Eagle transforms separately managed account into $1.8 billion ETF, says Reuters.

Eagle transforms separately managed account into .8 billion ETF, says Reuters.

© Reuters.

By Suzanne McGee

(Reuters) – Eagle Capital Management launched its first exchange-traded fund (ETF) on Monday by converting a separately managed account (SMA) into a public fund with $1.8 billion in assets.

Mutual fund-to-ETF conversions have become increasingly popular, but only a handful of SMAs have converted to ETFs, and Eagle’s new product is by far the largest, said ETF analyst Todd Sohn at Strategas.

“I’ve seen conversions from a few million dollars, to maybe $100 or $200 million, but seeing a ‘b,’ as in billion, attached to the number is a really interesting signal,” Sohn said.

The new Eagle Capital Select Equity ETF will be an actively managed portfolio of quality stocks that the management team believes are overlooked by the market and in which they have a high level of conviction. The ETF will charge a management fee of 0.80%, towards the high end of the range for actively managed ETFs.

Eagle used the services of Goldman Sachs’ ETF Accelerator platform to convert the SMA into an ETF. Goldman Sachs Group has helped issuers with five ETF launches so far.

Sohn said he expects to see an increasing number of conversions, both from mutual funds and SMAs, to ETFs in the coming months and years.

“Now that actively managed ETFs are established, the next step is to deliver new strategies within this framework,” he said. Additionally, he added, issuers will include not only asset management firms like Eagle, but also financial advisory firms eager to attract a younger clientele by offering their own branded ETFs.

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