News came last week that iM Global Partner, a global asset management network, has made another alliance in its US expansion by entering into a partnership with Richard Bernstein Advisors (RBA). The firm acquired a 45 per cent non-controlling stake in RBA as of July 28, 2021.
RBA is a New York-based asset allocation specialist founded in 2009 by Richard Bernstein. Henry Timmons, director of ETFs at Richard Bernstein Advisors, explains that the firm has about USD12 billion of its USD14.6 billion in assets under management in ETF model portfolios.
Timmons explains that the firm was launched in 2009 by Richard Bernstein, who came from Merrill Lynch with the intention of creating a global macro investment house. The firm first delivered asset allocation models to UBS, then began sub-advising its first mutual fund in 2010 with Eaton Vance.
The iM Global Partner news brings a fresh interest in UCITS ETFs for the firm which has a predominantly US client base at the moment.
“The bulk of what I do is try to figure out how to select the best ETF for our desired exposure,” Timmons says. “Most people focus first on the expense ratio as most want the cheapest but that is not the most important aspect.
“We have an investment committee of nine people and we are all trying to determine where we want to be positioned based on three pillars: profitability, sentiment and liquidity. Once we know where we want to have that exposure, we implement the solution. I say the expense ratio is very invisible but not the most important aspect. It’s the exposure.”
Because of the size of the firm, liquidity is an issue which they examine in both the primary and secondary markets. “We also look at everything else such as trading costs, sponsor reputation, tax efficiency and so on,” Timmons says.
2017 saw the firm enter the institutional business. “The institutional appetite for ETFs is definitely growing,” Timmons says. “There was a tendency to prefer a solution that held many securities but we are finding the allure of holding hundreds of securities is starting to wane as they realise what they can do with the ETF investable universe.”
ESG is proving ever popular, with Timmons noting that there are certain ESG launches driven by institutional demand. “We are seeing a spectrum of involvement within ESG ETFs,” he says. “From a slight tilt to thematic and concentrated bets and that is still evolving – ESG 3.0 will be quite something.”
The firm has grown its assets significantly through a dedicated RBA sales team focused on the ETF strategies and via sub-advisory relationships with other larger firms. “We are doing our best to position our strategies where we have high convictions,” he says.
iM Global is keen to continue to build the ETF business. “The partnership enables RBA to continue doing everything we do but the key is that we now have a partner to distribute our strategies to where we don’t have a presence and iM Global grows as we grow – we have no presence in Europe at the moment, so this could be huge.”