Envestnet is preparing to launch four ETFs that are to run using a mix of active and passive management styles, according to a recent filing with the Securities and Exchange Commission.
The four new strategies will be the Envestnet ActivePassive Core Bond, ActivePassive Intermediate Municipal Bond, ActivePassive International Equity and ActivePassive US Equity ETFs, according to the filing, which is dated Tuesday. Expense ratios were not immediately disclosed.
The ETFs will be managed by Envestnet chief investment strategist Tim Clift (pictured), co-founder and chief investment officer Brandon Thomas, as well as PMs Janis Zvingelis, Greg Classen and Tim Murphy. The filing includes a section that nods to potential sub-advisory agreements but does not name any at this time.
Their strategy for the ETFs ‘blends active and passive investment strategies to optimize costs, tracking and potential return’ against each fund’s benchmark, the filing said.
Envestnet will determine how much of a strategy is allocated to active or passive instruments ‘based on a variety of factors’ including proprietary active manager research, subadviser due diligence and analysis on factor investing.
‘The Adviser takes advantage of the low costs and index tracking of passive investing and balances it with active investing which can provide the opportunity to add value through risk mitigation and security selection’ the filing said. ‘The ratio of the Fund’s investment portfolio that is actively versus passively managed is expected to shift over time as economic conditions change and the available information about the asset classes in which the Fund invests evolves.’
Envestnet, which offers portfolio management software to RIAs, has worked to craft ETF portfolios and has previously launched similar ‘ActivePassive’ strategies, but the move to launch its own ETFs with the ActivePassive approach is a new one.
‘There’s some merit to putting the different (manager) sleeves in an ETF, as the rebalancing can be done more tax efficiently,’ said Jeffrey Ptak, Morningstar’s chief ratings officer, via Twitter.