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Nuveen Launches Its First Active ETFs

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What You Need to Know

  • The three active equity ETFs are semi-transparent funds that reveal their holdings monthly, rather than daily.
  • The three ETFs are essentially clones of mutual funds with fees lower than those funds' institutional shares.
  • Nuveen's entry into the active ETF market follows similar moves by DFA, T. Rowe Price, Putnam Investments and others.

Nuveen, the asset management unit of TIAA, has launched its first active ETFs, joining a growing number of asset managers that also recently took the plunge, including Dimensional Fund Advisors, T. Rowe Price and Putnam Investments.

The Nuveen suite of active ETFs consists of three semi-transparent funds that are ETF versions of the firm’s actively managed mutual funds. They are the Nuveen Small-Cap Select ETF (NSCS), the Nuveen Dividend Growth ETF (NDVG) and the Nuveen Winslow Large-Cap Growth ESG ETF (NWLG).

All three ETFs trade on the NYSE and disclose only proxy portfolio holdings, rather than actual holdings, on a daily basis, unlike traditional ETFs. They do so to maintain the secrecy of their trading strategy and avoid any potential front-running by other market participants.

The ETFs use the NYSE’s licensed proxy portfolio structure for this and will disclose their holdings on a monthly basis following the same disclosure schedule as the mutual funds they resemble.

Jordan Farris, head of ETF product at Nuveen, said in a statement that the ETFs represent “an intuitive evolution” of Nuveen’s “proud tradition of active management.” The strategies incorporate the firm’s “unique combination of expertise in stock selection, analytics and portfolio modeling with product structuring capabilities” used across its $1.2 trillion platform.

He added that the ETFs provide clients “their preferred wrapper, though they can still build portfolios across a range of Nuveen products, including mutual funds, closed-end funds, and both index ETF options.”

The  ETFs also offer investors relatively low fees for actively managed funds. The Dividend Growth and Large-Cap Growth ESG ETFs have net expense ratios of 0.64%; the Nuveen Small-Cap Select ETF charges a 0.85% fee. All three fees are lower than the fees for the institutional share classes of their equivalent mutual funds ratios.

Two ETFs — the dividend growth and small-cap funds — charge the same as the fee for the R6 (retirement) share class of their comparable mutual fund; the large-cap growth ESG ETF charges more than its comparable mutual fund R6 share, which is just 0.44%.

With these latest ETF additions, Nuveen has a total of 16 ETFs — three active and 13 passive — with total assets of about $4.1 billion.