SS&C ALPS Advisors and Blue Tractor achieve a number of firsts with new semi-transparent REIT ETF

Laton Spahr, SS&C Alps Advisors

SS&C ALPS Advisors has seen its assets grow to USD16 billion since late last year and has added a new product to its diversified range of offerings. 

Achieving a number of firsts, SS&C ALPS Advisors has partnered with GSI Capital Advisors and Blue Tractor Group to recently launch the ALPS Active REIT ETF (Nasdaq: REIT), the first semi-transparent ETF listed by Nasdaq, and the first ETF to use Blue Tractor’s Shielded Alpha ETF wrapper. 

Laton Spahr, president of SS&C ALPS Advisors, explains that he was familiar with GSI Capital Advisors from its original home, before a buyout, at Green Street Advisors, the leading REITs research firm on Wall Street for over 25 years. 

What has become GSI was the firm’s buyside entity, the investment side of the business. “We had been talking to them for over a year,” Spahr says. “Their whole approach was really impressive to us with their range of institutional separately managed accounts that they had managed for 15 years. But they needed some sunlight on their offering as they had nothing in the retail space, no mutual fund nor ETF.” 

GSI runs a very concentrated portfolio of around 40 securities, with a significant portion of the portfolio weightings centred on the top 10 holdings. “Being able to obscure what they are doing in the portfolio is a benefit to holding onto their alpha generation,” Spahr explains. 

In this instance, the Blue Tractor semi-transparent ETF wrapper was ideal, Spahr says, because it lets the market see the full portfolio holdings, however it scrambles the weightings of each security in the underlying portfolio, so enabling liquidity providers to still conduct very efficient markets, but also fully obscuring from predatory traders when GSI adds or reduces its portfolio positions 

Simon Goulet, Co-Founder of Blue Tractor Group, says: “We were delighted to partner with SS&C ALPS Advisors and GSI Capital on REIT.  The excellent trading dynamics and tight pricing since its launch on Nasdaq are testament to our contention that the Shielded Alpha ETF wrapper is the ideal balance between the transparency market makers require to conduct efficient markets and the opacity active advisers, such as GSI Capital, require to protect their proprietary alpha generation strategies.” 

Spahr comments that the last few months have been kind to the firm, with two particular market themes experiencing strong growth – commodities and clean energy. The firm’s ALPS Clean Energy ETF (ACES) went from USD500 million to over USD1 billion in six months, while increased flows into its commodity product are a result of recent inflation concerns. 

Spahr confirms that he is talking to half a dozen more active managers to bring to market in an ETF structure. “Many custodians and broker dealers are cautious about adopting active ETFs into their platforms partly because revenue in that area is less than mutual funds so there is a resistance,” he says. “But the benefits they supply to clients are causing more demand from the individual financial advisers. Active management through the ETF structure is the future, but it’s a painful transition for the distributors.” 

He says that having shown investment advisers how the ETF structure works, it’s an easy process to get them to use it. “That’s the fun bit as everyone wants a better mousetrap,” he says. 

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