Calamos Makes a Splash in Active Equity ETF Arena
July 14th, 2014 at 8:30am by Tom Lydon
Calamos Investments, the Chicago-based mutual fund issuer, is looking to build on its success in the mutual fund business with the introduction of the Calamos Focus Growth ETF (NASDAQ: CFGE).
The Calamos Focus Growth ETF enters a thinly populated arena of actively managed equity-based ETFs. As of mid-June, there were about 90 U.S.-listed actively managed ETFs with a combined $16 billion in assets under management, but the bulk of those ETFs (and assets) are fixed income products. [Big Growth Seen for Actively Managed ETFs]
That small population of actively managed equity ETFs could give Calamos a leg up as it enters a part of the ETF industry that some market observers see as poised for exponential growth in the coming year.
Increased demand for the products and the potential for a more favorable regulatory environment could make actively managed ETFs a $500 billion asset class by 2020, according to a new report by SEI Investments.
“The Calamos Focus Growth ETF leverages the firm’s 25-year history investing in growth companies, and features a portfolio consisting of stocks which we believe offer the best opportunities for growth. The portfolio selection process stresses company fundamentals, including a global presence, strong revenue and earnings growth, solid returns on invested capital and lower debt-to-capital levels. The fund also utilizes active management, blending investment themes with fundamental research,” according to a statement issued by Calamos.
The Calamos Focus Growth ETF is the ETF answer to the firm’s Calamos Focus Growth Mutual Fund (CBCAX), which is nearly 11 years old and has almost $74 million in assets under management. Introducing an ETF version of an already established mutual fund could prove to be a shrewd move on the part of Calamos. Over the past year, the Calamost Focus Growth Mutual Fund has returned 30.1%, easily topping the S&P 500 and Russell 1000 in the process.
After all, that is exactly the strategy employed by PIMCO when the bond giant launched the PIMCO Total Return ETF (NYSEArca: BOND), which is now the largest actively managed ETF. [PIMCO to Increase Active ETF Footprint]
To its credit, Calamos is not running away from one of the big issues that has kept some mutual fund issuers from getting behind active equity ETFs: Daily transparency.
“We’re not worried about daily transparency hurting our performance,” said Gary Black, Global Co-CIO of Calamos Investments, in an interview with ETF Trends. “Transparency and showing our cards is not an issue for us. This is a good time to be launching and the Focus Growth ETF is an idea whose time has come.”
The Calamos Focus Growth, which will be comprised of 30 to 40 highly liquid large-caps, will utilize the same process, philosophy and management team as it mutual fund equivalent, said Black.