Industry Updates

ETF Wrap: Sparplan wags ETF

Savings plans driving ETF launches, a pension fund’s climate ETF fixation and a head of ETF business departing made headlines this week

Jamie Gordon

ETF Wrap

This week saw Legal & General Investment Management (LGIM) launch a multi-factor equity ETF designed specifically to be used in ETF savings plans, in a move that may be the beginning of a ‘tail wags dog’ dynamic whereby portfolio solutions drive product launches. 

The L&G Gerd Kommer Multifactor Equity UCITS ETF (GERD) listed on the Deutsche Boerse with a total expense ratio (TER) of 0.50%. 

The launch sees LGIM partner with and leverage the brand of Munich-based wealth manager Gerd Kommer Invest, offering investors exposure to the Solactive Gerd Kommer Multifactor Equity index of 5,000 stocks of all sizes across developed and emerging markets. 

GERD is available via German online broker Scalable Capital with transaction fees waived for investors through savings plans – or sparplans – and a minimum investment threshold of €10. 

With a recent BlackRock and YouGov survey predicting an additional two million Germans will invest in ETFs in the next 12 months – and 20 million expected to use savings plans by 2026 – it is not unreasonable to assume asset managers will gear future launches to tap into this retail opportunity, or fill gaps in existing sparplans.  

Indeed, LGIM also partnered with Widiba Bank in May to distribute its thematic ETFs to Italian end clients. It is not inconceivable to think issuers fill gaps in their roster ahead of future pushes into new regions. 

BlackRock has also partnered with Scalable Capital and Amsterdam-based Bux to offer savings plans based on its ETFs.  

Given other issuers do not have BlackRock’s breadth of product range, it might be a natural move for some issuers to launch additional ETFs to have the suite necessary to offer ready-made portfolio solutions to digital platforms. 

In 2020, for instance, Vanguard wrapped its popular funds-of-funds LifeStrategy suite within ETFs to provide access to German and Italian investors. 

While Vanguard has yet to partner with a third-party digital broker to offer ETF portfolios, its head of European distribution Robyn Laidlaw told ETF Stream: “If we thought there was a way we could work together to get these kinds of solutions out to clients in Europe under a partnership model, we would be very interested in exploring that further.”  

Climate collector 

This week also saw the Amundi MSCI Europe Climate Action UCITS ETF (AE5B) list on the Deutsche Boerse with a total expense ratio (TER) of 0.09% and €500m in seed from Finnish pension fund Ilmarinen. 

The investment marks just the latest “anchor” investment by the Helsinki-based manager after it provided a $2.1bn seed for the US-listed Climate Conscious & Transition MSCI ISA EYF (USCL) and $800m for the Tokyo-listed iShares MSCI Japan Climate Action ETF (2250). 

It also comes after Ilmarinen rotated $2bn out of a DWS ESG ETF to seed the Xtrackers MSCI USA Climate Action Equity ETF (USSC) in April. 

Prior to AE5B’s arrival, 85% of Ilmarinen’s passive equity portfolio was already invested climate-based strategies. The pension fund also contributed to the development of the MSCI climate action indices underlying the four recent ETF launches. 

Investment in a UCITS ETF to access European equities is in line with Ilmarinen’s policy to purchase ETFs that trade the same hours as their underlying equity exposure. 

SPDR man 

State Street Global Advisors (SSGA) bid farewell to the head of their SPDR ETF division, marking an end to a career spanning 35 years in financial services. 

Robin Tobin will step down as global head of SPDR and head of EMEA in March next year after five years at the helm and a total of 10 years at the firm. 

He first entered the business in 2014 as head of European distribution before co-leading SPDR ETFs from 2016 to 2018.  

SSGA said Tobin will remain in charge until a successor is named. 

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

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