AB is signaling a serious commitment to the ETF space, said Ben Johnson, Morningstar’s director of global exchange-traded fund research.

“Noel had a very prominent position at State Street, and he had a very direct impact on the ETF lineup there,” he said.

At State Street, Archard served as the global head of product. He brings two decades of ETF and product experience to AB, with previous leadership roles at BlackRock and Vanguard.

While the trend toward old-school asset managers — including T.Rowe Price, Dimensional Fund Advisors, Federated and Capital Group — moving into the ETF space has been gaining traction over the past few years, the AB news was not something market watchers were anticipating.

“This is a pleasant surprise, and I did not see this coming,” said Todd Rosenbluth, director of mutual fund and ETF research at CFRA.

“Noel is an ETF veteran and AB has strong actively managed mutual funds that can be leveraged or even converted to support ETF investors,” Rosenbluth said. “This is long overdue given the growth of the ETF market, but it is not too late to enter.”

Johnson of Morningstar said the move is particularly interesting considering that AB “flirted with the idea of ETFs a decade ago.”

Johnson said AllianceBernstein filed to launch an active ETF in 2010 and got exemptive relief from the Securities and Exchange Commission in 2013, but never moved forward.

AB’s hesitation about moving into ETFs at that time is considered a factor that led Cathie Wood to leave the asset manager in 2012 to launch the wildly successful ETF shop Ark Invest.

“At this point, AllianceBernstein’s move is not completely unexpected, given what we see with all roads are leading toward ETFs right now,” Johnson said.