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Rating:SEC Puts Arrow's Active ETFs in Flight Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, August 24, 2012

SEC Puts Arrow's Active ETFs in Flight

Reported by Chris Cumming

Arrow Funds [profile] was recently awarded an exemptive release to manage active ETFs. Now the Olney, Maryland-based fund shop is partnering with Gemini Fund Services to offer advisory and trust services to shops that want to launch new active ETFs.

This May, Arrow launched its first ETF, the passively managed Arrow Dow Jones Global Yield ETF (GYLD), and on Tuesday, Arrow CEO Joe Barrato came to New York City to ring the opening bell on the NYSE. Last month, the SEC awarded the firm an exemption to manage ETFs, and the firm plans to offer advisory services to managers who, in Barrato's words, "are serious and understand what it takes to run an ETF and make it a long-term success."

Barrato says he plans to formally begin offering Arrow's advisory and trust services at the upcoming Gemini conference. But he says that Arrow has already been approached by "10 or 15" money managers interested in their services, and is in discussion with several about launching their ETF strategies in the Arrow trust.

The active exemption is the culmination of a long behind-the-scenes effort by Barrato and his staff to set up its ETF infrastructure. Its ETF trust, for which Arrow supplies the board and Gemini the administrative services, launched in January, and the Arrow ETF is currently the sole product in the trust. Barrato said that he wanted to "get the pipes ready before we start putting in products," and wanted to better understand the costs and administrative challenges before offering his firm's services widely.

Now with passive and active exemptions along with its own trust, Arrow is pretty well set up. Barrato says he's hoping to sign Arrow on as an advisor with ETF manufacturers who are ready for the challenges of promoting a successful product. "Running an ETF is more difficult than running a '40 Act Fund, and we want to find people with a good product who understand what it takes." Now that the pipes are ready, he says, "we want to put a handful of active strategies into the marketplace." 

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