There are some late bloomers in the world of ETFs.
While some of the big names in the business have been in it for a couple decades, there are plenty of traditional mutual fund shops that have only recently made the leap. Others may still be considering if, and when, to add ETFs. Within a few months, though, the rules of the road are probably changing. The Securities and Exchange Commission is widely expected to start approving a dual-share class structure, which will allow companies to add ETF share classes to existing mutual funds and vice versa.
But that hasn’t stopped firms from adding stand-alone ETFs or converting mutual funds to them. In recent months, companies including Lazard, First Eagle, Parnassus, Praxis, Thornburg, and Tweedy, Browne, have added their first ETFs. They have good reason to get into the space: ETFs can offer tax efficiency, they trade intraday and they provide transparency that some investors want. One other important detail … they’re cheap.
New in Town: “The tax advantages afforded by ETFs are simply too compelling to ignore,” said Bob Wykoff, managing director at Tweedy, Browne, which in December launched the Insider + Value ETF, its first product in the wrapper. “We’ve had an interest in ETFs for a very, very long time. But finding how we would come at it took us some time. There was a long learning curve.”
There are more than a few factors motivating asset managers to add ETFs. Actually, there are billions and trillions of them:
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