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Vident Investment Advisory expands sub-advisory portfolio management & trading capabilities into non-transparent ETFs


Vident Investment Advisory (VIA), a subsidiary of Vident Financial LLC, is enhancing its core exchange traded fund (ETF) sub-advisory business to also include non-transparent ETFs. VIA has entered into a license agreement with New York City-based Blue Tractor Group, LLC (Blue Tractor), permitting VIA to now offer its best-in-class ETF sub-advisory portfolio management and trading capabilities to Advisors wishing to launch proprietary actively managed strategies using Blue Tractor’s Shielded Alpha℠ non-transparent ETF wrapper.

VIA currently partners with 20 Advisor clients, including some of the largest asset managers in the United States. VIA’s sub-advisory business has enjoyed double-digit growth in 2020 and now totals over USD5.5 billion of assets under management, including passive and active transparent ETF strategies, UCITs vehicles, separately managed accounts and private funds.

VIA’s push into actively managed non-transparent ETFs through its license with Blue Tractor recognises the exciting growth potential of this burgeoning new space. VIA’s flexible business model means it can work directly with Advisors or in cooperation with white-label firms bringing Advisors to market.

“We are very pleased to be partnering with Blue Tractor. It is clear that active Advisors are intrigued by the non-transparent ETF wrappers and it is our intention to position VIA as a leader in sub-advisory services in this area,” says Rafael Zayas, SVP, Head of Portfolio Management and Trading with VIA. “We believe that the unique features and capabilities of the Blue Tractor non-transparent wrapper make it a key service offering for VIA.”

Approved by the US Securities and Exchange Commission in December 2019, the Blue Tractor Shielded Alpha wrapper confers to an Advisor the superior cost, tax and intraday liquidity benefits of an ETF versus a traditional mutual fund, while still fully obfuscating an Advisor’s proprietary active portfolio management and trading strategy. Additionally, and wholly unique to the Shielded Alpha℠ wrapper versus competing non-transparent wrappers, all the workflow to manage and generate the daily ETF creation basket is hosted in the secure Microsoft Azure cloud, allowing VIA’s portfolio managers to rapidly and efficiently manage an ETF’s creation basket in order to accrue additional cost and tax efficiencies otherwise unavailable using competitive non-transparent ETF wrapper structures.

“We have long been impressed by VIA’s ETF sub-advisory capabilities and are very pleased to be partnering with them,” adds Terry Norman, founder of Blue Tractor. “VIA’s well-established place in the world of ETF sub-advisory services and our innovative Shielded Alpha approach represent a powerful combination for Advisors.”

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