John Hancock Drafts Active Global ETF
August 10, 2012
John Hancock, the Boston-based financial firm that has been looking at entering the ETF market for a couple of years, filed paperwork with U.S. regulators to market its first ETF, an actively managed multi-asset-class global ETF that looks to find current income while growing capital.
As the firm puts it in the filing, the Global Balanced ETF is designed to “seek a balance between a high level of current income and growth of capital, with a greater emphasis on growth of capital.” The strategy is in some ways akin to what Invesco PowerShares set out to do with its passively managed PowerShares RiverFront Tactical Growth & Income Portfolio (NYSEArca: PCA).
PCA is mostly a fund-of-funds strategy that looks for income and capital growth by tracking a RiverFront index, while John Hancock’s ETF is looking to keep a 60/40 split between equities and fixed income, give or take 10 percent in either direction, and it’s actively managed. PCA has gathered only $16.5 million in four years.
John Hancock’s filing comes at a time when smaller fund providers such as FocusShares and Russell are struggling to compete in an ETF market that’s dominated by a handful of large fund managers.
Still, the company is hoping to carve out a niche for itself, and opting to launch actively managed ETFs might be a way to do that, as many industry sources have recently been hailing active ETFs as the next wave of growth for the $1.22 trillion U.S. ETF industry.
The fund’s portfolio will include everything from domestic and foreign equities of various market capitalizations to global debt—both investment-grade and junk—to other ETFs and cash when needed.
The Global Balanced ETF is John Hancock’s first actively managed fund to enter the regulatory pipeline, but the firm seems to also be planning for passive strategies, including an infrastructure-focused ETF.