Active, Transparent ETFs Are Right Up This Equity Boutique's Alley
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Wednesday, December 28, 2016

Active, Transparent ETFs Are Right Up This Equity Boutique's Alley

The Davis Advisors [profile] team is preparing to charge into the active ETF business, and they're embracing the transparency that so many other active advisors are wrestling with.

Dodd Kittsley
Davis Advisors
Director of ETF Strategy
"We see the ETF part of the business as really just a natural evolution in delivering our strategy," Dodd Kittsley, director of ETF strategy at Davis, tells MFWire. "This is a firm that is very committed to the ETF business. This isn't just a toe-dipping exercise."

Kittlsey, an industry veteran who has held key posts at several of the biggest ETF players, joined Davis earlier this year after holding a similar position at Deutsche. The equities-focused investment boutique is prepping three active ETFs for launch (the Davis Select U.S. Equity Fund, the Davis Select Financial Fund and the Davis Select Worldwide), and they might do more further down the line.

"This is all we have planned right now ... One would expect that there could be more ETFs," Kittsley states. "I wouldn't expect a massive suite of hundreds of products. It's a boutique AM and we're very, very focused."

47-year-old Davis now has about 200 people, more than $25 billion in AUM, and a very focused, long-term, low-turnover approach to investing. And traditional active ETFs, transparency and all, fit that approach well, Kittsley says.

"We really believe that our investment discipline is well-suited to daily transparency," Kittsley says. "We fully embrace that."

Different product structures, Kittsley says, give investors more flexibility.

"For us this is really about client demand," Kittsley says. "We are thrilled to be able to offer choice to investors. Freedom of choice is very important to us."

State Street, Davis' mutual fund custodian, will also serve as custodian for Davis' ETFs, and Foreside will handle distribution. And Davis did not go with a white-label ETF provider.

"This is something that has been very much developed and worked on in-house," Kittsley say.

Each of the ETFs draws on existing areas of expertise where Davis offers existing mutual funds. Yet the ETFs' "weightings will be different," Kittsley confirms. The ETFs will also "not include private placements."

"We will screen out some of the less liquid securities as well," Kittsley says.

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