Active ETF Provider Grail Has Deal in the Works

by: Tom Lydon

Actively managed ETF provider Grail Advisors has signed a letter of intent with a prospective partner to acquire its line of ETFs.

Grail CEO William Thomas couldn’t share the name of the prospective partner, but told us this morning that a decision would likely come down in the next two to four weeks.

Instead, Thomas said, Grail is looking to focus its efforts on new products and opportunities, such as the forthcoming Grail Western Asset Ultra Short Duration and Grail DoubleLine Emerging Markets Fixed Income ETFs.

“It’s important that our existing shareholders and prospective shareholders know new opportunities are in the works,” Thomas said.

Thomas said Grail is pleased with its prospective partner and that it would be a strong fit for what Grail is trying to do.

“We like this firm, because their objectives and belief in active ETFs is as strong as ours. They see the opportunities.”

Many have pegged 2011 to be the year of the active ETF. Was Grail before its time on this? How valuable is having active exemptive relief approval in this environment?

Thomas stated that the firm was early in the game when it came to active management.

“From the start, we have positioned Grail to be the leader in bringing active ETF management to Wall Street,” said Thomas.

“Our kids will be buying ETFs, and I’m proud that we were there at the beginning.”

Grail originally had seven ETFs on its roster, but two closed in August after they failed to gain the interest of investors: Grail RP Financials and Grail RP Technology. The five remaining funds are:

  • Grail RP Focused Large Cap Growth (NYSEArca: RWG)
  • Grail American Beacon Large Cap Value (NYSEArca: GVT)
  • Grail McDonnell Intermediate Municipal Bond (NYSEArca: GMMB)
  • Grail RP Growth (NYSEArca: RPX)
  • Grail McDonnell Core Taxable Bond (NYSEArca: GMTB)

Grail ETF shareholders should not be concerned about this. If Grail’s funds do get acquired, they will continue to operate as normal.

If Grail chooses to liquidate, then it would follow the same orderly liquidation process that applies to all ETFs.

Disclosure: None