AXA Investment Managers has revealed its ambition to become the leading active ETF issuer in Europe following its hotly anticipated entry into the market earlier this week.
Speaking to ETF Stream, Hans Stoter, global head of AXA IM Core, said it is the perfect time for its newly launched ETF platform to enter the burgeoning active ETF market in Europe, which will sit alongside and be able to leverage its mutual fund offering.
The platform launch marks a re-entry into the ETF market for AXA IM after it sold its ETF business, EasyETF, to BNP Paribas Asset Management (BNPP AM) in 2009.
Easy ETF, which it co-founded with BNPP AM in 2005, now has roughly €33.8bn assets under management (AUM) across 90 ETFs and index funds.
On its return, AXA IM will be hoping to carve out a slice of the €16bn European active ETF industry, a figure that has more than doubled from €7.4bn since 2018, according to Morningstar, accounting for just 1.2% of the €1.3trn European ETF market.
“Active ETFs are still a very small part of the Europe but it is rapidly growing. Given out ambition to be one of the leaders in active ETFs, it is the right time to be entering the market,” Stoter said.
It was one of the key reasons why Waystone ETFs entered the white label market in July as it looks to utilise its active product structuring capabilities and benefit from regulatory tailwinds from the US.
While white labelling may be an attractive route for some asset manager’s looking to break into the ETF market, Stoter added the business started planning the platform after spotting the strategic opportunity “about a year ago” and wanted to have “full control over what we do and how we do it”.
“We see both product wrappers existing next to each other,” he continued. “We are not planning to change all our mutual funds into ETFs or only launch ETFs from now on.
“ETFs and mutual funds are attractive formats for our clients and one that will appeal a potentially different client base, which is exactly why we are bringing this ETF platform to life next to our mutual fund strategy.”
The ETF platform will look to benefit from the wrapper’s “enhanced liquidity and transparency”, leveraging its existing portfolio management team to select stocks for each strategy.
Stoter added the platform would not look to implement non-transparent ETFs – those that do not have to disclose their holdings daily – even if European legislators allowed, despite their popularity with active ETFs in the US.
“I hope transparency in the ETF market will stay,” he said. “It is one of the most attractive features along with the liquidity of an ETF and I see no reason why we will deviate from it.”
The AXA IM ACT Biodiversity Equity UCITS ETF (ABIU) listed on the on Deutsche Boerse on 6 September and the firm will look to distribute across more of Europe as “demand evolves”. The AXA IM ACT Climate Equity UCITS ETF will follow “in a couple of weeks”.
This includes the UK, which accounts for roughly 25% of Europe’s ETF market, according to data from Blackwater Search & Advisory.
“At this stage we are not registered in the UK and this is one of the countries where we will simply assess how client demands go for actively managed ETF strategies before making the decision to register,” Stoter said.
AXA IM’s new range of active ETFs will focus on thematic strategies with a sustainable element that will see them labelled as Article 9 under the Sustainable Finance Disclosure Regulation (SFDR) but the French asset manager hinted it will target other areas in the future.
Stoter said: “We do not wish to stop with these two ETFs and will expand the range by combining our responsible investing focus towards the asset classes that we are that we are known for, whether that is thematic equities, Sustainable Development Goal-aligned equities and also fixed income.
“We have not made any choices yet about the next ETFs we will launch. Our priority is to bring our first ETFs to life and to grow them in size. We will then listen to our clients as to what they see as attractive next steps.”
In a possible sign of what’s to come, AXA IM launched a metaverse mutual fund in April.