Hennessy Advisors to expand ETF portfolio with STF Management ETFs acquisition

Hennessy Advisors, Inc. has announced a definitive agreement to acquire the assets of STF Management, LP’s exchange-traded funds (ETFs), marking a strategic expansion into actively managed ETFs. The deal includes the STF Tactical Growth ETF and the STF Tactical Growth & Income ETF, which together hold approximately $220 million in assets.

Once finalized, the two funds will transition under the Hennessy Funds Trust, where they will be rebranded as the Hennessy Tactical Growth ETF and the Hennessy Tactical Growth & Income ETF. Hennessy Advisors will assume the role of investment advisor, and Jonathan Molchan, the current portfolio manager, will continue overseeing the funds. The acquisition is expected to close in the third quarter of 2025, pending regulatory approvals.

How Does This Deal Fit Into Hennessy’s Growth Strategy?

Hennessy Advisors has built a reputation for strategic growth through acquisitions and fund integrations, strengthening its position in the asset management industry. Over the years, the firm has expanded its portfolio by incorporating equity, sector, and multi-asset funds, focusing on long-term, actively managed investment strategies.

This latest move underscores Hennessy’s commitment to broadening its ETF footprint, a segment that has witnessed substantial growth due to rising investor demand for cost-effective and diversified investment options. ETFs have increasingly gained traction as investors seek tax efficiency, transparency, and active risk management. By acquiring these STFM ETFs, Hennessy is positioning itself as a competitive force in the growing actively managed ETF sector.

Teresa Nilsen, President and Chief Operating Officer of Hennessy Advisors, emphasized that the transaction aligns with the firm’s long-term vision. She stated that the company remains committed to ensuring continuity for investors, while strengthening its ETF capabilities with the addition of Jonathan Molchan and his extensive expertise in derivatives strategies, risk management, and portfolio optimization.

Why Are Actively Managed ETFs Gaining Popularity?

The ETF market has evolved significantly over the past decade, with a growing shift from traditional passive index funds to actively managed ETFs. While passive ETFs track a benchmark index, actively managed ETFs offer greater flexibility, allowing portfolio managers to make real-time investment decisions based on market conditions.

The two funds Hennessy is acquiring—STF Tactical Growth ETF and STF Tactical Growth & Income ETF—fall into this actively managed category. These ETFs focus on tactical asset allocation, allowing them to adjust investment exposures based on market trends and risk assessments.

As investors increasingly seek diversified investment strategies that can adapt to economic shifts, actively managed ETFs have gained favor for their potential to outperform traditional index-tracking ETFs. This trend has fueled the expansion of asset managers into the ETF space, with firms like Hennessy Advisors recognizing the need to broaden their investment offerings to capture this growing segment.

Who Is Jonathan Molchan, And How Will He Shape These Funds?

A key aspect of this acquisition is the retention of Jonathan Molchan, the portfolio manager currently overseeing the STFM ETFs. With two decades of experience in trading, research, and derivatives strategies, Molchan brings deep expertise in risk-adjusted portfolio management.

Molchan expressed confidence in Hennessy Advisors’ track record of disciplined investing and shareholder-focused management. He stated that the transition would provide continued stability for existing shareholders, ensuring that investors benefit from Hennessy’s institutional resources, operational efficiencies, and shareholder services.

By retaining Molchan’s leadership, Hennessy Advisors is signaling a commitment to preserving the investment philosophy of the acquired funds, while leveraging its broader infrastructure to enhance long-term growth potential.

What Are The Regulatory And Tax Implications Of This Transaction?

The acquisition is subject to standard regulatory approvals, including sign-offs from the Securities and Exchange Commission (SEC), the Hennessy Funds Trust Board of Trustees, and the Listed Funds Trust Board of Trustees, under whose umbrella the STFM ETFs currently operate.

Additionally, the deal requires shareholder approval from existing STFM ETF investors. Given the transaction’s structure, it has been designed as a tax-free reorganization under the Internal Revenue Code of 1986, meaning shareholders should not recognize any capital gains or losses as a result of the transition.

This tax-efficient structure is intended to provide a seamless transition, minimizing any financial disruptions for investors while integrating the ETFs into Hennessy’s portfolio.

How Will This Acquisition Impact Hennessy Advisors’ Market Position?

For Hennessy Advisors, the acquisition of the STFM ETFs represents more than just an expansion—it is a strategic move to deepen its foothold in the competitive ETF market. As the industry continues shifting toward cost-effective, diversified, and actively managed investment strategies, Hennessy’s decision to acquire these funds reflects a broader effort to align with investor preferences.

With approximately $220 million in assets under management, these funds will contribute to Hennessy’s overall asset base, increasing its market competitiveness in the ETF landscape. Given the industry-wide trend of traditional asset managers expanding into ETFs, this acquisition signals Hennessy’s commitment to adapting to changing investor demands while reinforcing its long-term growth trajectory.

What’s Next For Hennessy Advisors?

As Hennessy Advisors integrates the STFM ETFs into its investment offerings, the firm is expected to leverage its existing distribution network to attract more investors to its ETF products. Given the rising popularity of actively managed ETFs, this acquisition may pave the way for further ETF-related expansions within Hennessy’s broader growth strategy.

Investor sentiment toward Hennessy Advisors’ stock will likely depend on how effectively the firm manages the transition and integration of the acquired funds. If the firm successfully retains existing ETF investors while expanding its ETF client base, the transaction could provide a boost to its overall market valuation.

As the financial industry continues evolving, asset managers like Hennessy Advisors must navigate the shifting dynamics of investment management, balancing traditional strategies with innovative, actively managed solutions. This acquisition marks a pivotal step in Hennessy’s broader strategic expansion, reinforcing its commitment to long-term growth and investor value creation.