Recent news saw the semi-transparent ETF provider Blue Tractor announcing that it was set to launch its first product with Red Gate Advisers, a newly formed multi-boutique investment adviser.
Its first fund is the Stance Equity ESG Large Cap Core ETF, which will be administered by the RBB Fund, Inc Series Trust.
Craig Urciuoli (pictured), Co-Founder and President of Red Gate Advisers explains that his background in product development, sales, marketing and distribution in financial services and asset management goes back over 25 years, having recently built up Third Avenue Funds to over USD30 billion.
At the end of 2019, Urciuoli joined his former colleague Arnie Reichman at RBB funds, the oldest and one of the largest of the series trust businesses in the financial sector, offering turnkey solutions for fund governance. The firm has approximately USD15 billion on its platform on behalf of nine unaffiliated investment advisers and 35 different mutual fund and ETF products.
“In my endeavours I discovered small and emerging managers who need a little extra help coming to market, and raising capital. We can help Bill Davis and Stance Capital build out their brand and navigate the ETF or mutual fund structure,” Urciuoli says.
“It’s not white labelling because the brand is not universal across the platform,” Urciuoli explains. “We’ll be building other people’s brands.”
Urciuoli says that there is a rising demand for the ETF structure with lots of people looking to get into that space and launch product. “Partnering with the right strategy is the overarching driver for us at Red Gate,” Urciuoli says.
Urciuoli will be working with Salvatore Faia plus a sales and marketing team to build out the business and raise capital for their funds.
“Bill Davis has been an expert in the ESG space, doing ESG since before it was even popular.,” Urciuoli says. “He is a values-based investor and has proven that you don’t have to sacrifice performance and values for returns. We think it’s a superior product that will be receptive in the market place.”
The approximate USD100 million in assets that Davis has at the moment is in separately managed accounts, and will now become a semi-transparent Blue Tractor shielded alpha ETF.
“The ETF structure has been evolving to be a superior structure from all standpoints,” Urciuoli says. “But it had been a hurdle for active boutique managers who needed to protect their intellectual property so the new transparency structures mean that lots of active boutique managers are entering the market place.”
For Urciuoli, the Blue Tractor offering fitted because the ESG theme requires a client to understand and know the names within the underlying portfolio but with the IP protection of the structure that protects the weight of investments in each firm.
“It’s perfect for Bill and his shareholders and, in addition, the Blue Tractor model has more flexibility for portfolio managers to manage and be more tax efficient as they have an added edge which was appealing,” Urciuoli says.
Red Gate has plans for more ETFs, and will use more of the semi and non-transparent structures. “They are here to stay,” he says. “And there is room for more than just one.”
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