AXS Expands ETF Lineup With Knowledge Leaders Capital Acquisition
AXS Investments, the asset manager with $823 million in 12 ETFs, is acquiring Knowledge Leaders Capital as the firm continues to expand through acquisitions.
The companies announced Oct. 4 that AXS is buying Denver-based Knowledge Leaders’ ETF suite, which includes its single flagship ETF, the Knowledge Leaders Developed World ETF (KLDW) and one mutual fund, the KL Allocation Fund. Members of Knowledge Leaders staff will join the AXS team, according to a press release.
Terms of the deal were not disclosed.
The actively managed Knowledge Leaders Developed World ETF, which has $124 million in assets and is focused on emerging markets, will come under the AXS brand, according to CEO Greg Bassuk. He added that AXS had been “keeping their eye on [Knowledge Capital Partners] for a while” because of the firm’s strategy of focusing on companies that invest in intangible assets, such as investments in research and development and financial leverage.
The KL Allocation mutual fund will fold into the AXS Astoria Inflation Sensitive ETF (PPI) with CIO of Knowledge Leaders Capital, Steven Vannelli, helping to manage PPI.
The acquisition comes as M&A activity has been ramping up across the rapidly growing ETF industry. ARK Investment Management acquired Rize ETFs to expand into Europe in late September, while activist investment firm Engine No. 1 sold its suite of three ETFs managing $641 million to TCW Group at the end of July.
As firms continue to roll out new funds at a record-setting pace, players in the industry are consolidating.
“It makes sense that we would see more consolidation at this phase—there are a lot of small issuers that have done one or two good products, but as financial conditions tightened, maybe it’s more of a struggle,” said Bryan Armour, ETF analyst at Morningstar of the M&A environment in the ETF industry.
Rapid ETF Growth at AXS
AXS has expanded its ETF suite through acquiring other firm’s funds. Most recently, the firm relaunched the High Yield ETF (HYLD), which it acquired, as the AXS Real Estate Income ETF (RINC).
“We're seeing a lot of opportunities out there,” said Bassuk. “Having that marketing and distribution heft is increasingly important going forward.”
The Knowledge Leaders Developed World ETF (KLDW) is up about 6% year to date, trailing the S&P 500 which is up 11% this year. It has an expense ratio of 0.75%.
AXS’s largest ETF is the AXS Short Innovation Daily ETF (SARK), an actively managed fund with $216 million that bets against famed investor Cathie Wood’s largest ETF, the Ark Innovation ETF (ARKK), which has nearly $7 billion in assets.
Contact Lucy Brewster at lucy.brewster@etf.com.
