U.S.-based Russell Investments is itching to be more than just an index provider.
The investment firm signalled it wants a slice of the exchange-traded fund (ETF) business when it recently filed with regulatory authorities to launch 11 ETFs south of the border. These funds, however, track Russell's global indexes that are not currently licensed to ETF providers. See filing.
Russell, parent of Russell Investments Canada Ltd., is among index publishers like Standard & Poors and Dow Jones & Co. which license market benchmarks to ETF firms. For instance, the iShares CDN Russell 2000 ETF tracks the Russell 2000 index of U.S. small-cap stocks.
While it makes sense for Russell to get into the ETF space as a direct provider because it can make more in fees, it risks losing potential licensing partners who will view the firm as a competitor, writes Jessica Toonkel Marquez of Investment News.
David Feather, who started this month as the new president of Russell Investments Canada after nearly two decades as an executive with Mackenzie Financial Corp., indicated recently that Russell is focused on offering, not only mutual funds, but also "fund portfolios, separately management accounts and alternatives."
Those alternatives likely include Russell ETFs or portfolios of its ETFs in Canada. See previous Fund Watch blog.