Russell Investments has wasted no time in making full use of its acquisition of U.S. One Inc. as it filed for three new actively-managed ETFs on February 2, which will be series of U.S. One Trust. Paul Hrabal, President of U.S. One, entered into an agreement with Russell on Jan. 6, 2011 according to which Russell would acquire control of U.S. One, prior to the end of Q1 2011. Once that happens, Russell would become the investment advisor to the existing One Fund (NYSEARCA:ONEF), as it will also be for the three new funds that are being planned.
Acquiring U.S. One has helped Russell speed up its product development efforts in the Active ETF space as it will no longer have to wait to receive exemptive relief from the SEC on its own, since it can now utilize U.S. One’s existing relief to issue new funds as part of the same series. This should provide the company with a significant leg up over other large fund players like T. Rowe Price (NASDAQ:TROW), Eaton Vance (NYSE:EV) and Legg Mason (NYSE:LM) that are still waiting in line to receive approval from the SEC for their own Active ETFs. When that happens is anyone’s guess at the moment, and in a world as competitive as the ETF industry, time-to-market can be enormously important.
Russell will be the investment advisor to all three funds that are being planned. All of these are fund-of-funds because U.S. One only has exemptive relief to launch actively-managed ETFs that are fund-of-funds. U.S. One had request approval from the SEC in August 2010 to expand its relief in order to allow for funds that can invest in individual securities, instead of just other ETFs; however, the status of that application is unclear. Expenses to the funds have not yet been disclosed, but the following details were provided for the funds’ investment strategies in the preliminary prospectus:
Russell Global Opportunity ETF (ONEO)
This fund will be a fund-of-funds that will look to achieve long-term capital growth by investing in other ETFs with exposure to equity, fixed-income, real estate, commodities, infrastructure or currency markets. Alongside the multi-asset class exposure, the fund will have a minimum of 30% portfolio exposure to non-U.S. issuers through the underlying ETFs. Russell will employ an asset allocation strategy to provide exposure to multiple asset classes in both domestic and foreign markets.
Russell Bond ETF (ONEB)
This is also a fund-of-funds that will aim to achieve total returns by investing in other ETFs that track fixed-income securities issued by governments and corporations in the U.S., Europe and Asia, as well as in other developed and emerging markets.
Russell Inflation ETF (ONEI)
ONEI is another fund-of-funds that will look to provide total returns that exceed the rate of inflation over a full economic cycle by investing in underlying ETFs that provide exposure to inflation hedges. These include equities, TIPS, real estate, commodities and infrastructure assets.
Disclosure: No positions in above-mentioned names.
Disclaimer: Views and opinions expressed on EtfsHub are those of the author alone and do not in any way represent the official views, positions or opinions of the employers – both past or present – of the author in question, or any other institutions and corporations associated with the author. Etfshub is not an investment advisor, neither the information nor any opinions contained or expressed above and elsewhere on EtfsHub constitutes or should be construed as a solicitation or offer by EtfsHub to buy or sell any securities or other financial instruments or to provide any investment advice or recommendations. None of the material above and elsewhere on EtfsHub is intended to endorse or promote any company or its products. EtfsHub shall not be liable for any claims or losses of any nature, arising indirectly or directly from use of the information on or accessed through the site. Please see full disclaimers here.