Who Might Buy iShares?

March 16, 2009

A lot of people called me yesterday to ask who might buy iShares. The short answer is, I don't know. But like everyone, I can't help but speculate.

I know my more serious colleagues—Jim Wiandt and Murray Coleman—will accuse me of falling short of the desired journalistic reserve. To that, I plead guilty. The list of potential suitors I lay out below is rank speculation, based on nothing more than my intuition about the industry and a few silly hunches.

But the fact that Barclays is shopping iShares around is big news in the ETF industry. There are important ramifications. And besides, this is a blog, and if I can't speculate here ...  

So let's get it out of the way. Here is my list of potential suitors. This is borrowed from my own speculation, and that reported by John Spence and others in the media yesterday:

  • Big Broker-Dealers: Goldman Sachs, J.P. Morgan, Morgan Stanley
  • Big Banks: State Street, Deutsche Bank, Northern Trust
  • Brokers: Charles Schwab
  • Fund Companies: Fidelity

There are a dozen more options, including private equity firms, but those are some of the hot names.

Make no mistake: iShares would be a jewel for any of them. It controls 46% of all ETF industry assets, including six of the top 10 funds. Its iShares MSCI Emerging Markets ETF (NYSE Arca: EEM) is the second-highest grossing ETF in the world, pulling in over $110 million per year; only the SPDR Gold Shares (NYSE Arca: GLD) does better, grossing $125 million. And it sits at the heart of one of the fastest-growing segments of the financial services industry.

Whoever buys iShares, assuming it's sold, I hope for one thing: They continue pouring money and effort into educating investors about ETFs. The ETF industry has been built in large part on the outreach efforts of iShares, and it would be a shame to lose that.

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