TCW Group, the $210 billion California-based asset manager, has marked its entry into the US ETF space with the acquisition of Engine No. 1’s ‘Transform’ ETF platform.
Katie Koch, President and CEO of TCW.
The deal, which is in line with TCW’s strategy to diversify its product offerings and capabilities, brings the $140 million Transform Climate ETF (NETZ US), $10m Transform Supply Chain ETF (SUPP US), and $540m Transform 500 ETF (VOTE US) into its portfolio.
NETZ is a high-conviction, actively managed fund that invests in 20 to 40 companies that are expected to drive and benefit from the energy transition.
SUPP is also an actively managed thematic fund. It focuses on US equities of companies exhibiting supply chain resilience.
VOTE, meanwhile is a passively managed US large-cap ETF that aims for positive environmental and social impacts through proxy voting and engagement with portfolio companies.
According to TCW, the acquisition presents the firm with the infrastructure and expertise to not only offer tax-advantaged ETF wrappers but also to potentially expand into other core and thematic investment areas.
The deal seems timely given TCW’s strong brand presence among advisors, positioning the firm as a potential contender in the ETF market despite its late entry.
Engine No. 1’s team will now be part of TCW. Jennifer Grancio, formerly the CEO of Engine No. 1, is taking on the newly minted role of Global Head of Wealth at TCW, overseeing wealth distribution and guiding the ETF business strategy among her key responsibilities.
Commenting on the acquisition, Katie Koch, President and CEO of TCW, said: “Integrating Engine No. 1’s Transform ETF platform into TCW is an important part of our efforts to enhance our capabilities and provide a greater range of investment vehicles for the benefit of our clients.”
Chris James, Founder and Chief Investment Officer of Engine No. 1, added: “The closing of the sale of our ETF platform to TCW marks the successful evolution of a business we launched and rapidly developed to become a leader in the active thematic space.”
It’s worth mentioning that, while the acquisition sees TCW become an ETF issuer in its own right, the firm also sub-advises four ETFs manufactured by First Trust with a combined asset size of more than $6 billion.