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Monday, July 18, 2016

American Beacon Just Invested In a Gotham Startup. Here's Why.

Reported by Neil Anderson, Managing Editor

Gene Needles just invested in an active ETF boutique, though the ETF bit is just icing on the cake.

On Thursday Needles (chairman, president, and CEO of American Beacon Advisors [profile]) confirmed that the Irving, Texas-based subadvised mutual fund shop just bought a minority stake (of unspecified size) in New York City-based ARK Investment Management [profile]. Jeff Ringdahl, chief operating officer of American Beacon, confirms it was the ARK team's "investment expertise" that drove the deal, not the fact that ARK offers its own ETFs.

"That wasn't the objective of it," Ringdahl tells MFWire, calling ARK's ETF business and expertise an "added benefit" to American Beacon. "If [ARK's funds] were in a mutual fund form, this transaction still closes."

"We're looking for under-distributed investment excellence," Ringdahl adds. "We're not investors. We make investments in investors, outstanding investment boutiques, and have them run autonomously with added capabilities."

The 14 people at ARK, including founding chief Cathie Wood, will all stay on (the employees own the majority of the shop).

"There's absolutely no change to the personnel, strategy, day-to-day operations," Ringdahl says.

Watch for American Beacon to create new mutual funds powered by ARK's "disruptive innovation" investing strategies. Though don't expect American Beacon to add ARK as a subadvisor to any funds already on the market.

"We don't have plans to add them to any existing mutual funds," Ringdahl says.

And even though ARK's ETF capabilities did not drive the deal, Ringdahl says, American Beacon will still be using those capabilities.

"This is a mutually beneficial relationship," Ringdahl says. "They'll be helpful to operationalizing ETFs that American Beacon may want to sponsor ... We will lean on ARK as our operational partner to enter with NextShares as well as potentially ETFs." 

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