Exclusive: Guggenheim reorganizes, phases out Rydex ETF brand
Guggenheim Partners LLC is merging 11 asset management businesses into a new $119 billion firm and changing its name to Guggenheim Investments as part of a broad effort to target financial advisers and institutional clients.
The firm will replace the Rydex name with Guggenheim Investments for its RydexShares exchange-traded funds and the majority of Rydex's mutual funds early next year. Guggenheim acquired Rydex SGI last year as the lead investor in its parent, Security Benefit Corp.
With $12 billion in assets under management, the firm will be the eighth largest provider of ETFs in the U.S., according to Lipper. The combined firm would be the 58th largest fund company, with $24.1 billion in U.S. mutual funds. Todd Boehly, president of Guggenheim Partners, will run the company.
The move makes Guggenheim one of three asset managers to offer both active and passive ETFs as well as open-end and closed-end funds, putting them in select company. The others: $1.25 trillion BlackRock Inc.
Guggenheim announced the change via Webcast to its 1,200 investment management employees on Tuesday.
Guggenheim will compete with BlackRock and PIMCO in some areas but primarily plans to use its expertise in different niche markets to compete with the leaders in those markets, said Richard Goldman, chief operating officer of the new firm.
For example, the firm has $14.5 billion in alternative mutual funds, ETFs and institutional portfolios. JPMorgan
Founded in 2000, New York-based Guggenheim Partners' roots come from managing money for the Guggenheim family. The firm moved into institutional asset management in 2001, providing fixed income asset management to insurance companies.
In 2009 Guggenheim made its first push into the retail space when it bought Claymore Group, then the 13th largest U.S. ETF provider, with $1.6 billion under management.
That gave Guggenheim a way to sell through broker-dealers. Claymore's funds, which were rebranded under the Guggenheim name last year, are available on a number broker-dealer platforms, including Bank of America Merrill Lynch and Morgan Stanley, Goldman said.
The firm made its second big push into retail in 2010 with the Rydex acquisition. Rydex, a longtime provider of ETFs and mutual funds has a significant presence in the registered investment adviser market, with $34.7 billion in fund and ETF assets under management.
Guggenheim believes its fixed income offerings and Rydex's equity-focused product line are complementary, Goldman said.
With the combined firm, Guggenheim can launch investment strategies to cater to different audiences, said Don Cacciapaglia, who will serve as chief administrative officer.
Guggenheim also plans to offer some of its institutional strategies as mutual funds for advisers. In early September, the firm filed with the U.S. Securities and Exchange Commission to launch the Guggenheim Macro Opportunities, Total Return Bond, Floating Rate Income and Municipal Income Funds -- retail versions of current institutional strategies, Goldman said.
From a product and distribution standpoint they have better breadth together, said Christian Magoon, an ETF consultant and former president of Claymore Securities. The challenge will be giving the different product lines sufficient distribution and marketing support.
Guggenheim will keep the Rydex name on its $7 billion Target Beta Funds due to its strong following.
Rydex is known for its niche ETFs, including two leveraged ETFs and its more well-known equal-weighted ETFs, said Paul Justice, an ETF analyst at Morningstar Inc. He said some advisers found these gimmicky, so eliminating the Rydex name from the higher-brow Guggenheim makes sense for branding.
But few people really know what the Guggenheim brand means, said Geoff Bobroff, a fund consultant. Sure we all know the Guggenheim Museum in New York, but what does that brand really mean? he asked.
(Reporting by Jessica Toonkel; Editing by Jennifer Merritt and Walden Siew)
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