1) Elkhorn ETFs Close, Change Names ETF.com | 4/16/2018
Because… Elkhorn’s founder and CEO, Ben Fulton, is one of the pioneers in the ETF industry. He was formerly Managing Director of Invesco PowerShares’ Global ETF Business. Unfortunately, his rich industry experience and in-depth product knowledge did not bring the deal with Turner to a satisfactory close. As the competition intensifies and more traditional asset managers move into the ETF space, industry consolidation will be on the rise. Firms should realize even after a careful evaluation of financial conditions, product positioning, and cultural fit, not every merger/acquisition attempt has a happy ending.
2) Vanguard Active ETFs Slow to Grow ETF.com | 4/16/2018
Because… Patience is a virtue. Two months is too short to measure a fund’s success. Vanguard is subject to the same scrutiny as everyone else when it comes to active ETFs. The firm has not promoted these factor-driven strategies to individual investors. Institutional investors and financial advisors typically wait for a fund to establish its three-year track record. Performance is one primary criterion for selecting an active fund. Vanguard is known for partnering with reputable asset managers, such as PRIMECAP and Wellington, for its actively managed mutual funds. The new ETFs are managed by its internal quantitative equity team. Investors will want to see if they can produce solid returns before gaining their trust.
3) Wealthfront Cuts Risk Parity Expense Ratio in Half to 0.25% PR Newswire | 4/18/2018
Because… We questioned the adequacy of the fund’s expense ratio when Wealthfront announced the launch of the Risk Parity Fund. While the firm responded to investor backlash by halving the fund’s expense ratio within two months of its offering, the firm’s image has already taken a hit. Customers were puzzled by the firm’s business philosophy and pricing schemes. On the one hand, it advocates a low-cost model to lure investors away from human advisors who charge higher fees. On the other hand, it rolled out a proprietary product strategy that is unproven and much more expensive than most ETFs on a robo-advisory platform. Restoring investor confidence in the firm may now be harder than a price cut decision.