Growth fund manager Fred Alger Management is gearing up to join the exchange-traded fund community with a planned launch of two actively managed ETFs next year, according to a company release.
The Alger 25 ETF The strategy will invest in 25 high-conviction large cap growth equities in tech, health care, consumer discretionary and industrials sectors; and the Alger Mid Cap 40 ETF will seek to invest in 40 high-conviction mid cap growth equities, the release said. They will be available in the first quarter of 2021.
Dan Chung, CEO and chief investment officer of Alger, said there has been an increased demand for Alger’s focused strategies since first launching in 2012, and now investors preferring an ETF vehicle will have access.
The release noted that Alger has licensed ActiveShares from Precidian Investments, which enables the firm to deliver actively managed investment strategies in an ETF vehicle without disclosing holdings daily. The ETFs will be listed on the NYSE Arca, Inc., which currently lists nearly 80% of all U.S. ETF assets under management.
The ActiveShares concept was approved by the Securities and Exchange Commission in May 2019, and it was the first to get approval from among several other entities that approached the regulator in recent years seeking approval to roll out a structure allowing active managers to launch ETFs that don’t have daily portfolio disclosures.
Brown Brothers Harriman (BBH) and Co. will serve as the custodian, administrator and transfer agent of the funds, the release said, adding that BBH and Alger have worked together for more than a decade.
Ryan Sullivan, senior vice president and head of U.S. ETF Services for BBH, said they are excited to partner with Alger on its first managed ETF launch, “which will continue to bring fresh investment solutions to the collective market.”