HANetf sees exciting opportunities for active managers in ETF space

Mar 1st, 2018 | By | Category: ETF and Index News

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HANetf, a European white-label ETF platform, has urged active managers to prepare themselves for the rise of passives by launching their own low-cost products.  

European ETF industry flourishes in 2017 with 40% AUM growth

Hector McNeil, co-CEO of white-label ETF provider HANetf.

The firm, which was launched in August 2017 by ex-WisdomTree co-CEOs Hector McNeil and Nik Bienkowski, provides those asset managers seeking to enter the European ETF market with a platform to do so efficiently and at a lower cost than establishing their own in-house infrastructure.

It reduces the barriers to entry for those companies keen to issue ETFs in Europe.

Flows into ETFs have been steadily increasing for the past ten years. In Europe, the annual growth in ETF assets under management has averaged 20.1% over this period.

Some of the latest advice propositions, most noticeably online wealth managers, only invest in ETFs to keep costs down.

HANetf’s Hector McNeil suggests that one way to ensure active managers can benefit from this trend is for asset managers to launch their own versions of their top strategies.

“Asset managers need to look at what they offer and consider whether a competitor could replicate a version of their strategy in an ETF,” he said. “If the answer is yes – and there are fewer and fewer strategies that cannot be replicated in today’s market – then asset managers need to recognise this and consider creating their own ETFs.

“But this is not a defensive move – instead it is a game-changing opportunity, allowing them to distribute products in a different way and access new asset bases, particularly Millennials and cost-sensitive investors. The next generation of investors don’t shop like their parents did, they don’t consume media like their parents did, and they won’t invest like their parents did.”

More and more asset managers are expanding their ETF or passive ranges already, and McNeil expects the trend to accelerate as the ETF market continues to grow.

However, he says asset managers considering launching their own ETFs need to look carefully at what to launch, but also at what to avoid trying to replicate. 

“All active managers need to have a strategy with regards to the ETF market, and over the next few years we expect every asset manager that wants to benefit from this long-term trend to have an ETF strategist in-house,” said McNeill. “But the actual strategies launched by firms needs to be carefully considered. While it could be tempting to launch a more general ETF solution rather than focus on your best-seller, the broad index plays – such as US equities for example – are already extremely competitive on price. Rather than play that scale game, it makes more sense for asset managers to export their own IP via a lower-cost version of an existing strategy.”

Marketβeta has spotted the same opportunity. It is a soon-to-launch white-label UCITS ETF platform which provides third-party asset managers with the infrastructure to build and launch ETFs into Europe without having to establish their own full-service business.

The platform is being launched by Graeme Dewar, previously head of strategy implementation at Legal & General Investment Management and Joy Yang, former head of equities at Vanguard.

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