Global X CEO Luis Berruga has revealed the group’s grand plans after it broke into the Australian market with the acquisition of ETF Securities Australia yesterday.
Speaking to ETF Stream following the acquisition, Berruga said it would be “business as usual” – at least in the short term – following the completion of the deal which he likened to Mirae Asset Global Investments’ purchase of Global X in 2018.
Since then, Global X has established itself as a worldwide player, running ETFs in the US, Brazil, Canada, Colombia, Europe, Hong Kong, India, Japan, Korea, Vietnam and now Australia. In that time, the business has grown tenfold from $8.5bn in assets under management (AUM) to $85bn.
“I can see myself in their shoes four years ago. Mirae took a very good approach, they were always trying to empower local management to continue to do what they were doing before.”
Berruga was chief operating officer of Global X at the time it was acquired by Mirae but was soon promoted to CEO with its entire senior management team remaining in the business.
Business as usual, for now
While outgoing executive Graham Tuckwell will step completely away from the business, the senior management team comprised of head of product, Evan Metcalf, head of portfolio management, Cliff Man and head of distribution, Kanish Chugh, will remain in place.
“Our plan for Australia is to just continue to do the same. I think we can bring a lot to the table regarding our thematic and digital asset expertise,” he said. “We do not have any plans to change anything and we trust the local management team.”
“In the short-term, our goal is to continue to hire talented individuals and launch products. We will start working together, but I want the business to preserve its independence.”
On whether ETFS Australia was likely to rebrand to Global X Australia, Berruga said it was a possibility but was keen to stress it did not want to move too fast too soon.
“It could happen, but you don’t want to acquire a business and right away do something to disrupt the growth trajectory of that business,” he said. “If, six months from now, we sit with the local management team and say, ‘Global X is one of the most trusted and admired ETF brands in the world, do we think it will be net positive for the business to unpack the brand?’, we will collectively make that decision.”
He added: “Over the next three to six months we will work together with the local management team to figure out ways in which we can help them, mostly from a development, marketing and research standpoint, these are the things we have traditionally done very well in the US and Europe.”
Berruga said the deal for ETFS – which houses A$4.7bn in AUM – is the missing link in its quest to become a truly global ETF player.
“It is a very small industry and we have very tight relationships, so it pretty much happened organically. We were looking for opportunities in Australia and at the same time Graham Tuckwell was already thinking about a potential exit from the business,” he said.
“There were no investment bankers, it was a transaction that happened between Graham and our team at Global X and went through very efficiently. We were able to close the transaction quickly because we knew each other very well.”
As the third biggest ETF market globally, behind the US and Europe, there is no doubt about the growth potential of the Australian market, which grew by 30% in 2021, according to Berruga.
“There is huge potential because more and more financial advisors and retail clients are embracing ETFs as the investment vehicle of choice, we are very optimistic the adoption is going to continue to grow significantly,” he said.
Furthermore, Berruga highlighted the favourable regulatory framework of the market, following the launch of the first spot bitcoin and etheruem ETFs in May.
“Because of the forward-thinking approach of the investment community to institutional clients, financial advisors, retail clients, our value proposition around thematics, digital assets and unique exposures to commodities are really attractive,” he said.
Berruga added that ETFS Australia already had several products in the pipeline which are set to launch “over the coming weeks”, but that it would then assess with the local management team which of Global X’s product range would be most appealing to an Australian investor base.
“It will be a conversation,” he said. “But I am sure we will identify several opportunities that are not being offered in Australia that we will want to bring to market over the coming months.”
While Global X is a dominant force in the thematic space in the US – holding 35 thematic ETFs – nowhere is its ability to grow quickly more apparent than its recent expansion across Europe. Over the last 18 months, the group has grown its product range to 25 ETFs with a combined AUM of $500m.