Like a lot of firms, Russell Investment has been waiting a long time for the SEC to approve its request to launch an actively managed exchange-traded fund. Today, Russell took the bull by the horns, purchasing U.S. One -- and with it, the RIA's actively managed ETF.
Russell Investment Management Co. is catapulting into the actively traded ETF market with its acquisition of U.S. One Inc, a registered investment adviser with one actively managed exchange-traded fund.
Russell has been looking to launch actively-managed ETF for some time, initially filing with the Securities and Exchange Commission for exemptive relief in July 2009.
U.S. One already has exemptive relief for its fund.
Russell isn't just going to get ahead of its competitors, it's going to be positioned to be a leader in the actively managed exchange-traded fund space, said Paul Justice, an analyst at Morningstar Inc.
“They just got out of the HOV lane and passed all of the traffic,” Mr. Justice said.
U.S. One entered the ETF market in May with the One Fund Ticker:(ONEF). The $11 million actively managed ETF invests in index-based ETFs managed by BlackRock Inc. and The Vanguard Group Inc.
The deal gives Russell the ability to launch a series of ETFs of ETFs, Mr. Justice said. “I think that Russell will have many strategies coming along the lines of target date ETFs and other risk-based and asset-allocation-based portfolios,” he said.
“By acquiring U.S. One, we can more immediately leverage our proprietary research to extend the options to investors and include ETFs in our suite of products that we deliver to the marketplace,” said Jim Polisson, managing director of Russell's global ETF business.
Steve Claiborne, a spokesman for Russell, declined to comment on details of Russell's plans for ETFs.
Last year, Russell started beefing up its ETF expertise, hiring two former iShares executives: Mr. Polisson and Andrew Arenberg, who now heads up Russell's global ETF distribution. In April, Russell filed with the SEC to launch 11 ETFs based on its global indexes.
“I wouldn't be surprised to see them come out with 20 to 30 ETF portfolios ultimately,” Mr. Justice said.