has moved closer to its goal of coming out with active ETFs. On Wednesday the San Francisco firm, majority-owned by investment bank Grail Partners
, filed papers with the SEC
to roll out two actively managed equity ETFs. Grail picked American Beacon Advisors
(which was sold last year by American Airlines parent company AMR Corp. to Lighthouse Holdings [see The MFWire,
09/15/08]) to sub-advise the funds.
Grail is also looking to launch other active ETF products this year and is in talks
with a number of asset managers and financial institutions, said Grail Advisors CEO William Thomas
in an interview Thursday morning.
Grail Advisors' owner, incidentally, is also an investor in ETF firm XShares Advisors
(see The MFWire,
Asked about the choice of American Beacon for Grail's first two active ETFs, Thomas pointed to American Beacon's track record and "proven ability to manage multi-managed products."
Expense ratios for the funds have yet to be determined.
The Grail American Beacon Large Cap Value ETF
and the Grail American Beacon International Equity ETF
would join other active-equity ETFs in the market, such as those offered by Invesco's PowerShares
, which in April of last year became the first in the industry to launch such products.
What sets Grail's offerings apart from others in the market is that they will allow portfolio managers unrestricted trading, Thomas said.
Grail Advisors will distribute the active ETFs through RIAs, wirehouses, regional and independent broker-dealers.
It currently has five employees and is in the process of building its distribution team. The firm is bringing in four to six people who will work under the direction of distribution head Chet Chappell
"We've identified the candidates and we're in the process of onboarding them," said Thomas, a former distribution head at Charles Schwab Investment Management who joined Grail in April of last year (see The MFWire,
Grail Advisors underwent a change recently with the departure of its chairman, John Siciliano
, who also served as managing partner at Grail Partners and is now head of investment boutiques at New York Life Investments (see The MFWire,
01/070/09). Grail Partners founder and managing partner Don Putnam
now serves as chairman of Grail Advisors.
Company Press Release
SAN FRANCISCO–January 15, 2009–Grail Advisors, an innovator in the development and distribution of active Exchange Traded Funds (ETFs), has filed a registration statement for two new actively managed ETFs, the Grail American Beacon Large Cap Value ETF and the Grail American Beacon International Equity ETF. The funds represent the industry’s first actively-managed ETFs in the equity space using traditional active management.
Both funds will be sub-advised by American Beacon Advisors, Inc. of Fort Worth, Texas, a firm noted for its ‘manager-of-managers’ approach to portfolio construction. American Beacon, which oversees more than $37 billion* in equity and fixed-income assets, expects to manage the new Grail Advisor offerings in substantially similar fashion to the American Beacon Large Cap Value and American Beacon International Equity strategies.
"These funds are an enormous leap forward in the evolution of ETFs," said William M. Thomas, CEO of Grail Advisors LLC. "We've captured a unique opportunity to deliver real active portfolio management in an ETF structure that provides more transparency than traditional mutual funds. Grail Advisors wants to set itself apart by offering actively-managed products driven by fundamental analysis, as opposed to simple index or enhanced index ETFs."
Grail Advisors will serve as the funds' Manager and intends to operate both of the new ETFs as actively managed, multi-manager ETFs. The funds, similar to traditional mutual funds and unlike other active-equity ETFs in the marketplace, will allow portfolio managers unrestricted trading. American Beacon Advisors, the first of which Grail Advisor executives expect to be a premier list of sub-advisor relationships, will be responsible for allocating day-to-day portfolio management decisions for each ETF among one or more investment managers.
"We’re delighted to be out in front of the investment industry with Grail Advisors,” said William F. Quinn, chairman of American Beacon Advisors. “These new funds are the first to combine the kind of fundamental, active management we perform at American Beacon with ETFs, an investment vehicle that provides many benefits to marketplace participants today."
Grail Advisors' approach resolves the disclosure issue that has previously challenged the introduction of actively managed ETFs. The new funds’ portfolio holdings will be publicly disseminated on the Grail Advisors website each day the funds are open for business. "Investors of all types are coming to expect this level of reporting,” said Mr. Thomas. “Daily transparency is one of the major components to our strategy."
The two funds will represent the first of what are anticipated to be a series of offerings of the Grail Advisors ETF Trust. The San Francisco-based firm intends to make the benefits of ETFs available to the large pool of investors who currently select traditional mutual funds or other vehicles to access active portfolio management. Mr. Thomas says Grail Advisors is currently in discussions with a number of leading financial institutions and asset managers and expects to launch a number of customized, actively-managed ETFs this year.
*As of 12-31-08
About Grail Advisors LLC
Grail Advisors LLC, an innovator in the creation and distribution of actively managed Exchange Traded Funds, partners with established asset managers, distributors, and related financial institutions to design and deliver actively managed ETFs. Grail Advisors was created to deliver ETFs using fully disclosed active portfolio management to the global investment community.
About American Beacon Advisors, Inc.
Established in 1986, American Beacon Advisors, Inc. is an experienced provider of investment advisory services to institutional and retail markets. American Beacon Advisors also manages the American Beacon Funds, a series of low-cost, no-load mutual funds open to institutional investors, retirement accounts such as IRAs, and individual investors. The fund family includes a variety of portfolios spanning longer-range investments in international and domestic equity categories as well as short-term investment options including money market funds.
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