Martin Gilbert, chair of Revolut and former co-CEO of Standard Life Aberdeen, has identified smaller ETF issuers as an “obvious place to go” for acquisitions while expressing his admiration of ETFs in general.
Speaking at ETF Stream’s ETF Ecosystem Uncovered event, Gilbert was discussing the strategy of his new venture AssetCo, a shell company that established the consolidation of fund group.
Earlier this year the company began its buying campaign and acquired Edinburgh-based Saracen Fund Managers, with £120m in AUM, for £2.75m.
“We would love to move into ETFs but there is probably no providers small enough, our market cap [for targets] is £100m,” said Gilbert. “We are just looking at consolidating a bit at the boutique level and bringing them together, adding our expertise which is really in distribution.”
“There are many very good asset managers out there doing a great job that cannot understand why they are not bigger. But performance does not sell which is where we hope we can help. There is scope for consolidation at that level.”
However, ETF Stream founder and FT columnist David Stevenson pointed out that there were still several ETF providers in the US and Europe with small asset bases of around £300m to £500m.
“That is an obvious place to go,” responded Gilbert. “I am positive on the ETF sector, and I am especially positive on active ETFs. It is a great wrapper.”
ETFs may also feature in another of Gilbert’s ventures, with challenger bank Revolut which he joined in 2019. Although there are no set plans as of yet, Gilbert said the team had been increasingly considering an expansion into asset management with ETFs playing a natural part in this.
“If Revolut goes into asset management, with its 15-20 million customers that is a serious player in the market,” he said when referring to the upcoming inheritance shift of money that could see some incumbents lose money to challenger brands.
“We ponder asset management a lot. Inevitably you have to go in at some stage. If they did go in, they would go at low cost. ETFs would be the ideal product to offer and a natural progression to the trading we already do.”
Gilbert, who founded Aberdeen Asset Management in 1983, has long been a fan of ETFs and admits he wishes he had been involved in them sooner.
His old firm Aberdeen Standard Investments has signalled its intentions in the European ETF space following the appointment of Lyxor's Chanchal Samadder as head of ETF sales strategy.
“One of the mistakes I made was not really realising how big they would get,” he reflected. “I think asset managers should have an ETF business; it is the future.”