Head of ETF Product Development, IndexIQ
This week we sit down with Jonathan Spiegel at IndexIQ to discuss their recent launch leveraging the NYSE Active Proxy Structure and how the active ETF market is evolving.
IndexIQ has a long-standing track record as an ETF issuer and innovator, launching its first NYSE listed ETFs over a decade ago and being among the first issuers to launch liquid alternatives in ETFs. What led to the decision to expand the actively managed ETF lineup beyond fixed income and into equities with the launch of IWFG and IWLG in 2022?
It’s no surprise that actively managed ETFs have been gaining momentum for some time, with active management growing considerably over the past 5 years. While these ETFs are only a small piece of the overall pie, it’s hard to ignore this trend in terms of the number of strategies launching, as well as assets raised, and investor interest.
We noticed this trend several years ago, and as part of the New York Life Investments multi-boutique structure, we’ve also been able to leverage the expertise of the active managers within the NYLI family. Active management has been one of IndexIQ’s key focus areas for some time, and we’ve launched a number of actively managed fixed income strategies over the past few years. In fact, as we think more wholistically about our ETF product offerings, we group them into four key categories: 1) IQ Beyond Beta ETFs, 2) IQ Alternatives, 3) IQ Active ETFs, and 4) IQ Dual Impact ETFs.
Equities was one area where we saw an opportunity to build out our active ETF suite. We leveraged our existing relationship with Winslow Capital Management (Winslow Capital) to take a strategic next step and launch the new IQ Winslow ETFs: the IQ Winslow Large Cap Growth ETF (IWLG) and IQ Winslow Focused Large Cap Growth ETF (IWFG).
IndexIQ decided to license the NYSE Active Proxy Structure to give your investment management teams protection and disclosure flexibility inside the ETF wrapper. What were the key considerations for selecting the structure as well as the ETFs that leverage it?
Prior to the launch of IWLG and the IWFG, we were monitoring the trends within the actively managed semi-transparent arena for a while. Working with Winslow Capital to develop these two strategies was a natural extension of our existing relationship with the Firm through our parent company, New York Life Investment Management (“NYLIM”).
The NYSE Active Proxy Structure has garnered a lot of interest, as seen by the number of ETFs launching since 2020 when the first semi-transparent ETF launched. Given the market for these ETFs is still in a relatively nascent stage, it’s clear that asset managers recognize the potential of this structure. The NYSE Active Proxy Structure gives investors access to IndexIQ and Winslow’s Large Cap Growth strategy in an ETF format, which is currently only offered by NYLIM in a mutual fund and CIT structure. The NYSE Active Proxy Structure allows us to maintain consistency with the holdings disclosure approach taken by the mutual fund and take advantage of the benefits that the ETF structure is able to offer, such as tax efficiencies and intra-day liquidity.
As a global asset manager, what benefits and/or nuances come with operating an active ETF product line-up compared to other investment wrappers (i.e., Mutual Funds, CITs, etc.)?
As a global asset manager, NYLIM offers numerous strategies across many different product wrappers, including ETFs, mutual funds, CITs, SMAs, etc. One of the largest benefits is our ability to export successful strategies and leverage existing relationships with different subadvisors onto the IndexIQ platform. We are talking about IWLG and IWFG right now, but we can access the full breadth and depth of NYLIM as a global asset manager, as we contemplate the future expansion of our ETF offerings.
What are the key considerations that investors should contemplate when considering actively managed ETFs?
There are a number of reasons we believe active management adds value. At the heart of it, active management provides investors an opportunity to outperform a benchmark. One of the biggest considerations should be the investment advisor / subadvisor and their track record. We also believe in the value of passive management, as you can see with the majority of our ETF offerings. However, active management provides investment managers the flexibility to adjust their approach when things may or may not be working. Part of this flexibility is driven by a risk management framework that comes with the active investment approach. Another benefit of active management is the ability to allocate more funds towards higher conviction investments. Unlike a traditional market-cap weighted passively managed ETF, actively managed ETFs can choose how much to invest in a particular company. And let’s not forget this is all done within the ETF structure, which can provide tax-efficiency and intra-day liquidity, to name a few of the benefits.
Lastly, what guidance would you provide sponsors as they consider expanding their product offerings to include actively managed ETFs?
To expand product offerings into actively managed ETFs, it’s important to have the proper infrastructure and ability to execute. Active management is becoming more prevalent within the ETF landscape, although still on a small scale compared to passively managed ETFs. It is important to have a value proposition with the strategy you plan to roll out given the level of competition. It’s equally as important to have a good relationship with your service providers. For example, we have worked with the New York Stock Exchange (NYSE) on the launch of many of our ETFs. NYSE has provided us with support, advice, and market intelligence on how best to think about strategies we consider launching.
Whether active or passive, IndexIQ’s main priority has been to offer thoughtful investment solutions to the marketplace, and we look forward to continuing to bring out innovative and impactful strategies as we look to help our clients meet their portfolio’s needs.
|# of Issuers||185|
|# of New Issuers 2022||33|
|# of ETFs||869||AUM ($B)||$364.74|
|# of New Launches 2022||133||3 Yr AUM CAGR||165%|
|Avg. ER||0.41%||5 Yr AUM CAGR||59%|
|YTD Cash Flow ($B)||$48.80||YTD ADV (Shares)||127,271,300|
|3 Yr Cash Flow||$231.40||YTD ADV ($)||$5.10 B|
|5 Yr Cash Flow||$262.20||YTD Avg. Spread (bps)*||32.93|
Source: Factset & NYSE Internal Database and Consolidated Tape Statistics as of 2/14/2022
|Ticker||Inception||Name||AUM||YTD Flows||30 Day Median Spread (bps)||ADV (shares)||Structure||LMM||Expense Ratio|
|EQOP||9/17/20||Natixis U.S. Equity Opportunities ETF||$8,886,352||$623,987||11.41||870||NYSE AMS||Citadel||0.85%||NYSE|
|VNSE||9/17/20||Natixis Vaughan Nelson Select ETF||$10,440,662||$6,230,444||8.13||2,135||NYSE AMS||Citadel||0.80%||NYSE|
|VNMC||9/17/20||Natixis Vaughan Nelson Mid Cap ETF||$7,540,403||$(288,632)||14.43||475||NYSE AMS||Citadel||0.85%||NYSE|
|ESGA||7/15/20||American Century Sustainable Equity ETF||$109,330,888||$(30,574,911)||12.08||14,929||NYSE AMS||Citadel||0.39%||NYSE|
|MID||7/15/20||American Century Mid Cap Growth Impact ETF||$25,961,376|
|ESGY||7/1/21||American Century Sustainable Growth ETF||$7,048,829||$1,144,328||5.89||463||NYSE AMS||Citadel||0.39%||NYSE|
|NDVG||8/5/21||Nuveen Dividend Growth ETF||$6,982,136||$991,585||7.59||3,368||NYSE AMS||Citadel||0.64%||NYSE|
|NSCS||8/5/21||Nuveen Small Cap Select ETF||$5,655,208||$6,084||10.91||356||NYSE AMS||Citadel||0.85%||NYSE|
|NWLG||8/5/21||Nuveen Winslow Large-Cap Growth ESG ETF||$5,074,650||$220,954||7.99||4,791||NYSE AMS||Citadel||0.64%||NYSE|
|NUGO||9/28/21||Nuveen Growth Opportunities ETF||$2,529,567,758||$(34,482,373)||6.97||210,739||NYSE AMS||Citadel||0.55%||NYSE|
|SAEF||11/16/21||Schwab Ariel ESG ETF||$10,967,250|
|27.34||4,013||NYSE AMS||Flow Traders||0.59%||NYSE|
|IWLG||6/23/22||IQ Winslow Large Cap Growth ETF||$5,859,966||$ -||21.51||11,322||NYSE AMS||Citadel||0.60%||NYSE|
|IWFG||6/23/22||IQ Winslow Focused Large Cap Growth ETF||$5,867,400||$775,390||21.54||9,165||NYSE AMS||Citadel||0.65%||NYSE|
|FDG||4/2/20||American Century Focused Dynamic Growth ETF||$142,985,768||$(17,859,205)||10.44||26,420||ActiveShares||Citadel||0.45%||Cboe BZX|
|FLV||4/2/20||American Century Focused Large Cap Value ETF||$218,357,094||$(8,099,752)||10.29||8,787||ActiveShares||Citadel||0.42%||Cboe BZX|
|CFCV||5/28/20||ClearBridge Focus Value ETF||$3,554,318||$339,746||31.94||222||ActiveShares||GTS||0.50%||Cboe BZX|
|FBCG||6/4/20||Fidelity Blue Chip Growth ETF||$382,070,325||$745,140||23.56||135,924||Fidelity Proxy||GTS||0.59%||Cboe BZX|
|FBCV||6/4/20||Fidelity Blue Chip Value ETF||$113,096,655|
|32.67||27,236||Fidelity Proxy||GTS||0.59%||Cboe BZX|
|FMIL||6/4/20||Fidelity New Millennium ETF||$55,228,680||$(4,169,738)||36.1||10,305||Fidelity Proxy||GTS||0.59%||Cboe BZX|
|FGRO||2/4/21||Fidelity Growth Opportunities ETF||$64,792,825|
|13.26||171,773||Fidelity Proxy||Citadel||0.59%||Cboe BZX|
|FMAG||2/4/21||Fidelity Magellan ETF||$47,686,950||$705,188||11.99||17,683||Fidelity Proxy||RBC||0.59%||Cboe BZX|
|FPRO||2/4/21||Fidelity Real Estate Investment ETF||$19,920,515||$226,838||8.82||6,451||Fidelity Proxy||Citadel||0.59%||Cboe BZX|
|FSMO||2/4/21||Fidelity Small/Mid-Cap Opportunities ETF||$27,469,503||$(113,630)||12.62||7,406||Fidelity Proxy||RBC||0.59%||Cboe BZX|
|FSST||6/17/21||Fidelity Sustainability U.S. Equity ETF||$5,764,440||$482,085||10.02||1,127||Fidelity Proxy||RBC||0.59%||NYSE|
|FDWM||6/17/21||Fidelity Women's Leadership ETF||$2,641,755||$235||11.98||658||Fidelity Proxy||RBC||0.59%||NYSE|
|TCHP||8/5/20||T. Rowe Price Blue Chip Growth ETF||$263,035,063||$62,391,276||13.69||137,723||T Rowe Proxy||Virtu||0.57%||NYSE|
|TDVG||8/5/20||T. Rowe Price Dividend Growth ETF||$154,972,940|
|10.78||26,432||T Rowe Proxy||RBC||0.50%||NYSE|
|TEQI||8/5/20||T. Rowe Price Equity Income ETF||$93,009,039|
|12.71||18,028||T Rowe Proxy||Virtu||0.54%||NYSE|
|TGRW||8/5/20||T. Rowe Price Growth Stock ETF||$45,400,531|
|11.63||15,009||T Rowe Proxy||RBC||0.52%||NYSE|
|TSPA||6/8/21||T. Rowe Price U.S. Equity Research ETF||$22,000,721|
|10.69||2,059||T Rowe Proxy||RBC||0.52%||NYSE|
|IVDG||12/22/20||Invesco Focused Discovery Growth ETF||$636,971|
|10.69||371||Invesco Model||Citadel||0.59%||Cboe BZX|
|IVSG||12/22/20||Invesco Select Growth ETF||$1,100,111|
|9.78||375||Invesco Model||Citadel||0.48%||Cboe BZX|
|IVLC||12/22/20||Invesco US Large Cap Core ESG ETF||$6,238,093|
|16.4||2,003||Fidelity Proxy||Citadel||0.48%||Cboe BZX|
|IVRA||12/22/20||Invesco Real Assets ESG ETF||$3,303,274|
|30.15||1,695||Fidelity Proxy||Citadel||0.59%||Cboe BZX|
Gabelli Love Our Planet & People ETF
|GGRW||2/16/21||Gabelli Growth Innovators ETF||$2,900,050|
|GAST||1/5/22||Gabelli Asset ETF||$4,515,210||$244,380||51.98||120||ActiveShares||GTS||0.90%||NYSE|
|FRTY||3/1/21||Alger Mid Cap 40 ETF||$33,226,250|
|ATFV||5/4/21||Alger 35 ETF||$10,513,875|
|REIT||2/26/21||ALPS Active REIT ETF||$19,218,355||$(4,738,000)||45.69||6,123||Blue Tractor||GTS||0.68%||NASDAQ|
|STNC||3/16/21||Stance Equity ESG Large Cap Core ETF||$42,739,455|
|PFUT||5/26/21||Putnam Sustainable Future ETF||$7,193,387||$545,436||34.95||1,848||Fidelity Proxy||Virtu||0.64%||NYSE|
|PLDR||5/26/21||Putnam Sustainable Leaders ETF||$6,329,676|
|PGRO||5/26/21||Putnam Focused Large Cap Growth ETF||$10,672,061|
|PVAL||5/26/21||Putnam Focused Large Cap Value ETF||$34,463,717|
|HFGO||11/9/21||Hartford Large Cap Growth ETF||$80,705,185|
|30.64||166,719||Fidelity Proxy||Citadel||0.59%||Cboe BZX|
|SEMI||3/30/22||Columbia Seligman Semiconductor and Technology ETF||$14,665,717|
|CAPE||4/5/22||DoubleLine Shiller CAPE U.S. Equities ETF||$61,426,500|
|GABF||5/11/22||Gabelli Financial Services Opportunities ETF||$5,462,520||$261,400||38.77||306||ActiveShares||GTS||0.00%||NYSE|
|BYRE||5/19/22||Principal Real Estate Active Opportunities ETF||$5,758,504|
Source: FactSet & NYSE Internal Database and Consolidated Tape Statistics as of 8/5/2022
|Ticker||Name||Issuer||Launch Date||Asset Class||AUM|
|SSXU||Day Hagan/Ned Davis Research Smart Sector International ETF||Day Hagan Asset Management||07/01/2022||Equity||$7,627,380|
|IRHG||Global X Interest Rate Hedge ETF||Global X||07/06/2022||Alternatives||$3,126,293|
Global X Interest Rate Volatility & Inflation Hedge ETF
|Global X||07/06/2022||Fixed Income||$3,213,852|
|SPCZ||RiverNorth Enhanced Pre-Merger SPAC ETF||TrueMark Group||07/12/2022||Equity||$3,761,790|
|MCH||Matthews China Active ETF||Matthews International Capital Management||07/14/2022||Equity||$1,430,328|
|MINV||Matthews Asia Innovators Active ETF||Matthews International Capital Management||07/14/2022||Equity||$1,254,780|
|MEM||Matthews Emerging Markets Equity Active ETF||Matthews International Capital Management||07/14/2022||Equity||$1,594,794|
|TSLQ||AXS TSLA Bear Daily ETF||AXS Investments||07/14/2022||Equity||$40,497,750|
|NVDS||AXS 1.25X NVDA Bear Daily ETF||AXS Investments||07/14/2022||Equity||$1,987,060|
|PFES||AXS 2X PFE Bear Daily ETF||AXS Investments||07/14/2022||Equity||$2,364,445|
|PFEL||AXS 2X PFE Bull Daily ETF||AXS Investments||07/14/2022||Equity||$1,516,255|
|PYPS||AXS 1.5X PYPL Bear Daily ETF||AXS Investments||07/14/2022||Equity||$1,434,440|
|PYPT||AXS 1.5X PYPL Bull Daily ETF||AXS Investments||07/14/2022||Equity||$2,386,405|
|NKEQ||AXS 2X NKE Bear Daily ETF||AXS Investments||07/14/2022||Equity||$1,932,970|
|NKEL||AXS 2X NKE Bull Daily ETF||AXS Investments||07/14/2022||Equity||$1,759,815|
|SIO||Touchstone Strategic Income Opportunities ETF||Touchstone||07/25/2022||Fixed Income||$82,502,918|
|MMSB||IQ MacKay Multi-Sector Income ETF||New York Life||07/26/2022||Fixed Income||$25,410,000|
|TSLH||Innovator Hedged TSLA Strategy ETF||Innovator||07/26/2022||Equity||$2,558,000|
|LCF||Touchstone US Large Cap Focused ETF||Touchstone||07/29/2022||Equity||$1,000,000|
|CGV||Conductor Global Equity Value ETF||IronHorse Holdings||08/01/2022||Equity||$63,575,171|
|BCDF||Horizon Kinetics Blockchain Development ETF||Horizon Kinetics LLC||08/02/2022||Equity||$1,301,330|
|DVND||Touchstone Dividend Select ETF||Touchstone||08/04/2022||Equity||$5,040,000|
|STCE||Schwab Crypto Thematic ETF||Charles Schwab||08/04/2022||Equity||$5,248,026|
|Total - 23 New ETFs||$262,523,802|
Source: Factset as of 8/11/2022
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