New York-listed Janus Capital Group is poised to enter the exchange traded fund (ETF) market following the firm reaching an agreement to acquire VS Holdings Inc, the parent company of institutionally-focussed exchange traded products (ETPs) provider VelocityShares, LLC.
The news of the acquisition follows hot on the heels of the news that bond guru Bill Gross had left Pimco to join Janus Capital. Some analysts say the move could provide the new hire with a platform to launch his own ETF. At Pimco, Mr. Gross previously ran an actively-managed ETF that executed a similar strategy to his massive Pimco Total Return fund.
As reported in Asia Asset Management when the news broke on September 29 that Mr. Gross would be joining Janus Capital, he may find the going somewhat challenging as the firm has seen net redemptions in the last 20 quarters. Mr. Gross will manage a tiny Janus fund (Janus Global Unconstrained Bond Fund) from his base in Newport Beach, California.
The VS Holdings transaction includes an initial upfront cash consideration of US$30 million and is expected to close in the fourth quarter of 2014. The closing of the transaction is subject to certain conditions, including regulatory approval. The new acquisition will allow Janus to focus on so-called “actively managed” ETFs, which don’t strictly follow an index and are a growth area in the industry.
“This acquisition positions Janus within the rapidly growing rules-based and active ETF universe, enhancing the customised solutions we can provide to our clients and enabling us to work with the growing segment of financial advisors and institutions focussed on these instruments,” said Richard M Weil, chief executive officer of Janus Capital Group.
“Janus’ global distribution network and commitment to product development creates very unique opportunities to deliver institutional quality ETFs to a wide range of investors,” added Nick Cherney, co-founder and chief investment officer of VelocityShares. “Our combined company will be well positioned to grow our ETP business and continue to be a leading provider in the market place.”
Founded in 2009, VelocityShares had raised approximately $2 billion in assets across 21 investment products up to the end of September 2014. Its initial growth was driven by the development of exchange-traded notes (ETNs) in the volatility and commodity space. More recently the firm has leveraged its expertise to launch a second business around innovative and intelligent ETFs for diversified long-term investment portfolios, currently focused on volatility hedged equities and equal risk weighted solutions.
