Citigroup plans to launch a white-label exchange-traded product (ETP) platform in 2025 as asset managers seek diverse distribution channels and US managers expand into the European market.
The platform – named Citi Velocity ETFs – is set to launch in Q1 2025 and will specifically target asset managers launching active ETFs as demand continues to surge across Europe.
Andrew Jamieson, global head of ETF product at Citigroup, said the firm expects a wave of fund promoters to start ETF businesses in Europe, as the mutual fund model may be reaching its limit with many assessing how best to enter the ETF market.
“By enhancing our existing ETF offering with our new Citi Velocity ETFs platform’s capabilities, we bring something unique to the industry – the creation of an entire ETF ecosystem around the issuer,” Jamieson said.
The move follows other firms rushing to get a slice of the action in the white-label ETF space, with the rise of active ETFs being a key catalyst for this growth.
Allfunds has announced the launch of an ETP platform as it hopes to “revolutionise” the distribution of ETPs in Europe.
Meanwhile, Waystone ETF took over Northern Trust Asset Management’s Irish platform and Goldman Sachs’ ETF Accelerator platform brought Baader Bank’s artificial intelligence-led ETF to market.
HANetf also announced partnerships with active managers including Guinness Asset Management, Harbor Capital Advisors and Performance Trust across Q2 and Q3.
Jamieson noted two main client groups are eager to enter the European ETF market – European asset managers lacking ETF expertise and US issuers looking to expand globally.
“In both scenarios, there is significant interest in effectively outsource the ETF aspects to a single platform solution with a partner who is able to deliver the heavy lift. Many of our clients have been asking for this support for some time, and Citi Velocity ETFs is the culmination of this endeavour,” he added.
Active ETFs have become a driving force behind the expansion of white-label ETF service offerings in Europe. Active ETFs saw €4.8bn inflows during the third quarter representing 7.7% of all ETF inflows for the period, according to data from Morningstar.
Despite the rapid growth, active ETFs still represent a small portion of the European ETF market at 2.2%, as at the end of Q3.
