MutualFundWire.com: U.S. Bancorp Unveils an ETF Multiple Series Trust

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Tuesday, February 21, 2012

U.S. Bancorp Unveils an ETF Multiple Series Trust

U.S. Bancorp Fund Services has teamed with Exchange Traded Concepts to launch an ETF multiple series trust called ETF Series Solutions. So far, two firms -- AlphaClone LLC and Zacks Investment Research -- have signed on with the series trust.

Eric Falkeis
U.S. Bancorp Fund Services
CFO

AlphaClone will offer the AlphaClone Alternative Alpha ETF and Zacks will offer the Zacks Sustainable Dividend ETF and Zacks MLP ETF. [SEC filing]

Explaining his firm's decision to be part of the series trust, AlphaClone CEO Maz Jadallah told The MFWire: "U.S. Bancorp is well established and has a reputable fund services arm. Also, we like ETC's model of an ETF in a box."

Garrett Stevens
Exchange Traded Concepts
CEO

For Zacks, "the expertise of all the parties involved was really the appeal, in terms of making sure that all operational functions are covered," said Mike Castino, director of index services at Zacks Investment Research, in an interview.

ETC serves as the investment manager in the series trust. Funds could come onboard the trust as either a sub-adviser or an index provider. In the case of AlphaClone and Zacks, it's the latter.

Multiple series trusts such as ETF Series Solutions offer asset managers shorter time to market and lower costs, thanks to the trust-level exemptive relief.

Firms who join the multiple series trust can launch their ETFs in 75-90 days, compared to 12-18 months when they go through the exemptive relief process by themselves, said Eric Falkeis, chief financial officer of U.S. Bancorp Fund Services.

Securing an exemptive relief on their own could cost firms nearly a million dollars, including legal and setup fees, said Garrett Stevens, CEO of ETC.

On the mutual fund side, U.S. Bancorp Fund Services operates four multiple series trusts. The shares trusts count 58 investment advisers, 113 funds, 166 classes and $12.5 billion in AUM.

Last December, the Milwaukee-based fund servicer began its foray into the ETF realm with the rollout of an ETF service called ETF-Fusion, which provides support such as product development and implementation, along with technology.

For ETC, ETF Series Solutions is not its first ETF multiple series trust.

Stevens, the man behind ETC, is the former CEO of ETF shop FaithShares. Last year FaithShares liquidated its ETF lineup and Stevens went on to launch ETC, which offers firms a turnkey solution for launching ETFs.

Stevens and his team launched the Exchange Traded Concepts Trust, for which ETC partnered with SEI for fund administration and accounting and Brown Brothers Harriman for custody. That trust has nine ETFs in registration.

Company Press Release

U.S. Bancorp Fund Services Launches Exchange Traded Fund Multiple Series Trust, ETF Series Solutions

Milwaukee-based service provider partners with Exchange Traded Concepts and adds AlphaClone, LLC and Zacks Investment Research, Inc. to trust

MILWAUKEE -- U.S. Bancorp Fund Services, LLC (USBFS) today announced the launch of its first exchange traded fund (ETF) multiple series trust (MST) and a partnership with Exchange Trade Concepts (ETC). This newest trust, called ETF Series Solutions (ESS), extends the benefits of a shared trust model to one of the industry's fastest growing segments.

AlphaClone, LLC and Zacks Investment Research will be the first two funds for the trust. AlphaClone will be offering one fund and Zacks Investment Research will be offering two funds, all with unique strategies.

"This new MST and partnership with Exchange Traded Concepts help make entering the ETF market incredibly easy for investment managers," said Joe Redwine, president of USBFS. "We continuously strive to find new ways to help our clients focus on investing while capitalizing on developments in the market. Our new MST continues that tradition."

ETC, a private-label ETF advisor, serves as the investment manager. As an advantage to funds in the shared trust, existing investment advisers and trust-level exemptive relief eliminates the cost and time to file separately, and significantly decreases time to market. Although each fund will be responsible for fund-specific expenses, certain expenses are shared by all funds in the Trust, including general legal services, Board of Trustee costs, insurance, and the trust's Chief Compliance Officer.

"Given their long-standing history in the mutual fund market and strong financial background, we are excited and fortunate to partner with U.S. Bancorp Fund Services to help launch this MST," said Garrett Stevens, chief executive officer of ETC. "Both of our companies are committed to growing the Trust and, given the increase in awareness in the ETF market, this is an ideal product to launch now."

ESS marks the fifth MST for U.S. Bancorp Fund Services. In December, USBFS introduced its ETF servicing solution called ETF-FusionTM, offering consultative support including product development and implementation, along with proprietary technology. ESS combines the benefits of ETF-FusionTM with the additional benefits of a shared trust model. Currently, USBFS shared trusts have $12.5 billion in mutual fund assets, 113 participating funds, 166 classes, and 58 different advisers.

"The ETF MST is a new concept in the industry that enables investment advisers to build awareness and recognition for their brand as a private-label ETF and launch an ETF in approximately 75 days for a minimal initial investment," said Eric Falkeis, officer of ESS and chief financial officer of USBFS. "Our ETF professionals have the operational and regulatory experience, plus the industry contacts needed to navigate the complexities of launching and managing an ETF."

About U.S. Bancorp Fund Services, LLC

Headquartered in Milwaukee since 1969, U.S. Bancorp Fund Services, LLC provides services to 320 fund families comprised of 2,087 portfolios, 2,372 fund classes, and 3.8 million shareholder accounts with $540 billion in client assets. U.S. Bancorp Fund Services combines industry-leading technology with high-quality customer service to provide clients with the best solutions available. For more information about their comprehensive suite of mutual fund and alternative investment product services, call 800-300-3863 or visit www.usbfs.com