A Tactical SMA Shop Enters the ETF Biz
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Tuesday, June 16, 2015

A Tactical SMA Shop Enters the ETF Biz

A tactical ETF strategist just entered the ETF business directly, and it is looking to team up with other asset managers, too.

Matthew Tuttle
Tuttle Tactical Management
Stamford, Connecticut-based Tuttle Tactical Management debuted its first ETF (the Tuttle Tactical Management U.S. Core ETF) in February and launched its second (the Tuttle Tactical Management Multi-Strategy Income ETF) last week. Tuttle CEO Matt Tuttle says that a third ETF is on the way.

"Hopefully we'll be doing more," Tuttle says. "We're taking taking some of the more popular separate account strategies and we're going to turn those into ETFs ... and we're talking to other money managers about doing joint ETFs."

The firm has wealth management and separately managed account roots. Tuttle Wealth Management launched in 2003. By 2012, Tuttle tells MFWire, other advisors wanted to use the tactical portfolios Tuttle offered his own clients. "That sounded like a really good idea," Tuttle says, so he set up a second company, Tuttle Tactical Management to offer SMAs that other advisors could use with their clients. Then last year they started working with ETF Issuer Solutions (an ETF-in-a-box specialist now owned by subadvised mutual fund shop Virtus) on building Tuttle ETFs.

Tuttle Tactical Management now has about $225 million in AUM in its SMAs and the two ETFs. He describes putting the SMA strategies in ETF form as something he couldn't not do for his existing clients. Tuttle is a tactical manager, and trades within the SMAs require retail commissions (unless Tuttle restricts itself to whatever ETFs a particular platform will trade for free); within the ETFs, it faces institutional commissions. And with the ETFs Tuttle also gains the ability to control who they're trading with.

"We can call 12 brokers and get 12 bids and take the best bid," Tuttle says.

Tuttle also sees the ETFs' daily disclosure of holdings, but in ETF disclosures as opposed to directly within the clients' accounts, as a happier medium when it comes to full disclosure.

"I came to firmly believe that the ETF chassis was much better for clients than separately managed accounts," Tuttle adds. "I felt that separately managed accounts were better than mutual funds, but ETFs were better than separately managed accounts."

Looking ahead, Tuttle plans to turn more of his firm's SMA strategies into ETFs, though not all at once. And he's also talking to other asset managers about doing ETFs, say with a Tuttle-built tactical overlay on top of another shop's core strategy.

"Our ultimate goal is we want to have a very diverse family of ETFs that are different from anything else that's out there," Tuttle says.

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