Newcomers To The World Of ETFs In 2013


The first half of the year has brought a handful of new firms knocking on the door of the ETF market, looking to enter the quickly growing exchange-traded fund universe where they have yet to stake claim.

The ETF market continues to grow, now boasting more than $1.5 trillion in assets spread across some 1,400 U.S.-listed ETFs. As an industry, ETFs are growing at a quicker pace than any other financial instrument, and more and more firms are taking notice, including widely known names such as USAA, mutual fund firms such as Calamos, as well as a number of smaller registered advisors such as ERNY and Artivest.

Roughly a third of those total ETF assets—about $600 billion in 290 funds—are in the hands of iShares, the world’s largest ETF provider. More broadly, a small group of 10 ETF providers control more than 90 percent of all U.S.-listed ETF assets, making the barrier to entry high for newcomers. But that hasn’t kept the newcomers from lining up.

Following is a quick roundup of who some of these firms are, and what they hope to accomplish in the U.S. ETF market as it expands beyond the very first U.S. ETF launched 20 years ago, the SPDR S'P 500 ETF (SPY). The fund’s $130 billion makes it the biggest fund of all, commanding 9 percent of ETF assets.

As a quick side note, this list doesn’t include Fidelity Investments, whose expansion in the ETF market has been widely anticipated. It’s had one ETF on the market for 10 years , but only gained the right to market vast whole lineups of active ETFs in May of this year. Nor will the list discuss the plethora of big mutual firms that have lined up to possibly offer ETFs . Instead, it focuses on some of the companies that took their first steps into the ETF space in 2013.

Here are some of the newbies:

Calamos Investments

Calamos Investments, a Naperville, Ill.-based mutual fund company that developed a reputation for its focus on convertible securities, has requested permission to market actively managed ETFs, with plans for an initial fund targeting mid- and large-cap companies the fund manager deems to have promising growth prospects.

The Calamos Focus Growth ETF would be the first of many ETFs, as the “exemptive relief” filing contemplates a range of future funds focused on domestic and international equities as well as fixed income and even on mortgage- or asset-backed securities.

Eaton Vance

Eaton Vance, the Boston-based firm known for its extensive lineup of closed-end funds, has finally gained permission this year from regulators to market actively managed ETFs nearly three years after the company first started the process.

The firm has made known its interest in focusing on nontransparent active ETFs , and for that purpose, Eaton Vance also bought the assets of Managed ETFs, a company owned by Gary Gastineau, who is a known longtime ETF industry consultant and a staunch advocate of nontransparent ETFs.

Artivest Advisers

Artivest Advisers, a New York-based registered investment advisor, is looking to gain permission to offer active ETFs in a process it kicked off at the end of 2012.

Its first fund would be a long-short strategy combining stocks and bonds with returns linked to global natural-resource scarcity, in a strategy it tentatively called the Commodities Supercycle Artivest Trust ETF . Ultimately, Artivest hopes to market various other ETFs tapping into U.S. and global stocks and bonds as well as various blends of different asset classes.



In April, USAA, the San Antonio, Texas-based financial services company set up for U.S. armed forces and State Department personnel and their families, filed paperwork requesting permission to market a broad array of actively managed ETFs.

In the filing, USAA described no less than 14 funds , many with a focus on fixed income, but also including currently popular strategies, such as funds focused on dividend-rich stocks and natural resources. The group looks to be planning a comprehensive rendition of core asset classes.


GemShares, a Chicago-based financial firm, put into registration in April a physical diamond trust that followed by eight months or so the first round of news suggesting the firm was looking to patent a process for having diamonds become tradable securities.

The GemShares Physical Diamond Trust sets out to reflect the wholesale price of diamonds included in a fungible basket—called the “GemShares Global Investment Grade Standard Diamond Basket.”

Horizons ETFs Management

Horizons ETFs Management, a Canada-based ETF issuer, launched in June its first U.S.-listed ETF, an S'P 500 ETF with a covered-call overlay. The Horizons S'P 500 Covered Call ETF (HSPX) launched with the help of Exchange Traded Concepts, and came to market as the cheapest in class.

Horizons is no stranger to the covered-call ETF niche. The firm has 12 different actively managed covered-call ETFs currently listed on the Canadian market, as well as other ETFs listed in Korea, Hong Kong, Australia and Canada, with strategies that include bond funds, leveraged/inverse, equities, alternatives and actively managed funds.

Guinness Atkinson

Guinness Atkinson, the money manager known for its active mutual funds focused on alternative energy and Asia, is looking to gain permission to market index-based ETFs . The filing seemed to cast a wide net that implied the company could end up sponsoring equities as well as fixed-income funds focused on the United States and on international markets including Australia, Canada, China, France, Germany, Hong Kong, Italy, the Netherlands and the U.K.

ERNY Financial Advisors

ERNY Financial Advisors, a San Diego-based firm, has submitted two exemptive relief filings to the Securities and Exchange Commission this year. It is seeking to enter the U.S. ETF market with actively managed ETFs as well as index-based funds, including self-indexed strategies.

The ERNY Large Capitalization Dividend ETF is the first fund the company detailed. ERNY Financial, headed by certified financial planner and founder Eric Ervin, is a firm focused on corporate fundamental research, providing in-depth analytics of how companies perform, according to its website.


YieldShares is a new ETF provider that entered the U.S. ETF market this year, but one that has ETF veteran Christian Magoon at its helm. Magoon is well known in ETF circles from his tenure at Claymore and, more recently, as a consultant to ETF providers. He decided to start up a new company that will focus exclusively on the development and marketing of income-oriented funds, a niche of the market he says is underserved.

The YieldShares High Income ETF (YYY), launched this year, invests in about 30 closed-end funds with a heavy focus on equities CEFs. YYY came to market under Exchange Traded Concepts’ “ETF-In-A-Box” platform.

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