A small issuer in the $7 trillion U.S. exchange-traded fund industry is turning into one of the most aggressive in a bid to corner the market for niche investing strategies.
AXS Investments LLC has only ever launched one product -- the $66 million AXS Astoria Inflation Sensitive ETF (ticker PPI) -- yet in the past few weeks has unleashed a series of moves that pave the way for expansion.
That includes a takeover of Tuttle Capital’s six funds, among them the famous $392 million Tuttle Capital Short Innovation ETF (SARK), which bets against Cathie Wood’s flagship strategy. AXS has also closed the acquisition of the $117 million AXS Change Finance ESG ETF (CHGX) from Change Finance, and applied for 18 single-stock products with the Securities and Exchange Commission.
The goal is to gain scale as rapidly as possible in an increasingly saturated market, according to Greg Bassuk, chief executive officer at AXS. While last year saw record ETF inflows and new product launches, funds that debuted in the last two years -- around a quarter of the market -- command just 2.5% of total assets, Bloomberg Intelligence data show.
“Our view is, rather than launch the third or fifth product of its kind, we would rather get the earlier movers,” Bassuk said in a phone interview.
New York-based AXS started two years ago with the aim of expanding access to alternative asset classes beyond institutional investors. While the firm’s first products were mutual funds, building out ETF infrastructure began on day one, said Bassuk, who previously co-founded IndexIQ Advisors LLC and served as head of liquid alternative strategies at FS Investments.
Among other AXS filings are plans for an ETF that would target 200% of the performance of the ARK Innovation ETF (ARKK) and a fund that would be an inverse wager on the KraneShares CSI China Internet Fund (KWEB). On Wednesday, the firm filed for the AXS Short Bitcoin Strategy ETF, following an October filing for a Bitcoin futures fund.
Bassuk said AXS has secured “significant capital” to support its aggressive expansion, though he declined to provide further details. The firm has invested heavily in national sales and distribution and now employs a team of more than 20, he said. As part of the tie-up with Tuttle Capital Management LLC, Matthew Tuttle will join as managing director.
“I’ve got a fairly good retail following, they’re locked and loaded with financial advisors and family offices,” Tuttle said in a phone interview. “Basically we decided to merge.”
The growth-by-acquisitions strategy makes sense for both sides of the deal, according to Cinthia Murphy, director of research at ETF Think Tank. AXS is able to expand its lineup, while the likes of the AAF First Priority CLO Bond ETF (AAA) -- another fund set to be acquired -- get access to AXS’s wholesaling team, which has a network of financial advisors and family offices.