Global ETF Service
Brown Brothers Hariman
The future for ETFs looks bright in Europe. Global assets are gaining traction, currently hovering around $3 trillion, and have surpassed hedge fund total assets this year. New providers are entering the market, and advisers are dipping a toe into more exotic waters, including smart beta. Although hurdles remain on the horizon, like fragmented liquidity across Europe and a lack of comprehensive ETF information to help investors choose a product, it seems clear that growth will continue.
ETF Report UK interviewed 123 investors, of which 63% were IFAs, between May and June this year to find out what challenges they face, where they want to see more innovation and what they consider to be the biggest benefits of ETFs. Andrew Craswell, vice president, Global ETF Services at Brown Brothers Harriman, and the ETF team partner with ETF sponsors to consult and provide critical custodial and operational services. BBH has approximately $308 billion in ETF assets under custody as of June 2015. Craswell helps ETF Report UK analyse the survey results.
What did you think was the most interesting result of the survey?
I thought it was interesting that 98% of the respondents intend to maintain or increase their allocation to ETFs over the next 12 months. This is a reflection of the hard work carried out by ETF issuers and the industry to promote the benefits of ETFs to all investor types.
Slightly contrary to the previous point, nearly 50% of respondents stated that they received no calls from ETF salespeople in any given month. I think this highlights there is still some work to be done around promoting the ETF story in Europe.
In the US, flows into ETFs have now overtaken mutual funds, and a number of successful US ETF issuers—like Vanguard, WisdomTree, First Trust, Invesco PowerShares—are positioning themselves for growth in Europe by establishing UCITS platforms. There is still room for new issuers to come to market with their own products, particularly asset managers that may already have strong distribution capabilities and brand awareness in Europe.