In what could be the equivalent of a “man bites dog” headline, the passive strategies of an exchange-traded fund provider are being used in a suite of new mutual funds.
Ivy Investment Management Company on Wednesday announced it has created five new index-tracking mutual funds in partnership with ProShare Advisors LLC, the company behind the ProShares lineup of ETFs. The Ivy ProShares funds began trading late last week.
These are the first passive funds offered by Ivy, which now has 45 mutual funds with $38 billion in assets under management (as of year-end 2016). Based in Overland Park, Kan., Ivy is an affiliate of Waddell & Reed Financial Inc. The new Ivy ProShares mutual funds, along with the rest of the Ivy fund lineup, are offered through Ivy Distributors Inc. and are available via Waddell & Reed’s advisory platform and other outlets.
The Ivy ProShares funds take an opposite approach to the small but growing trend of mutual fund companies offering their active management strategies in an ETF or, in many cases, an exchange-trade product wrapper as a way to tap into the rapidly growing ETP market. That includes Ivy, which last year rolled out three active funds based on the NextShares exchange-traded managed funds structure developed and licensed by Eaton Vance. One of those funds, the Ivy Energy NextShares fund, is an ETMF version of its Ivy Energy mutual fund.
The five new Ivy ProShares passive funds comprise the following:
• Ivy ProShares S&P 500 Dividend Aristocrats Index Fund — invests in S&P 500 companies with at least 25 years of consecutive dividend growth.
• Ivy ProShares Russell 2000 Dividend Growers Index Fund — invests in small-cap companies that have increased dividend payments for at least 10 consecutive years.
• Ivy ProShares MSCI ACWI Index Fund — seeks to track MSCI ACWI performance.
• Ivy ProShares S&P 500 Bond Index Fund — tracks an index of corporate bonds issued by S&P 500 companies.
• Ivy ProShares Interest Rate Hedged High Yield Index Fund — invests in a diversified portfolio of high-yield bonds with an interest-rate hedge using short Treasury futures to minimize the effects of rising rates.