Over on the U.S. site, Matt Hougan recently joined the iShares speculation. Of course, I'm above that sort of thing, though I finally did get around to making a few phone calls to hear what all the buzz was about. And I'll tell you what, it's definitely a hot topic in the ETF business now.
I'm not sure I would go with Hougan's recommendation, given his recent track record of losing ETF investors heaps of money.
To me, the sexiest and most sensible of the deals that Matt lays out would be a real blue-chip branding exercise, ideally with a bank that won't go insolvent in the coming months. In terms of names, J.P. Morgan and Goldman Sachs both have a nice ring to them. BOTH are not out of the woods, though, in terms of the financial crisis. And neither they, nor State Street, nor Schwab, nor Fidelity would be able to pull off that deal at any sort of reasonable price without some financing help.
Thinking of it being State Street or Northern Trust is just ... weird, and seems extremely unlikely on its face. I guess stranger things have happened. But the tangle of products, coupled with a State Street stock price that has not exactly been a rock either, together with Northern Trust just bailing out of the NETS, make those seem like a wild reach to me.
And something tells me that Barclays is not going to be shuffling out arguably its current crown jewel at fire-sale prices. So my money says no deal happens and that the bank gets its begging bowl out at the door of the UK taxpayer, like all the rest.
The deal that seems most likely to me would be effectively a spin-off-type deal with private equity involved. That's one maybe I could see. You just have to look around and think about who's got money. XinShares anyone? There must be some way to put some Chinese sheen into the ETF world. Certainly that's interesting, but somewhat hard to imagine politically, as might be Sheik Shares.
OK, so after saying I wouldn't speculate, I've done it—opening it up for Paul, because I KNOW he's dying to speculate himself on the deal that could radically alter not just the ETF business, but the investing business.
Here are a couple of other key links on the deal (and if you Google it, you'll find plenty more speculation):
From the Times and MarketWatch U.K.