Myth-busting: ETF share classes explained

Where does the Vanguard-style ETF share class trend take the European ETF industry?

Theo Andrew

HSBC Asset Management’s decision to create ETF share classes on four index funds last month turned heads across the industry but there is still much confusion about what it means for ETFs.

Speaking to ETF Stream, Andrew Craswell, European head of ETF services at Brown Brothers Harriman (BBH), busts some of the myths around ETF share class creation and why major players may decide to follow suit.

For years, asset managers have had the ability to combine ETF capability with their mutual funds, so why is it happening now?

“What is driving the interest from a European perspective is the broader trend in asset management, which is the need to drive scale and efficiency in your operating model to deliver investment solutions to clients,” Craswell said.

“Secondly, ETFs have been capturing a lot of the flows and strategically asset managers are having to look at ways to enter the ETF market and deploy a strategy to investors in new ways.”

In this interview, Craswell also discussed:

  • The impact on investors

  • Regulatory and operational complexities

  • The convergence of mutual funds and ETFs

  • Tax implications for investors

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