Among the growing group of mutual fund providers eyeing the exchange traded fund space, Legg Mason is planning four new smart-beta, index-based ETFs.
According to a recent Securities and Exchange Commission filing, the money manager is working on the Legg Mason Developed ex-US Diversified Core ETF, Legg Mason Emerging Markets Diversified Core ETF, Legg Mason US Diversified Core ETF and Legg Mason Low Volatility High Dividend ETF. No tickers or expense ratios have been provided.
The Legg Mason Developed ex-US Diversified Core ETF underlying index groups components based on geography and sector, combines investment categories with more highly correlated historical performance into smaller number of so-called clusters, and equally weights the clusters.
The Legg Mason Emerging Markets Diversified Core ETF also utilizes a similar weighting technique, except it targets developing economies.
Meanwhile, the Legg Mason US Diversified Core ETF starts off by grouping securities into multiple investment categories based on industries and proceeds to combine the investments into smaller equally weighted clusters.
Lastly, the Legg Mason Low Volatility High Dividend ETF, like the name suggests, targets high dividend yield companies, with a lower price and earnings volatility. Specifically, companies must demonstrate profitability over the pas four fiscal quarters, and stocks whose yields are not supported by earnings are excluded.
While the mutual fund provider has filed an exemptive relief request for actively managed funds, the firm’s plans for index-based ETFs will be the next step in building its ETF business. [Legg Mason Is Considering Smart-Beta ETF Strategies]
The move into passive index-based ETFs comes as no surprise after the firm snagged two seasoned ETF experts from Vanguard earlier this year. Legg hired Rick Genoni and Brandon Clark to lead its ETF strategy back in February.
Legg Mason is just one of many mutual fund providers and money managers seeking to expand their presence in the financial space through ETFs. Active money managers are launching their own ETFs as demand from institutional investors, retail investors and financial advisors grow. For instance, T. Rowe Price Group, Principal Globlal Investors and Goldman Sachs Asset Management have all filed with the Securities and Exchange Commission to launch ETFs. [Active Money Managers Jumping on the ETF Bandwagon]
For more information on new fund products, visit our new ETFs category.
Money managers who are looking into constructing their own ETFs may also be interested in attending the second annual ETF Boot Camp in New York later this month. Whether you’re an ETF start-up, fund company, broker dealer, pension plan, endowment, private equity firm, fund board independent director, 401k plan provider or ETF industry executive…this conference is designed for you. This one-of-a-kind event will condense everything you need to know about the inner workings of the ETF business into two days.
Max Chen contributed to this article.