ETF M&A Heats Up

August 25, 2020

With more than 2,300 products now on the market, it's clear that unless you're BlackRock or Vanguard, simply showing up and offering an ETF isn't enough to attract investors.

That's why many small- and midsized ETF issuers have decided to acquire their way to growth. Over the past 18 months, firms like Invesco, WisdomTree and Global X have aggressively snapped up smaller or same-size firms to increase their invested assets, gain access to new markets and diversify their product offerings.

Even boutique issuers have done the same, with Pacer Financial, Alpha Architect and Roundhill Investments purchasing low-asset ETFs to broaden their lineup.

"We're on pace for record ETF inflows this year, but the rising tide hasn't lifted all boats," said Todd Rosenbluth, director of mutual and exchange-traded fund research at CFRA Research.

"A number of firms that have seen success are now finding opportunities to pick up existing products, presumably on the cheap," he added. "Meanwhile, smaller, independent issuers will have to decide whether they can survive long enough for the pendulum to swing back their way."

Brisk M&A Activity In ETF Industry

So far this year, FactSet Research has flagged 23 ETFs that have experienced or will soon experience some form of M&A activity, whether it's changing fund ownership, consolidation of multiple ETFs into a single fund, or even—in the case of the ETFMG Prime Cyber Security ETF (HACK) and the ETFMG Prime Mobile Payments ETF (IPAY)—being acquired as the result of a lawsuit.

 

ETF M&A Activity, Announced Or Actual, YTD 2020
Old ETF Name New ETF Name Summary of Action Effective Date
CSOP FTSE China A50 ETF (AFTY)  Pacer CSOP FTSE China A50 ETF (AFTY) Pacer Acquires AFTY from CSOP January 23
Reality Shares DIVCON Dividend Guard ETF (GARD) Reality Shares DIVCON Dividend Defender ETF (DFND) GARD's assets merged into DFND, and GARD shut down March 27
First Trust Value Line Dividend Index Fund (FVL) First Trust Value Line Dividend Index Fund (FVD) FCAN's assets merged into FDT, and FCAN shut down Q2 (Delayed)
Knowledge Leaders Developed World ETF (KLDW) No change Knowledge Leaders Capital acquired fund from Exchange Traded Concepts May 18
The Deep Value ETF (DVP) Roundhill Acquirers Deep Value ETF (DEEP) Roundhill buys/brings in existing manager to manage new ETF. June 22
First Trust Canada AlphaDEX Fund (FCAN) First Trust Developed Markets ex-US AlphaDEXFund (FDT) FCAN's assets merged into FDT, and FCAN shut down Q2 (Delayed)
First Trust Australia AlphaDEX Fund (FAUS) First Trust Developed Markets ex-US AlphaDEXFund (FDT) FAUS's assets merged into FDT, and FAUS shut down Q2 (Delayed)
First Trust Hong Kong AlphaDEX Fund (FHK) First Trust Developed Markets ex-US AlphaDEXFund (FDT) FHK's assets merged into FDT, and FHK shut down Q2 (Delayed)
First Trust South Korea AlphaDEX Fund (FKO) First Trust Developed Markets ex-US AlphaDEXFund (FDT) FKO's assets merged into FDT, and FKO shut down Q2 (Delayed)
First Trust Mega AlphaDEX Fund (FMK) First Trust Dow 30 Equal Weight ETF (EDOW) FMK's assets merged into EDOW, and FMK shut down Q2 (Delayed)
Salt High truBeta US Market ETF (SLT) Pacer Salt High truBeta US Market ETF (SLT) Pacer Acquires Salt Financial ETFs, assumes management September
Salt Low truBeta US Market ETF (LSLT) Pacer Salt Low truBeta US Market ETF (LSLT) Pacer Acquires Salt Financial ETFs, assumes management September
ETFMG Prime Cyber Security ETF (HACK) ISE Cybersecurity ETF (HACK) Post-lawsuit, Exchange Traded Concepts assumes management from ETFMG H2
ETFMG Prime Mobile Payments ETF (IPAY) ISE Mobile Payments ETF (IPAY) Post-lawsuit, Exchange Traded Concepts assumes management from ETFMG H2
Gadsden Dynamic Multi-Asset ETF (GDMA) No change Alpha Architect acquiring ETF from ETF Series Solutions Trust Q4
Reality Shares Nasdaq NexGen Economy ETF (BLCN) Siren Nasdaq NexGen Economy ETF (BLCN) Siren ETFs acquiring fund from Reality Shares October 18
Reality Shares DIVCON Dividend Guard ETF (GARD) Siren DIVCON Dividend Guard ETF (GARD) Siren ETFs acquiring fund from Reality Shares October 18
Reality Shares DIVCON Leaders Dividend ETF (LEAD) Siren DIVCON Leaders ETF (LEAD) Siren ETFs acquiring fund from Reality Shares October 18
Goldman Sachs Data-Driven World ETF (GDAT) Goldman Sachs Innovate Equity ETF GDAT's assets merged into new ETF, and GDAT shut down November 6
Goldman Sachs Finance Reimagined ETF (GFIN) Goldman Sachs Innovate Equity ETF GFIN's assets merged into new ETF, and GFIN shut down November 6
Goldman Sachs Human Evolution ETF (GDNA) Goldman Sachs Innovate Equity ETF GDNA's assets merged into new ETF, and GDNA shut down November 6
Goldman Sachs Manufacturing Revolution ETF (GMAN) Goldman Sachs Innovate Equity ETF GMAN's assets merged into new ETF, and GMAN shut down November 6
Goldman Sachs New Age Consumer ETF (GBUY) Goldman Sachs Innovate Equity ETF GBUY's assets merged into new ETF, and GBUY shut down November 6

Sources: ETF.com, FactSet; data as of Aug. 20, 2020

 

Although M&A activity concerning individual funds began to pick up roughly 18 months ago, ETF firms merging or buying one another have been a significant growth driver for almost a decade.

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