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Friday, April 1, 2016

An Institutional Multinational Makes a U.S. ETF Alliance

Reported by Neil Anderson, Managing Editor

A multinational, institutional asset manager is teaming up in the U.S. with a shop that specializes in intermediary-sold products. Watch for the two firms to create ETFs and more.

Scott Colyer
Advisors Asset Management Inc.
Chairman and Chief Executive Officer
On Wednesday Monument, Colorado-based Advisors Asset Management (AAM) [profile] unveiled a strategic partnership with Rothschild Asset Management (RAM), the New York-based U.S. asset management arm of Rothschild & Co. Scott Colyer, CEO of AAM, confirms that AAM will first create UITs (unit investment trusts) out of Rothschild's smart beta strategies, and SMAs (separately managed accounts) and ETFs will come, too, further down the line.

The AAM and RAM folks do not plan to team up for any traditional open-end mutual funds.

Mike Woods, CEO of RAM, describes the team-up as "a very complementary partnership" for the two firms. Woods puts the alliance into the context of the vision Woods shared last year. Woods is looking to amp up RAM's institutional business while making key alliances for retail distribution.

At the beginning of 2016 Woods unveiled an exclusive partnership with Pacific Funds to power six long-only, U.S. equity mutual funds. And RAM's smart beta strategies are also powering a pair of Canadian mutual funds for National Bank of Canada.

"The retail side takes a lot of effort on the distribution side, a lot of relationships, a lot of experience and knowledge ... AAM is predominantly a retail distribution firm and asset management firm," Woods tells MFWire. "This is a great combination to be able to bring institutional-type products and innovative financial solutions to the retail network."

"We had to be very thoughtful in terms of who's a great long-term partner for us," Woods adds. "You can have a few partners and then you partner for a very long time."

"We've morphed into a firm that supplies investment solutions to FAs, no matter where they are," Colyer tells MFWire.

AAM currently teams up with four boutiques. And Colyer, like Woods, prefers to keep his partnership list small.

"The model works well. I don't foresee us having a lot of partners quite frankly," Colyer says. "This is a very long partnership with a lot of homework done on both sides of the fence."

Colyer likens AAM's model to that of a restaurant, with its boutiques as chefs and AAM as the wait staff.

"They do the cooking and we do the serving," Colyer says.

Rothschild's three core investing styles are U.S. equity, alternatives, and smart beta, and now Woods has U.S. retail allies for two of the three. As for the third, alternatives, Woods says he's happy to focus more on the customized, institutional solutions market for those strategies.

Rothschild worldwide has $60 billion in AUM worldwide, including $5.6 billion in the U.S. RAM business. AAM works with about $15.8 billion, including $8.6 billion in UITs, $6.4 billion in assets under administration (where AAM offers services other than management), and $799 million in proprietary SMAs and mutual funds. 

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