Industry Updates

ETF Wrap: Trailblazer sells up after two decades

The Mirae Asset global expansion, Europe's new white label issuer and BlackRock's democratised voting scheme made headlines this week

Jamie Gordon

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As the Australian arm of ETF Securities’ business is acquired by Mirae and Global X, we are reminded of how much reach a few products and individuals can have and just how far an industry can develop in 19 years.   

In 2003, ETF Securities launched its flagship Gold Bullion Securities product – the world’s first gold ETF – on the Australian Securities Exchange, marking the start of an expansion that would see the issuer span three continents. 

Over almost two decades the firm notched up several firsts, including the world’s first physically-backed commodity exchange-traded product (ETC), first commodity platform, first gold product to offer physical redemption, first carbon ETF and more. 

After breaking through $30bn assets under management (AUM) by the end of 2012, the issuer sold its white label business, Canvas, to Legal & General Investment Management in 2017, before its US and European issuance businesses were acquired a year later by Aberdeen Standard and WisdomTree, respectively.  

While some of the firm’s staff have gone on to shape the industry in some of the largest issuers, others now lead disruptive providers targeting areas such as thematics, crypto and leveraged products, via HANetf, Rize ETF, Leverage Shares and others. 

In the final months before its acquisition by Mirae Global Investments and Global X, the last arm of ETF Securities remained active with several thematic launches and in May notched up its last ‘first’ as an independent firm, debuting Australia’s first crypto ETFs. 

While the firm’s founder, Graham Tuckwell, is expected to step away from the business completely, Global X CEO Luis Berruga told ETF Stream his firm does not plan to make any other changes to the company’s management, however, he suggested a rebrand could be on the cards in future. 

As for Tuckwell, his involvement in ETF businesses in Europe and the US will continue, including his ongoing push to take a seat on the board of WisdomTree, which is currently 10.5% owned by his venture investment house ETFS Capital. 

New white label contender 

On Monday, ETF Stream revealed the somewhat under-the-radar arrival of only the second issuer offering white labelling services in Europe. 

Leverage Shares listed the Kronos Strategy ETP (KRON) on the London Stock Exchange last Friday and using active management from Mourelle Investments, the product rotates between up to 1.5x leveraged and -1.5x short positions on the S&P 500 to outperform US equities. 

The move is significant as Europe’s white label space has to date been dominated by HANetf, which amassed $3bn in AUM in the three years following the launch of its first product. 

Leverage Shares could be set to offer a convenient alternative to white labelling active strategies in Europe. Though HANetf already offers an active strategy, there appears to be friction in bringing third-party active strategies into UCITS ETF format, an issue Leverage Shares does not face with its non-UCITS exchange-traded product (ETP) structure.  

The trade-off with this of course is the loss of the UCITS regulatory framework, which is a valuable element for many professional investors. 

BlackRock kicks its democratised voting up a gear 

In a significant moment for those on either side of the ‘passive has gone too far’ debate, BlackRock has decided to extend its Voting Choice scheme to products housing $2.3trn of AUM, or 47% of the firm’s index-tracking equity assets. 

The decision followed investors with $120bn in BlackRock products choosing how to conduct their voting – either self-directed, proxy, at BlackRock’s discretion or a hybrid approach – in just the first five months since the initiative launched. 

Another significant addition to the scheme is a pilot scheme in the works to allow all investors in BlackRock mutual funds, including individuals, to exercise choice in how their votes are cast. If successful, it could mark the first step in truly democratised index investing. 

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

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