Nuveen to Enter ETF Market


On Monday, 10/16/2000, Nuveen Investments announced its plans to launch the first in a series of new exchange-traded funds (ETFs). The new ETF will be based on America's Fastest Growing Companies Index, which was formerly known as the INDI SmallCap 500 Index. The INDI SmallCap 500 is comprised mostly of small-cap companies that fulfill high earnings growth criteria. The new ETF will trade on the American Stock Exchange (AMEX) once final regulatory approval from the SEC is obtained.

Gary Gastineau, Managing Director at Nuveen, said the new fund represents the future in ETFs. Prior to joining Nuveen, Gastineau helped AMEX to develop some of the first ETF products, including SPDRS, WEBS and DIAMONDS.

"Ideally, index funds should be based on indexes with rules designed to maximize portfolio performance and minimize portfolio changes that create unnecessary transaction costs and capital gains - in other words, on indexes that are investor-friendly," said Gastineau. He also said the new funds to be launched by Nuveen will be in competition with ETFs planned to be released by the Vanguard Group later this year.

"Unlike other small cap indexes, which drop successful companies when their market cap exceeds the index's strict capitalization limits, the America's Fastest Growing Companies Index is designed to hold on to those companies as long as they continue to meet the index's growth rate hurdle," said Bill Adams, Executive Vice President of Nuveen.

Nuveen, which currently manages $73 billion in assets, also said that it plans to launch more equity and fixed-income ETFs by year's end.

"These funds are a stepping stone to a broader array of Nuveen products, which we expect will include actively-managed ETFs," said Nuveen CEO Tim Schwertfeger.