January 27, 2012
State Street to Develop Actively Managed ETFs
State Street Global Advisors, the third-largest exchange-traded fund provider in the United States, is entering the actively managed exchange-traded fund space, but with a twist.
Unlike other major firms, the State Street Corp. unit is not only going to sell its own funds, but also will distribute funds and partner with other asset managers that do not have the regulatory wherewithal to go it alone.
State Street minds assets for hundreds of fund companies globally, with a total of $21.8 trillion in assets under custody, according to the firm. Many managers for whom the firm acts as a custodian are interested in getting into the actively managed ETF space, but do not have approval from the SEC or the distribution platform to be able to do so, said Jim Ross, head of the unit's ETF business.
"This allows us have a bigger presence in the active space and we have a broad platform to partner with firms that do not have the capability to do this themselves," Ross said.
By March, the firm will roll out three active portfolios that invest in its ETFs. The three portfolios will be a real asset portfolio that invests in a range of physical assets, such as gold and other commodities, through its ETFs; a blended portfolio that invests in a number of its equity and fixed income ETFs; and a global "go anywhere" portfolio that can allocate across geographies and sectors.
State Street plans to launch an actively managed bank loan ETF that will be managed by GSO Capital Partners, an alternative asset manager owned by Blackstone.
Investors (Again) Lose Faith in U.S. Equity Funds
Investors once again retreated from equity mutual funds just one week after giving them a warm response. According to statistics released by the ICI, investors pulled $484 million from stock funds over the past week, a reversal from the previous week when investors sent $1.42 billion their way.
U.S. equity funds received the full brunt of the drubbing and then some, losing $804 million for the week ended Jan. 18. Foreign equity funds, in contrast, posted estimated inflows of $320 million, still less than half the $684 million they attracted the week before.
Citi, Research Affiliates Expanding Bond Indices
Citi Fixed Income Indices (Citi) and Research Affiliates have come together to develop a new series of investable bond indices based on the Research Affiliates Fundamental Index (RAFI) methodology.
The Citi RAFI Bond Index Series will include sovereign and corporate bond indices and use fundamental measures to weight the index components.
The Citi RAFI Bond Index Series weights each country by its economic footprint. Each country's weight is calculated via an equally weighted average of four factors GDP, energy consumption, population and rescaled land area.