Grail To Close Two Active ETFs (RPQ, RFF)

by on August 24, 2010 | ETFs Mentioned:

Grail Advisors has announced that it will close two actively-managed ETFs the firm currently offers through a partnership with RiverPark Capital. Trading in the RP Technology ETF (RPQ) and RP Financials ETF (RFF) will be suspended prior to the market open on August 30, and shareholders will have their shares redeemed for cash the following day. Grail and RiverPark will be covering all costs related to the shuttering of the funds.

“By all appearances, the marketplace is not ready for these sector funds. We’ve been pleased with the performance of the RP Technology ETF but flows have still been disappointing,” said Morty Schaja, CFA, CEO, and Managing Partner at RiverPark Capital. “I believe investors will be better served by incorporating the best ideas of these two sector funds into our RP Growth ETF (RPX) offering.”

Both RPQ and RFF were launched in October 2009. Since its inception RPQ has gained about 13%. Fidelity’s ONEQ, which tracks the Nasdaq Composite Index against which RPQ was benchmarked, has gained almost 7% over that same period. Despite the impressive performance, RPQ struggled to accumulate assets; the fund currently has just about $3 million under management.

“Our goal is to bring investors a full complement of traditional, active fund managers and strategies to the ETF marketplace,” said William M. Thomas, CEO of Grail Advisors LLC. “With this move, we are dedicating our resources to the areas of most interest to investors, including the introduction of several exciting new funds in the coming months that will have broad appeal in the marketplace.”

The “exciting new funds” Thomas mentioned are likely to include an actively-managed emerging markets debt ETF managed by the firm of legendary bond investor Jeffrey Gundlach. Grail inked a partnership with DoubleLine Capital earlier this summer, and the first fund from that marriage could hit the market this fall [Grail and DoubleLine: Match Made In ETF Heaven?].

Once RPQ and RFF close their doors, Grail’s product lineup will consist of five actively-managed ETFs, including three equity and two fixed income ETFs.

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Disclosure: No positions at time of writing.