AllianceBernstein has launched an actively managed large-cap ETF positioned as a core holding for investors that is intended to blend seamlessly with passive ETFs within a portfolio.
The AB U.S. Large Cap Strategic Equities ETF (LRGC) seeks long-term growth of capital by targeting large-cap U.S. stocks with strong fundamentals based on research, the firm said.
As an actively managed fund, the firm anticipates that advisors and investors can use LRGC in tandem with other passively managed ETFs in their portfolio, said Noel Archard, global head of ETFs and portfolio solutions at AB.
“Now that the ETF world is continuing to expand into this active space, having some large-cap exposure that might give [investors] an active approach to sit side by side with their passive investments is appealing,” he said.
Combining passive and active strategies has existed in investments for some time, but with the ETF market expanding, that strategy has gravitated to the ETF world as well.
“What we’re hearing from clients [and others is] more and more they’re looking for opportunities to combine active and passive within their portfolio as they do in most other vehicles,” Archard said.
LRGC incorporates a strategy that AB has successfully used for more than 10 years in other vehicles including separate accounts. The same team that has been managing the strategy will continue to do so for the ETF, according to Archard. AB found it important to maintain consistency with the strategy across multiple vehicles.
“We’re really trying to leverage what we already have from ... a skill set and putting out variations of the strategy or something new run by the existing team because it’s in their wheelhouse,” he said. “You want to take folks who are very experienced within either the asset class or the outcome and make sure they can do what they do within whatever vehicle works for the advisor.”
The LRGC is the firm’s seventh ETF since it expanded into the space last year. It acts as a core holding and will have varying uses depending on the needs of the advisor, according to Archard.
“We are thrilled to provide a new investment option for our clients in one of our core U.S. equity strategies,” said Christopher Hogbin, head of Equities. “With this new ETF, a broad range of clients will have access to a compelling active equity strategy delivered in a liquid, transparent and tax efficient vehicle.”
Since it is an ETF, there are no minimums nor are there any holding periods. The total expense ratio will be 48 basis points and the fund is currently available on most major platforms including Fidelity, Charles Schwab and others, Archard said. It will be available on additional platforms going forward pending approval, according to the firm.