Grail Advisors Bringing Fixed Income to Actively-Managed ETF Marketplace

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October 5, 2009 12:23pm ETF BASIC NEWS

grailadvisorsTwo New Bond Funds Will Feature Strategic Partnership With McDonnell Investment Management


(Marketwire)– Grail Advisors, an innovator in the development and distribution of active-managed exchange traded funds (ETFs), today announced the registration of two new actively-managed fixed-income ETFs — Grail McDonnell

Intermediate Municipal Bond ETF and Grail McDonnell Core Taxable Bond ETF.

McDonnell Investment Management, LLC (McDonnell), a Chicago-based fixed-income specialist responsible for more than $13 billion assets(1) under management, will serve as the sub-adviser to both of the funds. Grail Advisors will serve as the funds’ manager.

Similar to traditional actively-managed bond funds, the new Grail McDonnell offerings will allow portfolio managers unrestricted trading.

“Our stated goal has been to bring a full lineup of traditional, active fund managers and strategies to the ETF marketplace,” said William M. Thomas, CEO of Grail Advisors LLC. “These new fixed-income ETFs, both very important additions to our actively-managed list, are made even more compelling by the skill and experience of McDonnell Investment Management.”

McDonnell specializes in fixed-income investment management, offering both investment-grade taxable and tax-exempt strategies and below investment-grade strategies using separate accounts, structured products, and other private investment vehicles. Investment mandates include core, limited maturity/duration, multi-sector, customized benchmark blends, and below investment-grade credit. The firm is wholly-owned by a team of professionals who were instrumental in developing the separate account management business in 1987, when the group operated as part of Van Kampen Investments. McDonnell was formed as an independently-owned, registered investment advisor in 2001.

“We recognize that the investment demands of the marketplace are shifting in response to today’s market environment,” said Edward Treichel, President and CEO of McDonnell. “We stand poised with Grail Advisors to respond with client-tailored investment solutions like these new Grail McDonnell ETFs.”

Grail Advisors rolled out the market’s first true, actively-managed equity ETF in May — the Grail American Beacon Large Cap Value ETF (NYSE: GVT). That fund was designed to incorporate traditional investment management approach and a multi-manager format into an active ETF structure. The Grail McDonnell offerings will combine all the benefits of an ETF structure — lower costs(2), tax efficiency(3), transparency of holdings(4), and intra-day trading — with actively-managed strategies from a veteran fixed-income management team.

San Francisco-based Grail Advisors intends to increasingly make the benefits of ETFs available to the large pool of investors who currently select traditional mutual funds or other vehicles to access active portfolio management. Mr. Thomas says Grail Advisors is currently in discussions with a number of leading financial institutions and asset managers, and expects to launch a number of customized, actively-managed ETFs that will provide full, daily disclosure on all holdings.

About Grail Advisors LLC — Grail Advisors LLC, an innovator in the creation and distribution of actively managed Exchange Traded Funds, partners with established asset managers, distributors, and related financial institutions to design and deliver actively managed ETFs. Grail Advisors was created to deliver ETFs using fully disclosed active portfolio management to the global investment community. More information is available at

About McDonnell Investment Management, LLC — McDonnell Investment Management, LLC is a private fixed-income asset management firm based in suburban Chicago. The firm manages approximately $13 billion in assets for institutions, private clients, mutual fund companies, and private investment funds across the U.S., Europe, and Asia. McDonnell is 100% owned by its employees and is an SEC-registered investment adviser.

(1) As of 9/30/09.

(2) Ordinary brokerage fees apply.

(3) Exchange trading of ETFs further enhances their tax efficiency. Investors who want to liquidate shares in an ETF simply sell them to other investors through exchange trading. Because of this unique structure, ETFs are not required to sell securities to meet investor cash redemptions, potentially generating capital gains tax liability for remaining investors. Keep in mind that the sale of an ETF will generate capital gains/losses for the investor liquidating shares.

(4) ETFs are considered transparent because their portfolio holdings are disclosed daily.

William M. Thomas is a registered representative of ALPS Distributors, Inc.

Shares are not individually redeemable and the owners of Shares may purchase or redeem Shares from a Fund in Creation Units only.

There are risks involved with investing including possible loss of principal. The ETFs will be actively managed and the Shares may trade above or below their net asset value. The trading price of Shares may deviate significantly from net asset value during periods of market volatility. Shares will not be FDIC insured, may lose value, and will have no bank guarantee.

An investor should consider investment objectives, risks, charges, and expenses carefully before investing. The Prospectus contains this and other information. For more complete information about the Grail McDonnell ETFs and the Grail American Beacon Large Cap Value ETF or to obtain a Prospectus, call 415-677-5870. Please read the Prospectus carefully before investing.

The information in the Prospectus is not complete and may be changed. The Grail McDonnell ETFs may not sell their Shares until the registration statement filed with the Securities and Exchange Commission is effective. The Prospectus is not an offer to sell the ETFs’ Shares, and the ETFs are not soliciting an offer to buy their Shares in any jurisdiction where the offer or sale is permitted.

The Grail McDonnell ETFs are new and have no operating history.

The Grail American Beacon Large Cap Value ETF is new and has limited operating history.

ALPS Distributors, Inc. is not affiliated with the mentioned entities — McDonnell Investment Management, LLC and Van Kampen Investments.

Grail McDonnell Intermediate Municipal Bond ETF, Grail McDonnell Core Taxable Bond ETF, and Grail American Beacon Large Cap Value ETF are distributed by ALPS Distributors, Inc.

Morrison Shafroth
(720) 470-3653





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