Differing tax treatment and the potential for wide bid/offer spreads have so far hindered the uptake of active ETF products in the UK relative to the US.

But one outfit hoping to change all of that is Goshawk, the new outfit launched by former Artemis global equity manager Alex Illingworth with backing from City veteran Christopher Mills. 

One of their first acts has been the purchase of the asset management arm of Vermeer Partners, bringing with it a fund and the capacity to launch an active ETF. 

Illingworth’s intention is to run it as a global equity fund, but with around 15 per cent of the capital held in bonds. 

This mirrors a segregated mandate Illingworth ran at Artemis and, he said, makes the active ETF "analogous to a model portfolio product”. This is the segment of the market he says he is targeting for growth.

The bonds will be owned to dampen volatility. In Illingworth’s words: "We run the bond allocation to not lose money, rather than to make money, and those are two very different approaches."

He believes the problem of bid/offer spreads is mitigated by the very liquid nature of the underlying investments and, he hopes, in timescale. 

Goshawk also intends to grow within the open-ended fund and investment trust space. 

Mills, his partner in the venture who co-founded JO Hambro Capital Management and founded Harwood Capital Management, has seeded similar ventures for fund managers Stuart Widdowson and Richard Staveley. 

Vermeer Partners, the company which sold the asset management unit to Goshawk, is continuing to run its discretionary fund management business as normal, according to chief executive Simon Melling.

It had assets of £1.75bn and made a profit of just over £1.1mn at the end of June 2023.

The active ETF debate is likely to continue to rage among allocators as providers continue to push the products, and we will keep checking in with allocators to see if the strategies are gaining any ground.