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Wells Fargo Mulls Active ETF Entry


Wells Fargo (WFC) could be the next banking giant to try its hand at actively managed exchange traded funds.

Already home to a substantial mutual fund business, California-based Wells Fargo has filed plans with the Securities and Exchange Commission for the Wells Fargo Advantage Ultra Short-Term Bond ETF, reports Mark Calvey for the San Francisco Business Times.

“We believe that offering our investment strategies and capabilities in ETF form would provide our clients with additional valuable investment options,” a spokeswoman for Wells Fargo Funds Management in Boston told the San Francisco Business Times.

News of Wells Fargo’s possible entry into the active ETF space comes as some industry observers are forecasting massive growth for actively managed ETFs over the next several years.  Active ETFs, with about $16 billion in assets, currently make up less than 1% of the $1.86 trillion U.S. ETF industry.

A recent SEI (SEIC) white paper, The Rise of Active Management in ETFs, outlines the shift in the actively managed ETF space and how new regulatory guidance and increased interest among traditional mutual fund providers could help support growth. [Active ETFs: A New Growth Frontier]

“Pooneh Baghai, co-leader of McKinsey’s Americas Wealth Management, Asset Management and Retirement Practice, predicts that assets in actively managed exchange-traded funds will explode to $500 billion by 2020, up from $15.2 billion today,” reports ValueWalk, citing SEI.

Wells Fargo is not the first major U.S. bank to enter the ETF business. Just last week, J.P. Morgan Chase (JPM) made its long-awaited ETF debut with the launch of the JPMorgan Diversified Return Global Equity ETF (JPGE) .

Designed to be a global core equity allocation tool for investors, the JPMorgan Diversified Return Global Equity ETF is comparable to several other new ETFs that have recently debuted in that it uses a factor-driven approach. [J.P. Morgan's New ETF Debuts]

ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.