Guggenheim reorganizes sales to focus on ETFs

NEW YORK (Reuters) - Guggenheim Investments has reorganized its sales force to focus more on exchange-traded funds.

Previously, the firm's 100-person sales staff was organized by distribution channel, such as big brokerage houses and registered investment advisers. A separate group sold only exchange-traded funds to the groups.

But that structure often led to multiple sales representatives contacting the same client, said Anthony Davidow, managing director and portfolio strategist at Guggenheim.

Over the past few weeks, Guggenheim, a division of Guggenheim Partners LLC, has reorganized its sales staff so that wholesalers will also sell exchange-traded funds along with its other investment products to advisers or large brokerage clients.

The firm will maintain a separate ETF team to focus on model ETF portfolio managers and institutional clients, Davidow said.

Exchange-traded funds are baskets of securities, like mutual funds, but they trade on exchanges, like individual securities. They are cheaper than mutual funds and allow investors to trade throughout the day, with simultaneous pricing, unlike mutual funds, which price at the end of the day.

Allowing sales reps to sell both ETFs and mutual funds makes sense for Guggenheim, said Paul Justice, an ETF analyst at Morningstar Inc. "Most companies have gone that route," he said.

And while Guggenheim has some popular ETFs, like the BulletShares ETF -- its $1.4 billion fixed income ETF suite -- Justice believes the firm should cull its product line a bit.

"They have some fairly niche products that don't really fit in to an adviser's portfolio," he said.

For example, Guggenheim has a $16.98 million airline ETF and a $45.5 million solar ETF.

Guggenheim has closed a number of strategies, shutting down eight ETFs earlier this year, Davidow said.

As part of the new structure, Guggenheim has created an eight-person ETF specialist team to support the sales reps and clients, he said. The new team and sales restructuring is part of an effort to focus the firm on educating advisers and other clients about its product line.

"We want ... (ETFs) to be a bigger part of the business," said Davidow, who is head of the new "ETF Knowledge Center," the group of ETF specialists supporting the sales staff.

The reorganization comes less than a year after Guggenheim Partners, which is headquartered in Chicago and New York, merged its 11 management businesses under the Guggenheim Investments name [ID:nS1E78J1YQ].

Guggenheim Investments has $130 billion in assets under management, $11 billion of that in its ETFs. The firm has been growing its ETF business through acquisitions over the years.

In 2009, Guggenheim made its first push into the retail investment 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 in 2010, were available on a number broker-dealer platforms, including Bank of America Merrill Lynch and Morgan Stanley.

In 2010, Guggenheim bought Rydex SGI through a joint acquisition of Rydex SGI's parent, Security Benefit Corp. Rydex, a longtime provider of ETFs and mutual funds had a significant presence in the registered investment adviser market.

The mergers made Guggenheim the 11th-biggest ETF provider in the United States.

(Reporting By Jessica Toonkel, editing by Dave Zimmerman)