Advisors Asset Management, an investment management company, is breaking into the active exchange-traded fund space with three new vehicles that capitalize on the expertise of the funds’ individual subadvisors. 

The active ETF space has been increasingly popular, having accounted for more than 70% of the ETF launches this year, according to Morningstar. In addition, they have been responsible for more than a quarter of the inflows into the overall domestic ETF market, according to Lance McGray, head of exchange-traded funds product at Advisors Asset Management. 

“Active ETFs are coming to market at a record-setting pace this year as investors are really searching for solutions that help them navigate the current market volatility and provide the tax benefits and the transparency and the flexibility of the ETF wrapper,” he said in an interview. 

With such interest in the space, the Monument, Colo.-based firm saw the opportunity to begin offering advisors its own active ETFs. The three new funds are the AAM Brentview Dividend Growth ETF (BDIV), the AAM Sawgrass U.S. Large Cap Quality Growth ETF (SAWG) and the AAM Sawgrass U.S. Small Cap Quality Growth ETF (SAWS). 

These are the first in a series of active ETFs the firm plans to launch; more are expected by the end of this year and early next year, McGray said. 

The dividend growth fund is managed by Brentview Investment Management, a firm that specializes in dividends, McGray said. It has three goals. The first is to provide faster dividend growth above market yield along with lower beta (volatility) characteristics than the market. Finally, the fund will invest in those companies that have credible management teams that realize the importance of dividends. 

Under normal market conditions, the fund will invest about 80% of its net assets in equity securities that pay dividends, the firm said. 

Sawgrass Asset Management subadvises the large-cap and small-cap ETFs, which share a similar strategy, though they differ in cap sizes.

“These strategies are really focused on looking for the opportunity for reasonable growth, and that is an area that is hot right now,” McGray said. 

The funds can add diversity to an investor’s growth portfolio because they provide consistent, stable earnings growth as well as low price volatility and attractive valuations, McGray said.

The three ETFs can collectively work as core holdings within a portfolio, McGray explained. And in a world that has seen a surge of new active ETFs, the firm sees its selection of subadvisors as its way to stand out. 

“The way that we certainly differentiate ourselves is finding those active subadvisors that have a longstanding track record of being very, very strong in a specific investment process,” he said. 

The dividend growth ETF and the large-cap fund have expense ratios of 49 basis points, while the remaining fund has an expense ratio of 55 basis points. The funds are currently available on the platforms of many major brokerage houses and independent broker-dealers, he said. 

“While we never try to time launches per se, we think the timing of these three products in the current marketplace is very good,” McGray said. “In this environment, we think that the importance of dividends and the importance of high income and the compounding of … dividends is going to be a major component of total returns going forward.”

Correction: A previous version of this story misstated the funds' expense ratios.