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Envestnet Files to Offer Its Own ETFs on Platform

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What You Need to Know

  • The TAMP is planning two bond and two equity ETFs that combine active and passive management.
  • Envestnet Asset Management is the advisor for all four ETFs; subadvisors will oversee the investment management.
  • Neither the names of the subadvisors nor fees were disclosed in the SEC filing.

Envestnet is planning a direct move into the ETF market, with the launch of four ETFs that combine active and passive management.

Each ETF is “a series of trusts for professional managers,” according to the firm’s recent filing with the Securities and Exchange Commission.

The ETFs are not only a first for Envestnet, whose platform includes ETFs and mutual funds from multiple asset managers which advisors can access, but also unusual in that their structures combine both active and passive management within a single fund.

They blend “active and passive investment strategies to optimize costs, tracking and potential return” over a fund’s particular benchmark index, according to the firm’s filing with the SEC.

The four ETFs are the ActivePassive Core Bond ETF (APCB) ActivePassive Intermediate Municipal Bond ETF (APMU), ActivePassive International Equity ETF (APIE) and ActivePassive U.S. Equity ETF (APUE).

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Envestnet Asset Management is advisor for the funds, but they will all have subadvisors that will be in charge of the investment decisions. Neither the names of the subadvisors nor the fees of the ETFs were disclosed in the SEC filing.

According to the filing, Envestnet Asset Management will determine the active-passive investment mix, based on a variety of factors, including proprietary research that looks at the likelihood of active managers outperforming or underperforming within the asset classes in which the fund invests, due diligence on available subadvisors and how they can contribute to overall fund performance and academic research on factor investing.

Tim Welsh, the president and founder of Nexus Strategy, a consulting firm for advisors, says the move by Envestnet is “an interesting development as Envestnet plays dual roles as a platform distributor as well as asset manager.”

He didn’t think the plan will have “any real long-term impact to advisors or other asset managers,” which are already included on the Envestnet platform, although it will allow Envestnet to list its funds first. “To be a platform owner and asset manager is a pretty powerful position to be in.”