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Latest product puts Natixis on a roll

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Natixis Investment Managers has recently enjoyed an asset management boost with its latest fund, the Quality Income ETF (GQI), managed by Gateway Investment Advisers, launched in December, investing in fixed income and options, and enjoying assets of over USD70 million.

Nick Elward, SVP, Head of Institutional Product and Head of ETFs, Natixis Investment Managers, explains that the new fund was seeded with USD40 million, showing a commitment to the new product. While Gateway is not necessarily a household name outside the US, Elward says, it is one of the leaders in option investing in general in the US.

The firm launched in 1977, and offers mutual funds, SMAs and ETFs using options, swaps or other derivatives. “This is what they do so people appreciate their expertise and focus,” Elward says.

“The performance has been strong against larger competitors with over 7 per cent yield and the targeted yield over the long term income could be in the 8 to 12 per cent range depending on the level of the VIX. Higher volatility should enable us to harvest more income.”

Natixis has five active ETFs in the market, the first launched in 2017. Three of the products are equity and one fixed income, separately from the latest product which combines equity and options.

ETF assets for the firm stand at nearly USD300 million.

The firm was a pioneer in the development of a semi-transparent ETF structure and launched three of those products in 2020. Two of these remain, managed by Vaughan Nelson, but more recently they have moved to become transparent, while one was  liquidated.  Separately, Natixis launched a new semi-transparent ETF in June 2023.

“I feel that active semi-transparent ETFs were the gateway for active managers to become more interested and comfortable about being in ETFs so those launches did open up the door for more active ETFs to come to market and for that I am really happy,” Elward says.  

“In terms of active semi-transparent ETFs, I don’t feel it’s a failure because if a portfolio manager wants to be semi-transparent to protect their trading strategy, we can do that.  The decision to potentially launch as semi-transparent comes down to their approach to investing and to the amount of assets they are managing.”

Elward says that they are always thinking about new active ideas but have nothing filed at the moment, although there are other affiliates within the group who are interested in coming into the ETF market.

Elward notes that he is seeing more financial advisers talking about if they are going to invest in active ETFs, they want to know it’s a concentrated product with significant positions in securities which the PM has  high conviction, “so we are trying to build products that align with that sentiment and we feel we are and we will keep them in mind when we launch new products.”

The firm offers a mid-cap product through Vaughan Nelson and Elward says that he is waiting to see a broadening of the markets which could see stronger performance in small to mid-cap stocks which will offer diversification for investors.

Elward says: “There is a lot of passion around what we do every day, looking after ETFs, and there is also passion and excitement from financial advisers, allocators and the younger generation investors so the future is very bright for all firms that are involved in this industry”.

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