Quant ETFs With $564 Million Switch to Become Actively Managed

(Bloomberg) -- Quant firm Alpha Architect is converting its five exchange-traded funds with $564 million in assets into active products, a switch it says will help cut costs and make it easier to trade. 

The $1.7 billion money manager based in Philadelphia announced in a Wednesday filing it will start actively managing the funds -- which currently track its own proprietary factor indexes -- as of Jan. 31. 

Without the mandate to track an index every day, Alpha Architect will save money and have more flexibility in timing trades, founder Wes Gray said. 

“For us, it really boils down to saving direct/indirect costs tied to dealing with indexes,” he wrote in an email, referring to the fees paid to a calculation agent and exchanges for data licensing. 

While the systematic processes used by quants often lend themselves easily to indexes, other firms like Dimensional Fund Advisors have also opted for the trading flexibility of an active structure. 

The five funds being converted are the Alpha Architect U.S. Quantitative Value ETF (ticker QVAL), the International Quantitative Value ETF (IVAL), the U.S. Quantitative Momentum ETF (QMOM), the International Quantitative Momentum ETF (IMOM) and the Value Momentum Trend ETF (VMOT).

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