Turner Investments has announced its acquisition of Elkhorn Capital Group, an upstart exchange traded fund firm founded by industry pioneer Ben Fulton, a former PowerShares executive.
Turner Investments’ have revealed its intention to shift from active management, after closing its last three equity mutual funds, moving into ETFs through acquiring Elkhorn Capital Group. Elkhorn has a handful of factor-based or smart beta strategies, including two smart beta commodity strategies, along with a line of mid-cap sector ETFs.
Turner will close out its three existing mutual funds Mid-cap Growth (TMGFX), Small Cap Growth (TSCEX), and Titan Long/Short (TSPCX), which collectively have just $135 million in assets as of July, in September.
“The investment industry has witnessed tectonic shifts in technology, product structures, distribution channels, and fees over the past decade,” Bob Turner, the CIO and founder of Turner Investments, said in a note. “This combination provides Turner with proprietary technology, added expertise, and unparalleled product development capabilities that we believe will deliver enhanced investment performance and value for both current and prospective clients over the long term.
“We are shifting the firm’s investment focus to uncorrelated returns and more predictable investment processes, more efficient and lower cost product structures utilizing the development capabilities of Elkhorn, with its collaboration partners, Barclays, Lunt Capital, and Dorsey, Wright & Associates, as well as the global technology and distribution platform.”
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As part of the deal, Fulton will become head of global ETFs for Turner while Jordon Golz, another Elkhorn executive, will be head of product for global ETFs.
Erik Hagar, a Turner’s principal and senior portfolio analyst, said the shift into ETFs away from active management in general has been in the works as the fund provider experienced greater fee pressures and uneven investment returns, which contributed to billions of dollars in outflows over the past decade, reports Randy Diamond for Pensions & Investments. At its peak, Turner managed over $30 billion in assets.
“We as a firm are acknowledging our industry has changed,” Hagar told P&I. “We acknowledge that ETFs are growing AUM while mutual fund assets flow industrywide is flat to negative.”
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