European ETF Consolidation ‘Inevitable’ Says SSgA Head

The head of EMEA at State Street Global Advisors (SSgA) has said that consolidation among exchange-traded fund providers in Europe is inevitable. The comment from Michael Karpik was made at an event organised earlier today to mark the 20th anniversary of the launch of the SPDR S&P 500, the world’s largest ETF.

Karpik’s comments come after a recent move by market leader iShares to increase its dominant position in Europe’s ETF market.

Earlier this month BlackRock, iShares’ parent company, announced that it had entered an agreement to acquire Credit Suisse’s ETF range. The deal, which is expected to be concluded by the summer, would see BlackRock hold 48 per cent of the overall European ETF market, or 75 percent of the market if only physically backed, rather than derivatives-based (synthetic) ETFs, are included.

Karpik said: “European investors want physical ETF product providers and in a product market that is relatively saturated there are still opportunities and we have been able to find these.”

Eleanor Hope-Bell, head of SSgA’s UK intermediaries business group, who was also speaking at the event, said: “The products we launch are specific. They have to be healthy in terms of assets and visibility.”

Reluctant to comment on any concrete plans for growth, SSgA has seen its European ETF assets under management double each year since it relaunched its fund range in 2011.

The firm still has a relatively small market share in Europe, where it is the 14th-largest provider, with a 1.2 percent market share, 44 ETFs and $4,089 billion in assets at the end of December 2012, according to data from ETFGI.

However, SSgA was ranked fourth highest in Europe for inflows last year, according to its own data, and it is the second largest provider on a global scale, according to research firm ETFGI.

According to ETFGI, on a global scale SSgA’s SPDR ETF range has 172 funds, with assets under management of $264.3 billion and a 15.1 per cent market share.

SSgA’s US-listed SPDR S&P 500 has become one of the most widely traded securities in the last 20 years and has $125 billion in assets under management.

A survey by the firm of 260 European corporate pension plans and 41 UK active fund managers showed that 47 per cent of European corporate pension plans planned to increase their allocations to ETFs over the next five years, while 42 per cent of the UK active fund managers would also increase their ETF usage in future.

Hope-Bell said: “This underlines a huge potential for ETF growth in Europe.”

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