Industry Updates

UBS AM ETF arm set to leapfrog Vanguard following Credit Suisse acquisition

Swiss asset manager would become fourth largest European ETF issuer

Theo Andrew

UBS banks

UBS Asset Management could leapfrog Vanguard to become the fourth-largest ETF issuer in Europe following the acquisition of Swiss rival Credit Suisse.

A merger of the two asset manager’s ETF businesses would see UBS AM house €89bn assets under management (AUM), overtaking Vanguard’s €85.1bn ETF AUM, according to data from Refinitiv.

It comes after UBS announced it would acquire Credit Suisse on Sunday in a deal worth $3.25bn as rapidly rising interest rates led to the collapse of several banks in the US before spreading to Europe.

While the fate of Credit Suisse’s ETF arm is still uncertain, the merger is likely to increase competition within the European ETF industry which is already highly concentrated.

The firm is currently the 15th biggest in Europe and ranked sixth in flow per ETF, according to data from Bloomberg Intelligence.

Detlef Glow, head of Lipper EMEA research at Refinitiv, said the deal will have a large impact at the top end of the European fund industry, giving UBS AM the impetus to battle for a top-three spot.

“Competition for the largest three ETF promoters in Europe may heat up further, as the new UBS may become ambitious to become Europe’s third largest ETF promoter,” he added.

Following the acquisition, UBS AM would be €42bn behind third-place DWS which currently have a market share of 10.1%. Amundi is a further €43bn ahead with a market share of 12.6%.

All three would still lag substantially behind BlackRock’s iShares business which has a market share of 44.2% with an AUM of roughly €564bn. BlackRock was reported to have lined up a rival bid to takeover UBS over the weekend, a move it denied.

Should UBS AM overtake Vanguard it may find it difficult to remain there for too long. The passive giant posted strong inflows in 2022 despite choppy markets, even outpacing BlackRock in Q3 inflows last year.

However, Glow said he expects UBS AM’s ETF arm to benefit from cost savings and economies of scale following the deal.

“UBS already announced that it sees a huge potential for cost savings after the merger,” he said. “One can expect that the new UBS will merge a number of funds and ETFs from Credit Suisse into existing UBS products to save administrative costs and to unlock economies of scale for the acquiring funds.”

DWS had previously stated ambitions to regain the number two position in Europe from Amundi by 2025 as part of its latest strategic growth plan.

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