UK-Based Baillie Gifford Takes the ETF Plunge Stateside

Core Insights - Baillie Gifford, a prominent mutual fund manager, has filed for its first US exchange-traded funds (ETFs), marking a significant shift in its investment strategy as the industry increasingly favors ETFs over mutual funds [2][4] Group 1: Company Developments - The firm manages $264 billion globally and is launching a suite of five actively managed ETFs that will incorporate assets from existing mutual funds [2] - Jamie McGregor has been hired to lead the ETF initiative, bringing experience from Goldman Sachs' ETF Accelerator program [2] - Baillie Gifford's US assets under management total $116 billion, and the new funds will focus on various strategies including Emerging Markets and International Alpha [5] Group 2: Market Context - The move to ETFs comes at a time when the SEC is set to approve dual-share-class requests, which could enhance the competitive landscape for asset managers [4] - Despite the growing popularity of ETFs, there remains a limited selection for investors seeking active, long-term growth strategies, with only 11 out of 235 international large cap equity ETFs offering such options [3] Group 3: Challenges and Considerations - The firm faces hurdles in rolling out ETF share classes, including the need to improve performance and invest in distribution and marketing to drive sales [5] - New entrants to the ETF market must expand their capabilities, either by hiring staff and investing in technology or collaborating with third-party trusts [6] - The distribution landscape for new ETFs is uncertain, as broker-dealers may be slow to approve them for their platforms [6]