The COVID-19 recovery has brought with it unprecedented sums of new assets into European ETFs, however, a more contentious subject is whether the issuers benefitting most from these flows are drastically increasing their headcount or merely consolidating their existing teams.
On the one hand, there are examples such as HSBC Asset Management, which has seen its assets under management (AUM) shoot up 38% so far this year, the most of any top-ten European issuer, according to data from Bloomberg Intelligence.
This coincides with the firm bringing three new senior staff into its ETF team since the start of 2021 along with an additional three new employees and 41% asset growth in 2020.
On the other hand, falling just outside the top ten largest issuers is Legal & General Investment Managers (LGIM), which, despite not making any major hire announcements since the turn of the year, has seen its AUM spike 59%.
Michael O’Riordan, founding partner at BlackWater Search & Advisory, said: “Some of the big asset managers who launch ETF businesses such as Fidelity International, Franklin Templeton, Northern Trust Asset Management and Goldman Sachs Asset Management are trying to leverage existing mutual fund staff as much as possible, the classic example being sales.
“In the past managers would hire standalone ETF sales teams but not anymore,” O’Riordan continued. “Cost is also a big thing now so hiring tends to be more on a piecemeal basis rather than a big bang approach. HSBC AM are probably the ones who have hired the most in the last year, the rest not so much.”
This was the case with Europe’s largest ETF issuer BlackRock which merged its EMEA mutual fund and ETF sales teamsin September 2019.
The same cannot be said for the smaller but growing players in European ETFs, however, where a tendency towards issuing products in fast-growing segments brings with it rapid AUM growth and the need for specialists able to develop and roll out new products.
As Claud Mitrache, founder of Jobs in ETFs, commented: “Asset classes such as fixed income and ESG have seen significant AUM growth and we have been noticing smaller ETF providers moving towards hiring technical and commercially astute relationship managers capable of articulating solutions similar to the investment team.”
Smaller issuers have also benefited from front-running the crypto exchange-traded product (ETP) battleground with CoinShares adding three to its headcount while watching its AUM shoot up 295% in 2020.
Athanasios Psarofagis, ETF analyst at Bloomberg Intelligence, spoke to the importance of issuers bolstering their sales teams: “In an industry that is constantly being flooded with new products, differentiating is becoming increasingly difficult.
“Distribution often gets overlooked versus product development but data shows that firms investing heavily in sales, distribution and marketing are having an edge.”
This fact is not lost on four-year-old white-label ETF issuer HANetf which hired five sales and marketing staff in 2020, overlapping with the launch of several crypto and thematic products and its 2,860% AUM growth.
While large asset managers can look inward for talent, allowing them to trim costs, hiring at rising stars such as 21Shares, Tabula and those already mentioned has to keep pace with product launches.
This helps grab focus with niche and creative products which sets them apart – and ensures they climb up the AUM rankings.