Wiandt: ETFs Poised To Take Centre Stage In Europe

May 22, 2014

In January of this year IndexUniverse changed its name to ETF.com - a move that has drawn attention from the ETF industry.

Founded by Jim Wiandt in 1999 with the vision of creating the central hub for information and analysis on indexes, index funds and exchange-traded funds, he acquired his first publication - The Journal of Index Issues from Dow Jones - and subsequently turned it into the Journal of Indexes.

His move into the ETF market came in 2003 when he purchased the Exchange Traded Funds Report. Since then the company has grown to include both European and U.S. versions of The Journal of Indexes and ETF Report. It has also expanded to incorporate industry conferences, including the largest ETF conference globally, and in the U.S. has developed a much sought after ETF analytics tool.

ETF.com now has 65 full-time employees around the world, with offices in San Francisco, New York, London and Quito.

Rebecca Hampson, ETF.com’s European editor, talks to Wiandt about why he has changed the brand’s name and why he considers ETFs so important.

ETF.com Why do you consider ETFs so important?

JW: They are at the centre of a fundamental change in how investors think about the markets. While investors used to think about the market in terms of alpha (whether by an active fund manager who would outperform or an individual equity that would outperform the market), the focus has shifted to beta and market exposure. I consider this switch a healthy one for investors and mirrors the way we view the investing world - which is in terms of exposures and risks.

ETF.com: Why should investors buy ETFs over other products?

JW: European investors have been hoodwinked for years into buying in-house products with high costs, distribution charges and other nonsense. Banks have wrapped simple exposures in complex packaging and charged extremely high fees as a result.

ETFs cut through all that.  ETFs offer institutional-quality exposure to virtually every asset class on the planet.  You can build a portfolio with fees that are a fraction of what you get in a traditional retail product and are more akin to the kind of fees that large sovereign wealth funds and other mega-institutions enjoy.

That’s what people deserve.

If there’s one thing that gets us fired up … one reason everyone at ETF.com comes to work each day … it’s to cut through the complex marketing pitches banks use to drive up fees and get people into better, lower-cost and more efficient products.

Investors are migrating that way anyway. Our goal is to accelerate that migration and help more investors find better products faster.

ETF.com Why did you charter a plane to the ETF.com Inside ETFs Event in Amsterdam?

JW: We chartered a plane to Amsterdam, because we believe that the ETP market needs to be built adviser by adviser, investor by investor. We were there in the U.S. before any advisers used ETFs, and now the vast majority of advisers are invested in ETFs, with hundreds of billions of dollars invested.  The way that happened was through education and really working, one by one to spread the word. Particularly in the European adviser space, ETF investing is nascent right now with a tiny amount of assets in ETFs, and many advisers knowing only with RDR that they should be looking at ETFs or ETFs or something like that.

Our goal is to bring a large new group of advisers and institutional investors to our ETF University at our Amsterdam event June 3-5 to build more knowledge of and passionate followers in ETFs and build a market that will in turn see more investors better invested, and provide us with more readers of our analysis and education and users of our data.

ETF.com: What are your plans for Europe now?

JW: We feel that as ETFs become better known that ETF.com will be extraordinarily well-positioned to help build and improve the ETP market in Europe as it blossoms.

We know it's only time until the shift in assets toward ETFs becomes a flood in Europe in the adviser then the retail investor space, and at ETF.com we'd like to speed that process!

ETF.com: What are the challenges facing the growth of ETFs in Europe. Is it simple education about what they are?

JW: Well certainly for huge swaths of potential investors, there is practically zero knowledge of even what ETFs are, let alone how they work and can be used as investment tools.  For many investors and advisers, the problem is even more basic than that.  They may not even have access to a brokerage window, which is fairly important to have if you want to buy an ETF. Or if they are advisers, they may be compensated in ways that would make it very difficult to switch to low fee ETFs.  Fortunately for European investors, much as was the case in the U.S. over the last 15 or 20 years, there are regulatory and competitive pressures that are steadily moving advisers toward fee-based compensation that generally better align the advisers interest with the end investor's interest.

Because of their high levels of efficiency, transparency and low cost, ETFs are naturally going to benefit from these trends. We believe that a sweeping adoption along the lines of that in the U.S. is inevitable, but will come unevenly...first to countries where the investing market is more developed or the regulatory pressure is stronger, such as the UK, Holland and Scandinavia and even there, we believe the sea changed is years, not months, away.  The rest of continental Europe will be even further behind because of less regulatory pressure and more closed distribution networks.  But we're obviously big believers in efficient markets and in free markets, and because ETFs offer a better mousetrap that is more likely to deliver better returns for the end investor, the shift will come. Time plus quality = market share.



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