Turner Investments ditches active, turns to ETFs in Elkhorn Capital acquisition

Money Management

Turner Investments Holdings is shifting its focus from active management, closing its last three equity mutual funds, moving active separate accounts to a factor-based approach and acquiring ETF provider Elkhorn Capital Group, confirmed Erik Hagar, a firm principal and senior portfolio analyst, in a telephone interview Wednesday.

Terms of the deal, which is expected to close in the next several weeks, were not disclosed.

Elkhorn was founded by Ben Fulton in 2015, the former managing director of global ETFs at Invesco (IVZ) PowerShares.

But while Mr. Fulton helped build Invesco’s ETF business to the fourth-largest in the U.S. during his eight-year tenure at the firm, currently at $100 billion, Elkhorn’s 13 exchange-traded funds have a much smaller combined value of approximately $200 million.

As part of the deal, Mr. Fulton will become head of global ETFs for Turner while another executive of Elkhorn, Jordan Golz, will be appointed head of product for global ETFs.

Turner Investments has seen declining assets under management. A decade ago it had AUM of more than $25 billion, but is at less than $300 million currently, said Mr. Hagar.

He said the move away from active management in general, fee pressures and uneven investment returns all contributed to outflows for Turner.

“We as a firm are acknowledging our industry has changed,” Mr. Hagar said. “We acknowledge that ETFs are growing AUM while mutual fund assets flow industrywide is flat to negative.”

Mr. Hagar said the company aims to expand with additional ETFs and also will introduce factor-based mutual funds and separate accounts.

He said the companies last three active funds, the Turner Small Cap Growth Fund, Turner Midcap Growth Fund and the Turner Titan Long/Short Fund will close in September. About two-third of firmwide AUM is in the three mutual funds with the remainder in separate accounts.

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