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AllianceBernstein signals move into ETFs with job listing

AllianceBernstein is signaling that it may enter the ETFs business by advertising a job opening for an important role overseeing ETF trading.

In a post on LinkedIn, the asset manager said it’s seeking a head of ETF capital markets. The job description includes working with market makers and tracking ETF trading. The position also requires helping clients with their ETF trading so that they achieve best execution. AllianceBernstein doesn’t have any ETFs on the market.

Jen Will, a spokeswoman for AllianceBernstein, didn’t immediately provide a comment on the posting, which says that the job will be located in Nashville, Tennessee. In May 2018, the company announced it would relocate its headquarters and most of its New York staff there.

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“Given the strong long-term trend toward ETFs, every asset manager needs a strategy to participate in this investment space or suffer the consequences of bleeding assets,” said Todd Rosenbluth, director of ETF research at CFRA Research.

Investor enthusiasm for indexed products, like most ETFs, has proved hard to ignore for active managers. Still, challenges exist for new entrants. Sanford Bernstein, which is owned by AllianceBernstein, was a recent cautionary tale. Faced with falling research revenue, the firm launched two ETFs in 2017 in order to put sell-side research in an ETF wrapper. The funds were both liquidated. One of them, the Bernstein U.S. Research Fund (BERN), had been trailing the S&P 500 by about 5 percentage points since its launch, according to Bloomberg Intelligence.

BERN had an expense ratio of 0.5%. The other defunct fund, the Bernstein Global Research Fund (BRGL), carried an expense ratio of 0.65%.

The average expense ratio among the leading 20 is nearly 40 basis points cheaper than what investors paid on average last year.
July 10

But opportunities are also opening up for active managers within the ETF industry. The SEC approved a new kind of active, non-transparent ETF this year. Created by Precidian Funds, the model keeps its holdings secret to address concerns about competitors front-running trades or copying the strategy of an active ETF. Precidian has said that asset managers including BlackRock and JPMorgan Chase will pay to license the methodology.

Eric Balchunas, an analyst at Bloomberg Intelligence, said AllianceBernstein may be ready to launch its own line of ETFs, though it will face severe competition.

It’s likely “they just want to be in the mix,” Balchunas said. “You can’t not have an ETF strategy.” — Additional reporting by Rachel Evans and Josh Friedman

Bloomberg News