Industry Updates

ETF Wrap: Another European giant enters crypto

A DWS crypto partnership, AXA IM eyeing fixed income and Vanguard’s UK retail platform growth made headlines this week

Jamie Gordon

ETF Wrap

This week marked another entry into the crypto space of a European behemoth after DWS entered a “strategic alliance” with digital asset manager Galaxy.

The German asset manager said it would launch a “comprehensive suite of ETPs”, joining the likes of Invesco, Fidelity and WisdomTree which are already active in the European exchange-traded product (ETP) space.

The move into digital assets also means another of the continent’s largest issuers is looking to offer crypto products after BlackRock launched a spot bitcoin trust for its US clients and partnered with Coinbase to offer institutional investors access to bitcoin last year.

Interestingly, Europe’s second-largest ETF issuer, Amundi, told ETF Stream last year it could not rule out investing in non-fungible tokens (NFTs) but described crypto as a “systemic risk”.

While Bloomberg reported DWS was in talks to acquire minority stakes in crypto ETP issuer Deutsche Digital Assets (DDA) and market maker Tradias, the firm’s CEO Stephan Hoops took to LinkedIn earlier this month to declare most crypto coins are “between worthless and fraudulent”.

After noting DWS parent company Deutsche Bank sold its online payments business back when eCommerce was “mostly porn and gambling”, Hoops acknowledged the “impressive growth stories” of Amazon and PayPal that followed and added “we are convinced that investor interest in digital assets is here to stay”.

In particular, Hoops said: “We believe in the future of a tokenised economy which will disrupt the current market structure.”

BlackRock’s founder, CEO and chairman Larry Fink said at the end of last year that tokenisation would be “the next generation for securities” before the firm’s S&P 500 UCITS ETF was tokenised by Swiss firm Backed Finance in February.

Outside of ETPs, tokenisation as an access vehicle for investments could prove revolutionary, given its in-theory ability to fractionalise even real assets such as property and provide such exposure to any kind of investor, anywhere, on a 24/7 basis via T+0 settlement.

While many baby steps need to be taken to get the pipework and custody of such vehicles right, if achieved it could be the next major battleground for rapid expansion in asset management.

AXA IM turns gaze to fixed income 

AXA Investment Management’s global head of ETF sales Olivier Paquier told ETF Stream the firm is looking to launch its first bond ETF this year and declared “we live in a fixed income era”. 

He added the firm will look to bring “something new” via its active offering and will prioritise launches based on what its ETF users want. 

The firm entered European ETFs last year with active thematic biodiversity and climate strategies, before debuting Europe’s cheapest Nasdaq ETF, the $417m AXA IM Nasdaq 100 UCITS ETF (ANAU) last November. AXA IM now boast over $1bn assets under management (AUM) within a year of entering the market.

ETFs drive Vanguard UK retail success 

Vanguard announced its UK Personal Investor (UKPI) platform has hit 500,000 users since launching in 2017.

During the same time, ETFs’ share of Vanguard UK assets has more than doubled form 9% to 20% at the end of last year, showing strong demand for the wrapper among UK retail clients. 

Vanguard launched its first UCITS ETFs in 2012 and its current 34-strong range houses more than €84bn AUM. Another evolution has been the 7.6% allocation to ETFs within the firm’s cult favourite $44.2bn LifeStrategy fund of funds suite. 

Between standalone products and portfolio inclusion, ETFs likely represent almost 25% of all Vanguard UK assets invested via professional and retail clients.

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