Magazine article American Banker

Gruntal Sells Exchange-Traded Funds at Retail

Magazine article American Banker

Gruntal Sells Exchange-Traded Funds at Retail

Article excerpt

Breaking out of the pack, the Gruntal & Co. investment firm has started marketing exchange-traded funds to its retail customers.

The funds, which have been quietly making their mark for two years, are mutual-fund-like baskets of securities that trade on exchanges like stocks.

Most exchange-traded funds track sectors or indexes, and none are actively managed. As a result, they have lower expense ratios and generate lower tax bills than actively managed funds. In addition, unlike mutual funds, exchange-traded funds reprice during the day, which makes them attractive to active traders.

Michael McGrath, managing director at New York-based Gruntal, said it is pitching the funds to investors with at least $250,000 of investable assets. These investors are usually sophisticated enough to move beyond index funds but may not have enough investable assets to pursue an all-stock strategy, Mr. McGrath said.

Though some analysts have been predicting a surge in business in exchange-traded funds, Gus Sauter, the lead manager of index funds at Vanguard Funds, said they have been used mostly by hedge funds managers.

So far, comparatively little interest has emerged on the retail level, he said.

Nonetheless, exchange-traded funds are steadily growing in assets. According to the Investment Company Institute, the mutual fund industry's primary trade group, the funds accounted for $72.1 billion in assets at the end of January, up 10% from December.

Gruntal's investors -- who are often active traders -- will use these funds as part of the asset allocation strategies that Gruntal advisers recommend. …

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