Pacer ETFs president Sean O’Hara has revealed its expansion plans for “Europe and beyond” including targeting the “vibrant” demand for the UCITS platform in the US.
O’Hara (pictured) said the group reached “sufficient scale” in the US after hitting $35bn assets under management (AUM) at the end of 2023 and was now ready to target other growth markets.
Earlier this week, ETF Stream revealed the Pennsylvania-based asset manager was planning to launch four ETFs from its flagship Cash Cows range in Europe, having set up an investment advisory business in Dublin.
“We now have sufficient scale so when we think about growth opportunities beyond the US, there are little side pockets where we can gather additional assets,” O’Hara said.
“We have expansion plans for Europe and beyond, but there is also a pretty vibrant market in the US for investors who prefer the UCITS structure, non-resident citizens who have relationships with US-based financial advisers.”
Demand for the UCITS structure in markets such as Mexico, Brazil and other South American countries has grown in recent years due to recognition of its regulatory and governance structure, as well as preferential tax treatment of UCITS vehicles versus the US’s ‘40 Act’.
Major European issuers have started to cross-list ETFs on the Bolsa Mexicana de Valores (BMV) over the past two years as demand has grown.
O’Hara added the firm was yet to fully establish its marketing and distribution plans for the “disjointed” $1.8trn European ETF market but was confident there would be demand for its Cash Cows range.
“We will have to see what the real plans look like for Europe,” he said. “The challenge is the market is disjointed and every country is a little different.
“We will have to think really carefully about what our plans for distribution in Europe, whether that is our boots on the ground or working with somebody else that could potentially market the products.”
Whatever route the group decides to take, O’Hara is confident of its unique offering.
“I do not think there is anything like the Cash Cows strategy in Europe. There are a lot of copycats coming but it is a fairly unique strategy that has performed well,” he said.
“We assume the same will be attractive to European, Mexican or Brazilian investors.”
To protect itself from potential copycat issuers, the group filed to trademark its flagship range with the UK government in March last year.
The range has fuelled growth for the ETF issuer in the US over the past two years, with total AUM growing from $10bn in January 2021 to $35bn by the end of last year.
