One of the important recent developments in the exchange-traded fund business has been the entry into the space by giant financial services companies. We’re talking Goldman Sachs, J.P. Morgan, John Hancock, Nationwide and others (apologies to those companies lumped into the “others” category). These companies bring brand recognition and marketing muscle to the table, and in some cases they’re combining their active management acumen and financial heft to launch funds with sophisticated strategies at compelling price points. 

And now you can add Prudential to that list with the rollout earlier this month of the PGIM Ultra Short Bond ETF (PULS), a diversified fixed-income, actively managed ETF that comes with a competitively priced expense ratio of 15 basis points.

This product was launched by PGIM Investments, which has more than 100 funds globally across various asset classes and investment styles. PGIM Investments is one of a collection of autonomous asset management units under the umbrella of PGIM, which is the global investment management business of Newark, N.J.-based Prudential Financial Inc. All told, PGIM has more than $1 trillion in assets under management, and the PGIM complex appears well-positioned to make a bigger ETF splash. ETFA recently spoke with Scott Benjamin, executive vice president and head of product development and marketing at PGIM Investments, to get a sense of what his company has in mind regarding its place in the ETF space.

ETFA: Welcome to ETF Land. Not to sound snarky, but what took you so long?

Benjamin: It was deliberate in terms of where we are in the evolution of bringing out what I call a ‘vehicle agnostic’ strategy. Like a lot of folks, we sort of grew up on ’40 Act open-end mutual funds, and we’ve been concentrated over the past five years or so on revamping and bringing out products on that end by leveraging the core capabilities across our four asset managers at PGIM—we have Jennison [Associates], an active equity shop; QMA, which does equities on the quant side with smart beta; PGIM Fixed Income and PGIM Real Estate. Overlapping that we also pursued an international strategy and we launched roughly 15 to 20 UCITs [Undertakings for Collective Investment in Transferable Securities] during that time.

By their nature, ETFs take a little longer to develop. And with ETFs we really wanted to do it right. We didn’t feel like we were late because we weren’t going to enter the passive space. As an active shop, we believe in active management and wanted to pursue an active strategy. We went through the necessary filings to be eligible to bring out active products. We didn’t feel an undue rush to get out there because the active space is still developing and we were in the process of building our brand globally. But we think the timing for this [the PULS fund] was right.

ETFA: I see the PULS fund already has $27 million in assets. Is this the result of seeding money from you folks, or is much of this fresh investor money?

Benjamin: We actually seeded it with $25 million. The incremental assets into the fund have been modest, but we didn’t expect much in the early going and it will take more time for the flywheel to develop and to get more momentum going. But we’re excited with the interest we’ve received in terms of people recognizing it without a lot of marketing at this point.

ETFA: Why did you start with this particular ultra-short bond ETF?

Benjamin: We have a ton of expertise across the spectrum that I previously mentioned, and in particular fixed income is a $700 billion-plus shop within the PGIM asset managers. While we have a good amount of short-duration strategies, we thought the ultra-short space was probably best fulfilled in an ETF vehicle because of the cost-efficiency standpoint. It comes out at 15 basis points, which is well-positioned within this category.

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