Asset management firm TCW Group announced on Tuesday that it’s buying the exchange-traded-fund business owned by activist investor Engine No. 1 for undisclosed terms.
The acquisition includes three ETFs, the Transform Climate ETF
NETZ,
Transform Supply Chain ETF
SUPP,
and the Transform 500 ETF
VOTE,
according to the announcement.
“TCW is one of the most prominent asset managers that does not offer their own ETFs, but only mutual funds,” said Todd Rosenbluth, VettaFi’s head of research, in emailed comments Tuesday. “They have a strong brand with advisors that can be leveraged to make inroads, despite arriving late to the ETF party.”
The acquisition is expected to be completed in the third quarter, pending shareholder approval, according to the announcement. TCW said Engine No.1’s ETF portfolio managers and staff will be integrated into the firm.
“We’ve built a tremendous ETF business at Engine No. 1 and we’re extremely excited by the opportunity to scale it even more quickly as part of TCW,” said Jennifer Grancio, chief executive officer and architect of Engine No. 1’s ETF business, in TCW’s statement on the deal.
The three ETFs being acquired have more than $600 million of combined assets under management, according to the announcement. The Transform 500 ETF is by far the largest, with $515 million of assets as of July 24, FactSet data show.
The fund, which tracks an index of large-cap U.S. stocks while encouraging transformational changes in companies through shareholder activism, is up around 20% so far this year, based on Tuesday afternoon trading.
Read: Why Engine No. 1 has turned to ‘ex-hedge fund’ talent to expand active ETF lineup
Also see: ‘Closer to local design and demand’: Engine No. 1 launches Transform Supply Chain ETF in wake of COVID disruptions
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