Natixis Investment Managers has unveiled its first semi-transparent actively managed ETFs with the launch of three funds on NYSE Arca.
David Giunta, CEO for the US at Natixis Investment Managers.
Each ETF provides exposure to a US equity strategy that is already offered in mutual fund format and managed by a Natixis affiliate. Collectively, the three mutual funds house over $1.3 billion in assets under management.
The ETFs utilize the New York Stock Exchange’s active ETF structure known as AMS (Actively Managed Solution).
The NYSE AMS model enables managers to avoid having to disclose daily portfolio holdings while maintaining the tax efficiency, liquidity, and lower costs typically associated with regular ETFs.
It achieves this through the use of proxy portfolio that is designed to closely track an ETF’s performance but has a different composition and weighting to the ETF’s actual holdings.
The proxy portfolio reflects the economic exposures and risk characteristics of an ETF’s actual portfolio and closely replicates intraday performance thus providing market makers with enough information to offer competitive bids and asks on the ETF while mitigating the risk of front-running.
David Giunta, CEO (US) at Natixis Investment Managers, commented, “We are pleased to be an early entrant into the active semi-transparent ETF marketplace where we’ve established three products that exemplify our dedication to providing investors with access to innovative and progressive investment vehicles.
“At Natixis, we believe that actively managed products can produce better outcomes for investors, and by working with the NYSE, we can now combine those benefits with the many attractive features of ETF vehicles.”
Douglas Yones, Head of ETPs at the NYSE, added, “As the home of ETFs, the NYSE is excited to continue to drive growth and opportunity for the global investment community. Today marks an important milestone for the ETF industry, as Natixis, one of the world’s largest active asset managers, enters into the rapidly growing semi-transparent ETF marketplace.
“The NYSE proxy portfolio structure will allow Natixis and their affiliates to leverage the benefits of an innovative ETF wrapper without having to display their investment strategies to the public.”
The ETFs
The Natixis US Equity Opportunities ETF (EQOP US) is a multi-managed, diversified core US equity product that combines fundamentally driven growth and value segments, weighted equally. The growth segment is managed by Loomis Sayles and covers the entire US equity market, while the value segment is directed by Harris Associates and focuses on the large-cap universe. When either segment exceeds 60% of the total portfolio for more than three months, the strategy will seek to realign to an equal allocation. The ETF comes with an expense ratio of 0.90%.
The Natixis Vaughan Nelson Mid Cap ETF (VNMC US) takes advantage of temporary information and marketplace inefficiencies to invest in US mid-caps at valuations deemed to be below long-term intrinsic value. The ETF seeks to provide a high, stable dividend with minimal perceived downside risk. The fund is managed by Vaughan Nelson and also comes with an expense ratio of 0.90%.
The Natixis Vaughan Nelson Select ETF (VNSE US) invests in between 20 and 40 companies from across the US market cap range, focusing on firms with positive returns on capital, attractive valuations, and sustainable dividend levels. Vaughan Nelson follows a bottom-up, research-intensive process emphasizing balance sheets and cash flow-based projections. The ETF comes in slightly cheaper with an expense ratio of 0.85%.