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Grail Advisors Launches First Active Multi-Manager ETF

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Grail American Beacon Large Cap Value ETF GVT.

The fund is the industry’s first ETF to implement traditional active management strategies. Like actively managed mutual funds but unlike active equity ETF’s already trading in the marketplace, the fund will grant its three active portfolio managers unrestricted trading.

San Francisco-based Grail Advisors will serve as the fund’s manager. It will be sub-advised by American Beacon Advisors, Inc., the Texas-based firm known for its multi-manager approach to portfolio construction.

Assets in the Grail Advisors ETF will be apportioned among three investment mangers–Brandywine Global Investment Management LLC, Hotchkis and Wiley Capital Management LLC, and Metropolitan West Capital Management LLC.

“The managers got comfortable” with the idea of an actively managed fund posting a daily portfolio update because with three active managers, no one can trace holdings to one particular manager, Grail Advisors’ CEO, William Thomas told Wealth Manager’s Kate McBride in an interview on May 4

The fund–the first and only ETF to deliver fundamental analysis and unrestricted trading to the marketplace–will carry considerably lower costs than similarly-managed mutual funds. There will be a concerted effort to make the ETF attractive to a large pool of investors who currently seek mutual funds or other vehicles to access active portfolio management.

The advantages of an ETF are many: the transparency of a portfolio disclosed every trading day, no 12b-1 fee, an expense ratio of 79 basis points, and tax savings of an ETF because they are able to manage flows by swapping shares “in-kind,” according to Thomas.

Grail is currently discussing the launch of a number of customized, actively- managed ETFs with major financial institutions and asset managers.


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