NYSE Active Proxy Structure Crosses $1 Billion + Q&A with Nuveen
October 28, 2021
NYSE becomes the first active structure to cross $1 billion in assets
On October 22, the NYSE Active Proxy Structure became the first structure that allows asset managers the flexibility of protecting their alpha generation strategies to surpass $1 billion in assets under management (AUM). Industry-wide, 40 ETFs with $3 billion in assets use the novel structures from ActiveShares, Blue Tractor, Fidelity, Invesco and T. Rowe Price. Year-to-date, these ETFs have accumulated $1.8 billion of cash flow. Looking forward, there are 15+ filed ETFs in the launch pipeline. The industry is also working to expand access to non-US equity and fixed income strategies.
Jordan Farris
Managing Director, Head of ETF Product Development,
Nuveen
Q&A With Nuveen
This week we sit down with Jordan Farris at Nuveen to discuss the company’s entry into the active ETF market and how the market is evolving.
Nuveen has a long-standing track record as an active asset manager, yet just recently launched its first actively managed equity ETFs with NYSE Arca-listed NUGO, NDVG, NWLG and NSCS. What led to the decision to enter the active ETF market earlier this year?
Nuveen is a 100+ year old organization managing more than $1 trillion in AUM on behalf of clients. Active management is part of our DNA, from municipal bond mandates to closed-end fund offerings to our extensive equity platform. Our longevity is due in part to our culture of innovation and how we have continued to evolve to meet the changing needs of our clients.
Our decision to enter the active ETF market was driven by investor preferences for accessing investment strategies. 2021 has already witnessed record flows into both passive and active ETFs, and Nuveen’s entrance into the active ETF space aligns our expertise in delivering active strategies to clients with the ongoing shift in how investors access those strategies.
For Nuveen Dividend Growth ETF (NDVG), Nuveen Winslow Large Cap Growth ESG ETF (NWLG), and Nuveen Small Cap Select ETF (NSCS), we brought existing capabilities to market, leveraging the same portfolio management teams that are responsible for the corresponding mutual fund and/or SMAs. This offers increased choice to investors with strong wrapper preferences. For Nuveen Growth Opportunities ETF (NUGO), we brought to market a capability new to Nuveen but from an experienced and successful portfolio management team.
Nuveen decided to license the NYSE Active Proxy Structure to give your investment management teams protection and disclosure flexibility inside the ETF wrapper. What were the key considerations for selecting the structure as well as the ETFs that leverage it?
We were seeking a structure that offered clients an efficient vehicle for accessing a strategy while simultaneously allowing portfolio managers to express their investment thesis without signaling trades to the market.
We have worked with the NYSE to grow our ETF business since 2016. Their understanding of market structure, exchange dynamics, and regulatory expertise gives us confidence in the NYSE Active Proxy Structure’s ability to function well as this market gains scale. Since the launch of our active ETFs in August, we have been very pleased with the secondary market and the ability of the ETF ecosystem to price the products efficiently during the trading day.
The ETFs we chose to launch using the NYSE Active Proxy Structure are several of our flagship equity strategies leveraging portfolio management teams with a proven history of delivering upon investment objectives. We have already seen allocations across all four strategies and are encouraged by investor interest.
As a global asset manager, what benefits and/or nuances come with operating an active ETF line-up compared to other investment wrappers (i.e., Mutual Funds, CITs, etc.)?
For clients, the active ETF wrapper offers an additional mechanism for accessing investment strategies. We view this added choice as beneficial to the overall client experience. Operating an active ETF product line-up, or a passive ETF line-up for that matter, requires expertise and knowledge in working with a number of market participants including exchanges, market makers, and authorized participants. For Nuveen, this expertise already resided in-house as a result of our quickly growing passive ETF line-up.
The benefits of active ETFs are largely similar to those of passive ETFs and can include greater tax efficiency and intra-day liquidity. As mentioned earlier, 2021 has already seen record growth in active ETFs as investors become more comfortable with the structure.
What are the key considerations for investors who are contemplating actively managed equity ETFs?
The key consideration is the investment strategy. Is this a strategy that aligns with the investors’ overall investment objective and has the portfolio manager been able to consistently deliver results over time? The active ETF is the delivery vehicle and has proven to be one of the more efficient ways for investors to access investment talent within a pooled investment product.
Find the investment strategy, the portfolio manager, or the index that fits your investment objective and then find the product wrapper that offers the best access. In many cases, that product wrapper will be an ETF.
What guidance would you provide sponsors as they consider expanding their offerings to include actively managed ETFs?
Speak with industry experts. There are multiple ways to enter the active ETF market and having done an industry analysis and knowing which strategies you’d like to bring to market are table stakes at this point. Developing a near complete understanding of market participants, regulations, and building a clear distribution strategy are all required for a successful launch.
Working with the NYSE can help inform and guide from a perspective that is not always clear sitting on the asset management side of the aisle. This type of support was a critical element in Nuveen bringing active ETFs to market and will continue to be impactful as we grow our existing suite and bring more products to market.
Active ETF Stat Pack
| Firms | |||
|---|---|---|---|
| # of Issuers | 139 | ||
| # of New Issuers 2021 | 46 | ||
| Products | Assets | ||
| # of ETFs | 689 | AUM ($B) | $289.40 |
| # of New Launches 2021 | 227 | 3 Yr AUM CAGR | 166% |
| Avg. ER | 0.50% | 5 Yr AUM CAGR | 61% |
| Cash Flow | Trading | ||
| YTD Cash Flow ($B) | $76.30 | YTD ADV (Shares) | 48,798,177 |
| 3 Yr Cash Flow | $168.80 | YTD ADV ($) | $4.42 B |
| 5 Yr Cash Flow | $207.00 | YTD Avg. Spread (bps)* | 29.01 |
Source: Factset & NYSE Internal Database and Consolidated Tape Statistics as of 10/22/2021
*Simple average
Active, Semi-Transparent Update
| Ticker | Inception | Name | AUM | YTD Cash Flow | 30-Day Med. Spread (bps) | ADV (shares) | Structure | LMM | Expense Ratio |
|---|---|---|---|---|---|---|---|---|---|
| EQOP | 9/17/20 | Natixis U.S. Equity Opportunities ETF | $10,589,358 | ($4,230,752) | 15.945 | 692 | NYSE AMS | Citadel | 0.90% |
| VNSE | 9/17/20 | Natixis Vaughan Nelson Select ETF | $5,783,992 | ($2,122,852) | 14.895 | 772 | NYSE AMS | Citadel | 0.80% |
| VNMC | 9/17/20 | Natixis Vaughan Nelson Mid Cap ETF | $9,326,851 | ($144,031) | 14.64 | 1,301 | NYSE AMS | Citadel | 0.85% |
| ESGA | 7/15/20 | American Century Sustainable Equity ETF | $154,144,440 | $15,811,214 | 14.875 | 9,189 | NYSE AMS | Citadel | 0.39% |
| MID | 7/15/20 | American Century Mid Cap Growth Impact ETF | $23,128,168 | $12,541,935 | 15.195 | 2,447 | NYSE AMS | Citadel | 0.45% |
| ESGY | 7/1/21 | American Century Sustainable Growth ETF | $6,077,456 | $431,686 | 6.975 | 1,754 | NYSE AMS | Citadel | 0.39% |
| NDVG | 8/5/21 | Nuveen Dividend Growth ETF | $5,978,666 | $757,394 | 7.82 | 4,630 | NYSE AMS | Citadel | 0.64% |
| NSCS | 8/5/21 | Nuveen Small Cap Select ETF | $6,243,456 | $1,021,184 | 10.595 | 4,640 | NYSE AMS | Citadel | 0.85% |
| NWLG | 8/5/21 | Nuveen Winslow Large-Cap Growth ESG ETF | $5,927,698 | $775,536 | 7.855 | 4,244 | NYSE AMS | Citadel | 0.64% |
| NUGO | 9/28/21 | Nuveen Growth Opportunities ETF | $851,107,761 | $1,034,264,910 | 7.9 | 2,170,496 | NYSE AMS | Citadel | 0.55% |
| FDG | 4/2/20 | American Century Focused Dynamic Growth ETF | $214,972,313 | ($38,639,711) | 14.305 | 26,848 | ActiveShares | Citadel | 0.45% |
| FLV | 4/2/20 | American Century Focused Large Cap Value ETF | $246,137,144 | $50,086,090 | 13.585 | 9,855 | ActiveShares | Citadel | 0.42% |
| CFCV | 5/28/20 | ClearBridge Focus Value ETF | $4,143,107 | $352,659 | 26.645 | 487 | ActiveShares | GTS | 0.50% |
| FBCG | 6/4/20 | Fidelity Blue Chip Growth ETF | $470,122,450 | $216,248,983 | 20.025 | 160,530 | Fidelity Proxy | GTS | 0.59% |
| FBCV | 6/4/20 | Fidelity Blue Chip Value ETF | $99,657,060 | $43,574,510 | 22.05 | 41,888 | Fidelity Proxy | GTS | 0.59% |
| FMIL | 6/4/20 | Fidelity New Millennium ETF | $61,806,885 | $31,254,618 | 20.52 | 26,257 | Fidelity Proxy | GTS | 0.59% |
| FGRO | 2/4/21 | Fidelity Growth Opportunities ETF | $49,506,525 | $44,311,853 | 4.81 | 40,547 | Fidelity Proxy | Citadel | 0.59% |
| FMAG | 2/4/21 | Fidelity Magellan ETF | $45,829,900 | $38,375,560 | 11.805 | 30,348 | Fidelity Proxy | RBC | 0.59% |
| FPRO | 2/4/21 | Fidelity Real Estate Investment ETF | $18,855,000 | $14,621,700 | 4.23 | 12,468 | Fidelity Proxy | Citadel | 0.59% |
| FSMO | 2/4/21 | Fidelity Small/Mid-Cap Opportunities ETF | $28,477,653 | $23,665,368 | 14.835 | 18,004 | Fidelity Proxy | RBC | 0.59% |
| FSST | 6/17/21 | Fidelity Sustainability U.S. Equity ETF | $3,823,155 | $1,535,855 | 10.925 | 6,133 | Fidelity Proxy | RBC | 0.59% |
| FDWM | 6/17/21 | Fidelity Women's Leadership ETF | $2,627,138 | $514,388 | 11.96 | 1,731 | Fidelity Proxy | RBC | 0.59% |
| TCHP | 8/5/20 | T. Rowe Price Blue Chip Growth ETF | $245,241,475 | $152,400,753 | 9.29 | 49,183 | T Rowe Proxy | Virtu | 0.57% |
| TDVG | 8/5/20 | T. Rowe Price Dividend Growth ETF | $106,816,547 | $58,879,283 | 7.92 | 15,944 | T Rowe Proxy | RBC | 0.50% |
| TEQI | 8/5/20 | T. Rowe Price Equity Income ETF | $52,215,141 | $22,520,816 | 10.7 | 8,601 | T Rowe Proxy | Virtu | 0.54% |
| TGRW | 8/5/20 | T. Rowe Price Growth Stock ETF | $47,438,325 | $14,895,382 | 8.455 | 6,378 | T Rowe Proxy | RBC | 0.52% |
| TSPA | 6/8/21 | T. Rowe Price U.S. Equity Research ETF | $20,609,440 | $4,168,683 | 9.035 | 2,646 | T Rowe Proxy | RBC | 0.52% |
| IVDG | 12/22/20 | Invesco Focused Discovery Growth ETF | $1,111,774 | ($284,840) | 15.195 | 1,368 | Invesco Model | Citadel | 0.59% |
| IVSG | 12/22/20 | Invesco Select Growth ETF | $1,416,514 | $- | 14.715 | 874 | Invesco Model | Citadel | 0.48% |
| IVLC | 12/22/20 | Invesco US Large Cap Core ESG ETF | $6,902,905 | $5,032,200 | 14.08 | 3,568 | Fidelity Proxy | Citadel | 0.48% |
| IVRA | 12/22/20 | Invesco Real Assets ESG ETF | $1,949,365 | $433,080 | 53.965 | 2,210 | Fidelity Proxy | Citadel | 0.59% |
| LOPP | 2/1/21 | Gabelli Love Our Planet & People ETF | $10,615,295 | $6,393,130 | 28.315 | 2,004 | ActiveShares | GTS | 0.90% |
| GGRW | 2/16/21 | Gabelli Growth Innovators ETF | $4,137,600 | $1,158,250 | 27.065 | 565 | ActiveShares | GTS | 0.90% |
| FRTY | 3/1/21 | Alger Mid Cap 40 ETF | $42,070,000 | $31,644,375 | 31.005 | 18,760 | ActiveShares | Virtu | 0.60% |
| ATFV | 5/4/21 | Alger 35 ETF | $15,715,000 | $13,627,625 | 37.325 | 7,424 | ActiveShares | Virtu | 0.55% |
| REIT | 2/26/21 | ALPS Active REIT ETF | $23,738,760 | $20,708,650 | 18.555 | 7,958 | Blue Tractor | GTS | 0.68% |
| STNC | 3/16/21 | Stance Equity ESG Large Cap Core ETF | $36,862,830 | $6,098,946 | 25.225 | 2,743 | Blue Tractor | GTS | 0.85% |
| PFUT | 5/26/21 | Putnam Sustainable Future ETF | $9,084,864 | $1,388,114 | 31.495 | 3,124 | Fidelity Proxy | Virtu | 0.64% |
| PLDR | 5/26/21 | Putnam Sustainable Leaders ETF | $7,558,156 | $679,200 | 9.765 | 2,806 | Fidelity Proxy | RBC | 0.59% |
| PGRO | 5/26/21 | Putnam Focused Large Cap Growth ETF | $9,985,057 | $700,098 | 8.97 | 5,913 | Fidelity Proxy | RBC | 0.55% |
| PVAL | 5/26/21 | Putnam Focused Large Cap Value ETF | $9,670,000 | $- | 28.12 | 4,265 | Fidelity Proxy | Virtu | 0.55% |
| Total/Average | $2,977,405,222 | $1,825,451,839 | 16.62 | 2,721,595 | 0.60% |
Source: Factset & NYSE Internal Database and Consolidated Tape Statistics as of 10/22/2021
*Simple average
October Active ETF Launches
| Ticker | Name | Issuer | Launch Date | Asset Class | AUM |
|---|---|---|---|---|---|
| MINO | PIMCO Municipal Income Opportunities Active ETF | PIMCO | 9/9/21 | Fixed Income | $41,672,400 |
| IOCT | Innovator International Developed Power Buffer ETF - October | Innovator | 10/1/21 | Equity | $8,900,920 |
| EOCT | Innovator Emerging Markets Power Buffer ETF - October | Innovator | 10/1/21 | Equity | $4,462,378 |
| SIXO | AllianzIM U.S. Large Cap 6 Month Buffer10 Apr/Oct ETF | Allianz | 10/1/21 | Equity | $38,425,500 |
| RISR | FolioBeyond Rising Rates ETF | Toroso Investments | 10/1/21 | Fixed Income | $1,268,250 |
| PSCQ | Pacer Swan SOS Conservative (October) ETF | Pacer Advisors | 10/1/21 | Equity | $1,565,655 |
| PSFO | Pacer Swan SOS Flex (October) ETF | Pacer Advisors | 10/1/21 | Equity | $3,707,253 |
| PSMO | Pacer Swan SOS Moderate (October) ETF | Pacer Advisors | 10/1/21 | Equity | $8,901,625 |
| QTOC | Innovator Growth Accelerated Plus ETF - October | Innovator | 10/1/21 | Equity | $2,528,490 |
| XBOC | Innovator U.S. Equity Accelerated 9 Buffer ETF - October | Innovator | 10/1/21 | Equity | $4,326,175 |
| XDOC | Innovator U.S. Equity Accelerated ETF - October | Innovator | 10/1/21 | Equity | $1,883,610 |
| XTOC | Innovator U.S. Equity Accelerated Plus ETF - October | Innovator | 10/1/21 | Equity | $1,882,868 |
| KEUA | KraneShares European Carbon Allowance ETF | KraneShares | 10/5/21 | Commodities | $26,422,657 |
| KCCA | Kraneshares California Carbon Allowance ETF | KraneShares | 10/5/21 | Commodities | $1,333,001 |
| JAVA | JPMorgan Active Value ETF | JPMorgan Chase | 10/5/21 | Equity | $27,224,978 |
| KGRO | KraneShares China Innovation ETF | KraneShares | 10/7/21 | Equity | $2,692,700 |
| PINK | Simplify Health Care ETF | Simplify Asset Management Inc. | 10/8/21 | Equity | $3,243,476 |
| MDCP | VictoryShares THB Mid Cap ESG ETF | VictoryShares | 10/5/21 | Equity | $2,565,090 |
| UBND | VictoryShares ESG Core Plus Bond ETF | VictoryShares | 10/5/21 | Fixed Income | $124,971,750 |
| UCRD | VictoryShares ESG Corporate Bond ETF | VictoryShares | 10/5/21 | Fixed Income | $100,399,500 |
| GTR | WisdomTree Target Range Fund | WisdomTree | 10/7/21 | Equity | $1,290,250 |
| MMSC | First Trust Multi-Manager Small Cap Opportunities ETF | First Trust | 10/14/21 | Equity | $2,085,972 |
| RUFF | Alpha Dog ETF | Geasphere | 10/15/21 | Equity | $43,882,965 |
| BITO | ProShares Bitcoin Strategy ETF | ProShares | 10/19/21 | Currency | $1,012,246,200 |
| BTF | Valkyrie Bitcoin Strategy ETF | Valkyrie Funds LLC | 10/22/21 | Currency | $4,860,000 |
| Total - 24 New ETFs | $1,431,071,262 |
Source: Factset as of 10/22/2021
NYSE ETF Summit & Active ETF Issuer Insights
Missed the April NYSE ETF Summit or our Active ETF Webinar series? Access replays from the Summit here or visit HomeofETFs.com to catch up.
Hear from ETF experts representing the various active ETF structures, fund sponsors such as American Century, Fidelity, PIMCO and T. Rowe Price, liquidity providers such as Flow Traders and Jane Street, and service providers such as BNY Mellon and State Street.