RFG’s Bluemonte Jumps Into ETFs
The RIA’s investment manager recently launched a suite of nine products across a range of asset classes.
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Consider it the third wave of ETFs.
First came the issuers focused on index-based strategies in new exchange traded funds. Then, there were the mutual fund shops that added ETF versions of products, or converted existing ones. Now, RIAs are building out products for their mass affluent clients. That is where the $6.5 billion independent advisor platform RFG Advisory’s Bluemonte Investment Management finds itself, said president Rick Wedell. The firm recently launched a line of nine ETFs spanning a range of asset classes that fit together in client portfolios, he said.
“You’ve seen the ultra high-net-worth space do this a lot,” he said, of family office portfolios becoming private ETFs for RIAs serving that space. “We’re doing this at the mass-affluent scale.”
Getting Low
Bluemonte, which is the internal investment management unit at RFG, has been moving assets from existing strategies into the ETFs this week, and there will be about $1.4 billion across the nine new funds by Friday, said Wedell, who is also a portfolio manager on the funds. The new, actively managed products have net fees of 23 to 25 basis points, with the exception of the Bluemonte Diversified Income ETF, which charges 75 bps. The low costs benefit clients, along with the in-kind redemptions allowed in the ETF structure that provide tax efficiency, Wedell noted. Using in-house funds that are designed to work together also helps ensure there isn’t overlap or style drift, he said. While the company isn’t initially marketing the ETFs externally, there have been some purchases by unknown investors since launch, he said.
Some basics about Bluemonte and the new funds:
- The unit accounts for about $2.5 billion of the $6.5 billion of RFG’s assets under administration.
- The ETFs include large cap core, large cap growth, large cap value, dynamic total market, global equity, core bond, short term bond, long term bond, and diversified income strategies.
“Wealth managers are increasingly shifting to ETFs for scale and tax efficiency,” said Todd Rosenbluth, head of research at TMX VettaFi. “It’s great to see a firm enter the market with a full suite rather than dip their toe in.”
