SEC “Names Rule”, Active Management, & Commodities
On this episode of ETF Prime, host Nate Geraci speaks with a trio of individuals discussing several different ETF topics. His guests include VettaFi’s Todd Rosenbluth, who discusses the SEC “Names Rule,” the LNGG ETF, and more. Geraci also speaks with BNY Mellon’s Matt Camuso about active management. To close the podcast, Geraci speaks with Neuberger Berman’s Hakan Kaya about the NBCM ETF.
To open the podcast, Geraci brings on VettaFi’s Todd Rosenbluth to discuss the SEC’s recent adoption of the “Names Rule,” which is a part of the Investment Company Act. Geraci explains how this new rule will require firms to be more diligent in what they will name their funds. He gives several examples of the intricacies of the rule, and how they will affect the firms moving forward. Geraci then asks Rosenbluth for his thoughts on the topic.
“I think this is really good in theory,” said Rosenbluth.
Rosenbluth highlights the importance of investors looking beyond fund names to ensure they are making sound investment decisions. He uses funds like the iShares Russell 1000 Growth (IWF) and the iShares S&P 500 Growth (IVW) as examples of ones that have characteristics that sound similar when compared to one another but hold different companies within them. Rosenbluth believes that while it is great the SEC is making firms provide more clarity, he thinks investors still need to do their homework on what is inside the funds. The pair continue to go in-depth into the rule, and how it will specifically affect funds within the ESG space.
The conversation then shifts gears when Geraci brings up a piece that Todd wrote describing how thematic ETFs differ from sector funds. Rosenbluth highlights that he wrote the piece in preparation for VettaFi’s Equity Symposium last week, which had an exceptional turnout.
Shifting the conversation back to thematic ETFs, Rosenbluth points out that many investors tend to think of those as technology-related. However, they can be represented in other sectors as well. He then goes in-depth on the Engine No.1 Transform Supply Chain ETF (SUPP) and the Xtrackers US Green Infrastructure Select Equity (UPGR) as thematic ETFs that launched in 2023 that give exposure to the industrial sector.
Geraci then moved the conversation to the rollout of the Roundhill Alerian LNG ETF (LNGG) that launched last Friday. He points out that the fund tracks a VettaFi index, the Alerian Liquefied Natural Gas Index. Before giving his thoughts on the LNGG ETF, Rosenbluth points out how excited he is about the partnership. He notes that Roundhill is well-known for its thematic ETF lineup.
“I’m proud of the index behind this ETF, and that the fund has come to market,” said Rosenbluth.
To close the segment, he then goes in-depth on the ETF, how it will work, and its exposures. The pair finish their conversation and go on to discuss several other different trending ETF topics.
Actively Managed ETFs
Geraci then brings on BNY Mellon’s Matt Camuso, who is an ETF strategist with the firm. Geraci highlights how BNY Mellon currently offers 16 ETFs and is approaching $4 billion in assets. He believes that is an impressive feat, seeing that the firm just came into the ETF space in 2020. Camuso talks about BNY Mellon’s ETF lineup, and what it was trying to initially accomplish when it first released the lineup. Geraci then asks Camuso about what went into the company’s decision to release actively managed funds.
“Product development really starts where the demand is. I think if you look across the ETF landscape, clearly active ETFs is in the front of most people’s minds,” said Camuso.
He highlights that he and his firm felt that demand, and that was what ultimately led to them launching actively managed funds. Camuso also points out that BNY Mellon felt it had characteristics to bring to market that would differentiate it from what was already on the market. He then continues to go in-depth into the company’s strategies in the active ETF landscape. Camuso also touches on his views on adding active ETFs to a portfolio.
To close the podcast, Geraci speaks with Neuberger Berman’s Hakan Kaya, senior portfolio manager for the firm’s Neuberger Berman Commodity Strategy ETF (NBCM). Geraci highlights that Neuberger Berman joined the ETF space just last year, and currently has four ETFs. He points out that the firm’s most popular ETF is the NBCM ETF. The fund is actively managed, and offers exposure to oil, natural gas, metals, and more. Kaya highlights that it is a pure commodity play and gives direct exposure to 28 different commodities. The fund also touches on six different commodity sectors.
“It is also volatility-controlled to deal with the rolldowns to really make the asset class digestible in a sense,” said Kaya.
He continues to go in-depth on the strategies behind the NBCM ETF and feels that this fund is filling a need in the space. Kaya also highlights how this strategy started as a mutual fund, and just last year the firm turned it into an ETF. The pair closes the podcast by comparing and contrasting other funds in the sector, as well as discussing several other aspects within the asset class.