Industry Updates

ETF Wrap: Active ETFs lure Robeco

Robeco’s entry to European ETFs, HSBC AM’s dedication to ETF share classes and Dimon’s 7% interest rate warning made headlines this week

Jamie Gordon

ETF Wrap

This week saw Dutch asset manager Robeco enter the European ETF space in hopes of capitalising on the buzz surrounding active ETFs.

The firm poached Nick King from Fidelity to lead its entry into the new product segment and plans to launch its first UCITS ETFs in Q2 2024.

Now head of ETFs at Robeco, King previously joined Fidelity in 2015 to lead the US asset manager’s Europe ETF push.

Robeco, which currently manages €181bn assets, has already outlined its primary focus will be on the “nascent” active ETF space, with little over 100 products comprising around €25bn assets under management (AUM) in Europe.

The news comes within days of Cathie Wood’s ARK Invest entering the European ETF space with its £5.25m acquisition of Rize ETF.

The buy-up will see Rize ETF rebranded to ARK Invest Europe, becoming a springboard for Wood to bring some of her US-listed active ETF suite – which currently houses $25bn – to Europe.

The deal will also see AssetCo and ARK partner to launch ETFs on behalf of AssetCo-owned mutual fund manager River and Mercantile.

Last month, Lisa Mantil, global head of Goldman Sachs ETF Accelerator, told ETF Stream her team hopes to have its first ETF in partnership with a European client launched by the end of the year.  Mantil added the firm’s focus will be on providing the pipework for institutional clients to bring active IP into the ETF wrapper.

Recent weeks cap off what will likely be known as a transformational year for active ETFs in Europe, with AXA Investment Managers and abrdn also launching their debut active ETFs in the second half of 2022.

ETF share class fixation 

HSBC Asset Management announced it will exclusively use ETF share classes to expand its fixed income ETF range with future launches, having listed the first such structure on its ICAV earlier this year.

The firm views creating an ETF share class of existing mutual funds – rather than launching sub-funds in a distinct umbrella – a “much more efficient” way to expand its range.

After launching its first ETF share classes, HSBC AM became a top 10 fixed income issuer in Europe after adding $6bn AUM to its range.

The firm is unlikely to follow the same model on its equity index funds given the US double taxation treaty which only applies to ETF umbrellas domiciled in Ireland.

Dimon warns of 7% rates 

JP Morgan CEO Jamie Dimon this week said the world is not ready for a 7% Federal Reserve funds rate.

After 11 consecutive Fed rate hikes to a range of 5.5%, Dimon warned the worst of the damage to consumers and markets could come from the possibility of an additional 1% to 1.5% additional rate hikes.

While the 10-year US Treasury is currently near a 4.55% yield, technical targets for this cycle get as high as 6.8%. These “war games” by strategists are not reality but a consideration of a wide range of potential outcomes.

Dimon’s warning coincides with a recent tactical and strategic positioning paper form the BlackRock Investment Institute, which struck a similar tone by forecasting a ‘higher for longer’ rates scenario even after several central banks chose to keep rates steady at policy meetings this month. 

It then called on the Federal Reserve and its peers to “keep a lid on growth to avoid resurgent inflation”.

ETF Wrap is a weekly digest of the top stories of ETF Stream


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