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Russell Investments to Acquire ETF Provider U.S. One

The move comes as Russell has more than 30 ETFs in the registration process.

Robert Goldsborough, 01/13/2011

Russell Investments is set to enter the ETF business in a hurry, through its announcement on Wednesday that it will acquire Reno, Nevada-based registered investment advisor and ETF provider U.S. One, Inc.

Russell will replace U.S. One as the investment advisor to one fund called--drum roll, please--the One Fund ETF ONEF, a small fund of funds ETF. However, the broader ramification of the acquisition is that it immediately will give Russell an SEC-approved platform to begin offering ETFs. Seattle-based Russell, which probably is known most for its Russell Indexes but also manages close to $150 billion in assets, launched an ETF business in Australia last year and has several dozen U.S. ETFs presently in registration but that have not yet won SEC approval. Given that Russell's own original filing documents have been sitting on the SEC's desk for 18 months, the acquisition makes sense in expediting the launch of several new products.

In a news release, Russell stated that U.S. One's president, treasurer, and founder, Paul Hrabal, will work with Russell as a consultant to its ETF business. No terms of the deal were disclosed. The transaction is expected to close shortly after a mid-February shareholder vote to approve Russell becoming ONEF's investment advisor.

"Russell continues to build the infrastructure for viable and comprehensive ETF offerings," said Jim Polisson, managing director of Russell's global ETF business, in a statement. "The acquisition of U.S. One provides Russell with a platform to play a unique role in this dynamic and fast moving growth arena. By acquiring U.S. One, we can more immediately leverage our proprietary research to extend the options available to investors and include ETFs in our suite of products that we deliver to the marketplace."

According to a proxy statement filed on Jan. 13, Hrabal owned approximately 50.6% of ONEF's outstanding shares, as of Jan. 7. That looks like just enough voting power to push the approval of the change in control through with ease.

Robert Goldsborough is an ETF analyst with Morningstar.

Disclosure: Morningstar licenses its indexes to certain ETF and ETN providers, including Barclays Global Investors (BGI), Claymore Securities, First Trust, and ELEMENTS, for use in exchange-traded funds and notes. These ETFs and ETNs are not sponsored, issued, or sold by Morningstar. Morningstar does not make any representation regarding the advisability of investing in ETFs or ETNs that are based on Morningstar indexes.

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