“It was one of the core tenets we had at Grail. It made sense to partner with people whose expertise was money management.” [Active ETF Fact and Fiction.]
Grail’s partners Brandywine Global Investment Management, Hotchkis & Wiley Capital Management, Metropolitan West Capital Management, RiverPark Capital, Western Asset Management, Wedgewood Partners and McDonnell Investment Management.
Another aspect of getting a suite of ETFs off the ground is finding the right people to partner with, which includes market makers, exchanges and authorized participants. Linking up with such people has gotten easier these days. The New York Stock Exchange and Bank of New York, for example, have departments that will link up those wishing to launch ETFs with index providers, market makers and other key people who can get the process rolling.
Getting Easier
While the launch of Grail’s first ETF was a learning experience, Thomas says they get a little smarter with each subsequent launch.
“You get smarter with every fund launch and the way you bring products to market and the way you market it.”
He also feels validated in Grail’s decision to launch actively managed funds. Since Grail’s initial fund launch, a slew of other providers have launched their own actively managed funds or announced their intentions to do so, including PIMCO, AdvisorShares, T. Rowe Price, Eaton Vance and JP Morgan.
”That’s very confirming that we led the industry in this new marketplace,” says Thomas.
Fuller at K&L Gates says that one of the biggest challenges new ETF providers face is that ETFs are not completely well understood by much of the investing public and that there’s more education left to be done.
“While there has been a lot of education to date, I would say there are still challenges to selling an ETF.”
Industry Growth
Despite the more intense competition in the ETF industry these days, Thomas still feels like there’s a lot of room for growth.
“I think you’re going to continue to see entrepreneurs like ourselves bring new creative ideas, and you’ll see older firms come into the space, as well.”
For those new players, Thomas has some simple words of wisdom.
“They should just be prepared for a tremendous amount of hard, but fun, work. I think it’s wonderful to be on the forefront of something so wonderful as ETFs.”
In addition to GVT, Grail has six other ETFs:
- Grail McDonnell Intermediate Municipal Bond (NYSEArca: GMMB)
- Grail McDonnell Core Taxable Bond (NYSEArca: GMBT)
- RP Growth (NYSEArca: RPX)
- RP Focused Large-Cap Growth (NYSEArca: RWG)
- RP Technology (NYSEArca: RPQ)
- RP Financial (NYSEArca: RFF)
For more stories about the actively managed ETF industry, visit our actively managed category.