Natixis Investment Managers Launches Natixis Gateway Quality Income ETF (GQI)
Highlights
- Gateway Investment Advisers, LLC has exclusively focused on options-based strategies to manage risk and generate cash flow since 1977; the GQI portfolio management team has more than 120 cumulative years of industry experience.
- GQI combines a diversified portfolio of high-quality US equity securities constructed using a proprietary factor-based approach with the characteristics of an actively managed index-option selling overlay program.
- GQI is designed to generate a robust, consistent stream of monthly income while providing broad equity market exposure to stocks exhibiting factors such as stable earnings, strong return-on-equity and assets, cash flow generation, and strong balance sheets.
- GQI’s net expense ratio is only 34 bps (gross expense ratio is 308 bps1), making it one of the most competitively priced ETFs in this space.
“Gateway’s goal since 1977 has been helping clients reduce the risks of stock market investing through actively managed options-based equity strategies, writing call options to generate market volatility-driven cash flow,” said Michael T. Buckius, CFA®, President, CEO and CIO of Gateway, and co-portfolio manager of GQI. “With the launch of GQI, Gateway’s first ETF, we are thrilled to bring our team’s decades of experience to help the many investors today who seek consistent income but also wish to remain invested in the stock market.”
Gateway uses a multifactor quantitative model to construct and manage GQI’s stock portfolio. The model evaluates US-exchange-traded equities and seeks to maximize exposure to quality characteristics while considering issuer and sector exposures, among other constraints and considerations. The equity portfolio generally consists of approximately 75-150 securities, and can include US exchange-listed common stocks, preferred stocks, American Depository Receipts, and investment companies (including ETFs).
The features of an actively managed options overlay program are built into the GQI strategy and are designed to generate consistent monthly income for investors. Replicating the characteristics of a laddered portfolio of one-month, near-the-money S&P 500® Index call options sold on a rolling weekly basis, the options overlay is implemented on 50 percent of GQI’s equity portfolio to balance capital appreciation with income.
“GQI stands out from the crowd for many reasons, key among them is Gateway’s multi-decade experience managing options writing strategies,” said David Giunta, CEO of Natixis Investment Managers in the US. “In partnership with Gateway, we are excited to offer an ETF that checks so many boxes for investors in today’s uncertain times.”
Day-to-day management of GQI is the responsibility of Gateway’s Daniel M. Ashcraft, Vice President and Portfolio Manager; Michael T. Buckius, CEO, CIO, President and Portfolio Manager; Kenneth H. Toft, Senior Vice President and Portfolio Manager; and Mitchell J. Trotta, Portfolio Manager. Together, the team averages 17 years of tenure with Gateway. GQI’s primary listing venue is the New York Stock Exchange (NYSE). In celebration of its historic ETF launch, the Gateway leadership team will ring the NYSE’s Closing Bell on December 28, 2023.
Based in Cincinnati, Ohio, Gateway Investment Advisers, LLC (Gateway) specializes in quantitatively driven equity portfolio management and index options-based investing. Since 1977, the firm has maintained consistent focus on reducing the risk of equity investing and enhancing cash flow with option strategies. Gateway’s core low-volatility strategy seeks to capture the majority of the returns associated with equity market investments, while exposing investors to less risk than other equity investments. The firm, which has been an affiliate of Natixis Investment Managers since 2008, had approximately $8.4 billion in assets under management as of September 30, 2023.
About Natixis Investment Managers
Natixis Investment Managers’ multi-affiliate approach connects clients to the independent thinking and focused expertise of more than 15 active managers. Ranked among the world’s largest asset managers2 with more than $1.1 trillion assets under management3 (€1.1 trillion), Natixis Investment Managers delivers a diverse range of solutions across asset classes, styles, and vehicles, including innovative environmental, social, and governance (ESG) strategies and products dedicated to advancing sustainable finance. The firm partners with clients in order to understand their unique needs and provide insights and investment solutions tailored to their long-term goals.
Headquartered in Paris and Boston, Natixis Investment Managers is part of the Global Financial Services division of Groupe BPCE, the second-largest banking group in France through the Banque Populaire and Caisse d’Epargne retail networks. Natixis Investment Managers’ affiliated investment management firms include AEW; DNCA Investments4; Dorval Asset Management; Flexstone Partners; Gateway Investment Advisers; Harris Associates; Investors Mutual Limited; Loomis, Sayles & Company; Mirova; MV Credit; Naxicap Partners; Ossiam; Ostrum Asset Management; Seventure Partners; Thematics Asset Management; Vauban Infrastructure Partners; Vaughan Nelson Investment Management; and WCM Investment Management. Additionally, investment solutions are offered through Natixis Investment Managers Solutions and Natixis Advisors, LLC. Not all offerings are available in all jurisdictions. For additional information, please visit Natixis Investment Managers’ website at im.natixis.com | LinkedIn: linkedin.com/company/natixis-investment-managers.
Natixis Investment Managers’ distribution and service groups include Natixis Distribution, LLC, a limited purpose broker-dealer and the distributor of various US registered investment companies for which advisory services are provided by affiliated firms of Natixis Investment Managers, Natixis Investment Managers S.A. (Luxembourg), Natixis Investment Managers International (France), and their affiliated distribution and service entities in Europe and Asia.
1 As of the most recent prospectus, the investment advisor has contractually agreed to waive fees and/or expenses (with certain exceptions) once the expense limitation of the fund has been exceeded. This arrangement is set to expire on 4/30/26. When an expense limitation has not been exceeded, the gross and net expense ratios and/or yields may be the same.
2 Cerulli Quantitative Update: Global Markets 2023 ranked Natixis Investment Managers as the 17th largest asset manager in the world based on assets under management as of December 31, 2022.
3 Assets under management (“AUM”) of current affiliated entities measured as of September 30, 2023 are $1,179.7 billion (€1,114.3 billion). AUM, as reported, may include notional assets, assets serviced, gross assets, assets of minority-owned affiliated entities and other types of non-regulatory AUM managed or serviced by firms affiliated with Natixis Investment Managers.
4 A brand of DNCA Finance.
Investment Strategy Risks
Exchange-Traded Funds (ETFs) trade like stocks, are subject to investment risk, and will fluctuate in market value. Unlike mutual funds, ETF shares are not individually redeemable directly with GQI and are bought and sold on the secondary market at market price, which may be higher or lower than the ETF's net asset value (NAV). Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns.
Unlike typical exchange-traded funds, there are no indexes that the GQI attempts to track or replicate. Thus, the ability of GQI to achieve its objectives will depend on the effectiveness of the portfolio manager. There is no assurance that the investment process will consistently lead to successful investing.
Investments in Equity-Linked Notes (ELNs) are subject to liquidity risk, which means there may not be an active market for ELNs which would prevent them from being sold at a fair price. Since ELNs are in note form, they are subject to certain debt securities risks, such as credit or counterparty risk. Should the prices of the underlying instruments move in an unexpected manner, GQI may not achieve the anticipated benefits of an investment in an ELN, and may realize losses, which could be significant and could include GQI’s entire principal investment.
Options may be used for hedging purposes, but also entail risks related to liquidity, market conditions and credit that may increase volatility. The value of GQI's positions in options may fluctuate in response to changes in the value of the underlying asset. Selling call options may limit returns in a rising market.
Equity securities are volatile and can decline significantly in response to broad market and economic conditions.
GQI is new with a limited operating history.
Definitions
The S&P 500® Index is a widely recognized measure of US stock market performance. It is an unmanaged index of 500 common stocks chosen for market size, liquidity, and industry group representation, among other factors; it also measures the performance of the large-cap segment of the US equities market. You may not invest directly in an index.
Before investing, consider GQI’s investment objectives, risks, charges, and expenses. Visit im.natixis.com/ETFs for a prospectus or a summary prospectus containing this and other information. Read it carefully.
Natixis Advisors, LLC is the adviser and Gateway Investment Advisers, LLC is the subadvisor for the Natixis Gateway Quality Income ETF.
ALPS Distributors, Inc. is the distributor for the Natixis Gateway Quality Income ETF. Natixis Distribution, LLC is a marketing agent. ALPS Distributors, Inc. is not affiliated with Natixis Distribution, LLC.
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