Russell Withdraws Active ETF Application, Terminates Trust

Mar.25.11 | About: Russell Equity (ONEF)

On March 17, Russell Investments made a filing with the SEC requesting to withdraw its application for fund relief necessary to launch actively-managed ETFs through the Russell ETF Trust. This application was first filed with the SEC in January 2010 and Russell became one of the many issuers that didn’t see much progress on its application. Now, that application is being withdrawn because the Russell ETF Trust is itself being terminated.

This filing comes just as Russell starts bringing its planned ETFs to market through the exemptive relief that has already been granted to U.S. One Trust by the SEC to launch and operate ETFs. Russell Investments had acquired U.S. One in January 2011 and in the process obtained the ability to bring ETFs to market through U.S. One without having to wait to receive its own approvals and exemptions via the Russell ETF Trust.

This smart move has allowed Russell to fast-track its product development plans, and it wasted no time in filing for three new actively-managed ETFs through U.S. One Trust in early February. Subsequently, near the end of February, Russell took another step and filed for 18 new index ETFs, again through U.S. One Trust. So it seems to be clear that, going forward, Russell will be utilizing the U.S. One Trust as a conduit to bring its ETFs to market, especially since the Russell ETF Trust is now being terminated.

At the same time, Russell also filed a supplement with the SEC on March 1, informing investors that the portfolio manager for One Fund (NYSEARCA:ONEF) will no longer be Paul Hrabal. Russell Investment Management was replaced as the investment advisor to ONEF, which was the only active ETF that U.S. One was operating and managing prior to the acquisition. As a result, ONEF will now be managed by Brian Meath, who previously founded OTA Asset Management and subsequently Cause Investments. During the acquisition, it was stated that Paul Hrabal, President of U.S. One Inc., will be retained in a consultative capacity.

Disclosure: No positions in above-mentioned names.

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