Building off its success as a data and research provider, Newfound Research has become one of the fastest growing exchange traded fund managed portfolio providers in the separate accounts space.
Despite a slight pullback in assets across the broader ETF managed portfolio industry, Newfound’s selection of ETF managed portfolios have garnered $157 million in assets under management under a relative short period. The strategies were launched last December but did not gain wide platform availability until May, so the majority of assets were gathered in just 6 months, Corry Hoffstein, CIO of Newfound Research, told ETF Trends.
While Newfound has experienced strong growth this year in its new strategies, its legacy business has also continued to develop, growing in 2014 from $900 million of fee generating assets to approximately $1.4 billion (excluding its largest client). Hoffstein added that while 2014 has been a difficult time for a few of the larger ETF strategists, there is still great appetite in the marketplace. Advisors that have had exposure to some of Newfound’s innovations over the last six years, through Newfound’s partners, are now able to receive direct access to Newfound’s best thinking through this new strategy line-up.
Newfound originally emerged onto the ETF managed portfolio scene in 2008 as a data provider and subadvisor to several firms. It first launched its own strategies in 2013 and has begun to build its sales and marketing group to support its investment team to bring these strategies to market as SMAs/UMAs, model licensing and mutual funds. The firm launched three mutual funds this year. Newfound first built its reputation as a data and research provider to other ETF strategists and it is well-known for its innovation and tactical signals from its core momentum algorithms.
The data provider is capitalizing on the growth spurt in the ETF managed portfolio space. Tom Rosedale, CEO of Newfound Research, pointed out that ETF managed portfolios are quickly expanding in the separate accounts space and that while many firms now offer strategies, very few offer them as mutual funds. The ETF managed portfolio industry grew 43% annually over the past five-years, while the overall ETF industry grew 21%.
The industry, though, experienced some growing pains over the third quarter. By the end of the third quarter, there were 677 strategies from 143 firms with $96 billion in assets under management, or a 6% pullback from the three months ended June. [A Rough Q3 Tempered ETF Managed Portfolio Growth]
Nevertheless, Rosedale is confident that their strategies can continue to grow. The Newfound Research team offers a broad line of strategies, drawing upon their experience over the prior six years acting as a data provider and in subadvisory roles. Now, Newfound offers its own line of 8 ETF managed portfolios, including Newfound Risk Managed Global Sectors, Newfound Risk Managed Small-Cap Sectors, Newfound Multi-Asset Income, Newfound U.S. Equity Dynamic Long/Short, Newfound 3% Target Excess Yield, Newfound 4% Target Excess Yield, Newfound Total Return and Newfound Tailwinds Allocation Suite.