News came last week that ETF entrepreneurs Hector McNeil and Nik Bienkowksi are aiming to disrupt the European ETF market with the launch of Europe’s first ‘white label’ UCITS ETF platform, HANetf.
In an interview with ETF Express, McNeil explains that the thinking behind the launch of HANetf is that the major constituent groups in the ETF industry comprise the global ETF issuers many of whom are not in Europe yet and the European asset managers who haven’t developed a solution for offering ETFs to sit alongside their mutual fund offering.
“They want the ETF product in their offering but not a full services ETF business,” McNeil says.
There are no pure white labellers of ETFs operating in Europe at the moment, just joint venture arrangements that have a conflict of interest in that they also run their own ETFs.
“They aren’t independent as they have their own proprietary ETF businesses,” McNeil explains. “We will have no products of our own, just the clients’ products and we will support the client from front to back from product development to distribution, marketing and sales.
“There will be no conflicts of interest and we believe we can give time efficient and cost effective entry to the ETF marketplace. We will significantly shorten the learning curve for a new issuer”
Using this platform route, new entries to the ETF market will be ready to go very quickly.
McNeil says: “We will have all the infrastructure set up and staff in place so the time to market will be the time it takes to get approval for the funds, whereas from scratch, a full services ETF company would have a whole raft of things they would have to do.”
McNeil and Bienkowksi have raised seeding funding for the new business with the majority drawn from their original investors in Boost, the firm they sold to WisdomTree. The remainder potentially includes new asset management entrants to the business including firms who are interested in entering the market themselves, as clients who are looking at a strategic stake.
“Nik and I will be majority owners and we are putting a substantial amount of our own money in,” McNeil explains. The team will be between 10 to 15 and many key functions like custody and administration will be outsourced.
“What we can do differently is to automate the sales and marketing process by integrating our customer interaction such as CRM, events, social media and email,” McNeil says. “Most of the issuers out there are dealing with a lot of legacy structure and systems so we can automate from day one and focus more dynamically on the end investors who matter.”
McNeil analysed the top 120 asset managers in the IPE ranking list of European fund managers and estimated that just 10 per cent have an ETF offering.
“They need an ETF solution,” he says. “I believe ETFs are at its simplest a wrapper and moving from mutual funds to ETFs is like the shift from analogue to digital TVs. It took time to kill off analogue but over time that’s what happened. Every meaningful asset manager needs an ETF product strategy.
“What puts them off is that the BlackRocks and Vanguards of this world are seen as having huge scale and under the current market structure it makes it difficult for them to compete. Our model crashes those barriers to entry.”
In terms of types of ETFs HANetf might provide, they will be able to offer all types of ETFs, ETNs and ETCs. Over time it is expected the range will include physical and synthetic product and passive, smart beta and active. They will also offer a service where they will analyse the market potential for new types of ETF. Fees will be based on a services model of minimum fees on each product.
