As an exchange traded fund business grows and matures, the money managers behind the ETF strategies will have to make some tough decisions, both good and bad.
To better compete in a tougher ETF industry, Columbia Threadneedle Investments has cut its management fee on two ETFs: the Columbia Multi-Sector Municipal Income ETF (NYSEArca: MUST) to 0.23% from 0.28% and Columbia EM Core ex-China ETF (NYSEArca: XCEM) to 0.16% from 0.35%.
MUST could help complement a traditional approach to municipal bond investing and improve investor outcomes. The smart beta methodology leans toward potential opportunity as opposed to traditional market cap-weighting or indebtedness. As a result, the portfolio takes a more active approach to enhance yield and generate improved risk-adjusted returns over conventional municipal benchmarks while following a passive, rules-based indexing methodology.
Meanwhile, XCEM helps investors gain broad exposure to the emerging economies but specifically excludes Chinese equities in case investors wary of the potential risks associated with this emerging Asian market.
Columbia Threadneedle has also decided to shutter four of its ETFs, including the Columbia Beyond BRICs ETF (BBRC), Columbia EM Quality Dividend ETF (NYSEArca: HILO), Columbia India Infrastructure ETF (NYSEArca: INXX) and Columbia India Small Cap ETF (NYSEArca: SCIN).
“The last day of trading for the Liquidating Funds on the NYSE Arca Exchange is expected to be June 14, 2019 (Cessation Date),” according to an SEC filing.
Shareholders may sell their shares prior to the close of regular trading on the Cessation Date. Before the Cessation Date, the four funds will begin the process of winding down their operations and liquidating their respective portfolios. On or about June 21, the funds will make a distribution to remaining shareholders whom held onto their positions equal to each investor’s proportionate interest in the net assets.
Additionally, the ETF provider has filed an initial registration statement with the SEC in relation to two new strategic beta domestic equity ETFs, including the Columbia Research Enhanced Core ETF (RECS) and Columbia Research Enhanced Value ETF (REVS), according to a separate SEC filing.
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