UBS is likely to benefit from BlackRock’s acquisition of Credit Suisse’s exchange traded fund arm (CS ETF), as investors seek to diversify and lower their exposure to just one provider, market participants say.
BlackRock, which manages the iShares exchange-traded fund range will buy the Swiss-based ETF business after Credit Suisse put it up for sale in October last year. It will give BlackRock a foothold in Switzerland, but could also see investors diversify away from the merged entity.
The purchase will see BlackRock gain $18 billion in assets and in return command nearly 48 percent of total market share in Europe, according to year-end data from research firm ETFGI.
“UBS could be the biggest beneficiary of BlackRock’s acquisition of the Credit Suisse ETF business. This is because Swiss investors are likely to want, and need, to diversify their issuer risk. The next ETF provider with a good range of products in Switzerland is UBS,” said Nizam Hamid, independent ETF and index consultant.
“ETF investors are generally big users of the iShares ETFs, so they will already be on their books. Most Swiss investors are then likely to have a Credit Suisse ETF as well and this is where the risk lies. The acquisition means that they will have too much exposure to one provider and therefore possibly too much exposure to a single counterparty or Swiss domiciled funds,” he said.
January data from ETFGI suggests that the movement has already started. In January Credit Suisse saw the largest level of outflows from its ETFs at $198 million, according to ETFGI. This compared with UBS Global Asset Management gaining the second largest level of net inflows [after iShares] into its ETFs at $842 million.
Hamid said: “We see UBS showing a very strong commitment to their ETF business in Europe. The launch of over 60 ETFs in London last year and more recently Italy shows they mean business and are looking to grow. This makes them an obvious choice on where to diversify.”
UBS boosted its product offering in the last year with the largest ever ETF listing on the London Stock Exchange last year and a launch of 61 ETFs on the Italian Bourse this January.