In yet another sign that the ETF industry isn’t done growing, two more financial giants have taken the initial steps towards launching their first ETFs. Jefferies Asset Management and Manulife Financial could soon join a field of ETF sponsors that is currently about 30 strong, making an increasingly crowded field even more competitive.
In a filing with the SEC, Jefferies requests exemptive relief and provides some very high level details on two proposed funds, including “one fund whose performance will correspond generally to the price and yield performance of a domestic equity securities index” and “one fund whose performance will correspond generally to the price and yield performance of a domestic fixed income securities index.”
Jefferies primarily operates as a global investment bank.
Also looking to make a splash in the ETF industry is Manulife, a major Canadian insurer that maintains significant mutual fund operations under the John Hancock brand in the U.S. The Manulife filing contained very few details on any specific funds but did mention that three of the firm’s subsidiaries would advise the new products.
The response of mutual fund companies to the development of the ETF industry has been mixed. On the one end of the spectrum is Vanguard, who embraced the funds from the beginning and is now one of the largest ETF companies. Other mutual fund giants, such as Fidelity, have only dabbled in ETFs, while Charles Schwab and Old Mutual have mostly stayed on the sidelines. Pimco has launched two new funds within the last several months, including the market’s first short-term TIPS ETF.
While many in the ETF industry expect further expansion from new entrants, consolidation in the long-term is also a likely development. “In terms of consolidation, I think products are going to consolidate and I think sponsors are going to consolidate,” Claymore President Christian Magoon told ETF Database last month. “In terms of new entrants, I think we are going to see institutional firms, firms from overseas, and traditional mutual fund players enter the scene pretty aggressively.” Magoon’s predictions are already coming to pass.
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