Mairs and Power, the St. Paul firm known for developing Minnesota- and Midwest-focused investment funds, is launching an exchange-traded fund tied to Minnesota municipal bonds.
The Minnesota Municipal Bond ETF will have the ticker symbol MINN and trade on the Chicago Board of Options Exchange (CBOE) starting Friday. The fund will be priced at $25 per share and, as an ETF, investors can buy as little as one share.
"We believe this ETF presents a distinct opportunity for investors, particularly Minnesota residents, who are looking to add fixed income to their portfolios," Mark Henneman, CEO of Mairs and Power, said in statement. "Unlike most ETFs, our fund is actively managed. This means we are constantly evaluating and making decisions about the securities in the portfolio."
The lead portfolio manager of the new fund will be Brent Miller, a Minnesota native who is also president of the Minnesota Society of Municipal Analysts. Miller helped create the fund with Robert Thompson, head of fixed income at Mairs & Power, who will be a co-manager of the fund. Heidi Lynch, a fixed-income trader, will be active in daily operations of the fund.
"As a firm we decided together that there is need out there for a lower-cost, high-quality product. We made it as something we want to invest in, too," Miller said. "That's how we design all of our products: 'Is it something you yourself would want to invest in?' "
Municipal bonds are issued by city, county, state and other government entities to pay for public projects. There are other Minnesota bond mutual funds out there, some locally managed, but many are managed from outside the state.
Miller said being a Minnesotan and working for an investment firm that has historically invested in Minnesota and Midwestern companies will give the fund an advantage.
"We want to invest in where we live, work and do business. That is what this fund allows," Miller said. "We think that local management has its benefits."
The firm has long had the skills to invest in corporate and municipal bonds and has done that for clients with individually managed accounts. Now it can provide those services as a retail product to a bigger audience.
Most of the Minnesota bond funds are charging fees of 65 to 85 basis points. The expense ratio of the Mairs and Power's Minnesota Municipal Bond ETF will be 39 basis points, Miller said.
For Minnesota investors, dividends will be exempt from federal and state income taxes.
"We want to propel our economic engine here, and that is a goal — to be good for local communities, too," Miller added.
Employee-owned Mairs and Power was founded in 1931 and chiefly offers growth, balanced and small-cap mutual funds. Between those funds and its individually managed accounts, the firm had more than $10 billion in assets under management as of Dec. 31.
Patrick Kennedy • 612-673-7926