BNP Paribas Asset Management's EasyETF is streamlining its business and tightening its institutional focus. Danièle Tohmé-Adet outlines the action the firm has taken so far.
The ETF world has often been characterised by a flurry of product launches and cross-exchange listings. But BNP Paribas Asset Management’s EasyETF chose to take the path less travelled and has actually been closing languishing ETFs in order to streamline and focus its business on the institutional market.
Danièle Tohme Adet, head ETF and indexed funds development, Sigma, at BNPPAM, says: “Over the past six months we’ve done something quite contrarian. We’re revamping and concentrating our product offering in order to deliver strong asset management expertise and excellence, rather than wasting time cross-listing products which only breeds more difficulties.”
Less is more
She explains that its better to list on just two exchanges and concentrate on providing excellent service on those.
“We began by delisting our dollar-denominated ETFs listed on Euronext. We wiped out things like our ETFs on Egypt, the UAE and luxury goods. These products have been delisted,” says Tohme Adet.
EasyETF is adapting its range in order to improve its competitiveness and visibility, by adapting to the needs of its customers, which are mainly institutional.
The ETF provider will be concentrating listings on Euronext, Deutsche Börse and the Swiss market, SWX. EasyETF will also liquidate 15 trackers on specific themes or geographies.
The assets held in these funds represent less than 5% of the total assets in the EasyETF range, which amounted to €4bn at the end of September 2010.
Furthermore, EasyETF will withdraw the 16 US dollar-denominated vehicles listed on Euronext, which will subsequently be listed on non-European markets, and it will also withdraw from the Italian stock market.
The move to reorganise the offering was partially driven by talks with market makers who, according to Tohme Adet, plan not to continue quoting all types of ETFs on all the exchanges. “The business is moving towards higher concentration of product,” she says. “Market makers showed us that they’re keen to optimise and clean up all the useless market making on ETFs that don’t trade. They want to concentrate on a few exchanges only.”
Another reason for BNPPAM to rationalise its ETF product range is its tightened focus on the institutional marketplace.
The retail market in Europe for ETFs is still very small and, therefore, any large player is going to focus on the larger clients, such as asset managers themselves and pension funds. “We’re calibrated for more institutional sales efforts,” says Tohme Adet. “And we’re focusing on a few ETFs such as those on commodities and the Stoxx zone. We have the best tracking error in the market and perform fiscal optimisation. We’re also focusing on the difficult asset classes like European and US equities.”
This is because institutions use ETFs for tactical asset allocation within mature markets, she says.
Tohmet Adet continues: “We have a competitive edge when it comes to servicing the institutional market because we’re part of an asset management business and provide excellence in replication management.”
She explains that the ETFs they’ve delisted were very much targeted at the retail market. EasyETF also delisted its products in the Italian market because it is very retail in nature.
Tohme Adet says that instead of prolific cross-listing in Europe, BNPPAM will be listing its products on exchanges overseas. “We have some boutiques and expertise in other markets and therefore we can act as an advisor in those markets,” she says.
Hong Kong is one example of where the firm plans to expand, but Tohme Adet stresses: “We don’t want to go in unprepared.” Therefore a lot of research is being carried out before any moves are made.
Part of the EasyETF rationalisation includes the launch of new trackers, which will enhance the current ETF range beginning the first quarter of 2011. These aim to capitalise on the firm’s innovation capacity.
©2011 funds europe