The ETF white-label market has been threatening to ignite for several years in Europe following an influx of providers that promised to bring the continent’s ETF boom.
Until June 2022, HANetf was the only white-label provider in Europe and the group has gone on to gain a foothold in the market, offering 32 ETFs with $4bn assets under management.
Since then, the likes of Waystone ETFs and Goldman Sachs, the latter via its ETF Accelerator platform, have also entered.
However, it is only recently that the pair launched their first ETFs having both hit the market around two years ago.
The launch looks set to be a seminal moment for the industry, with Waystone ETF taking over Northern Trust Asset Management’s Irish platform and Goldman bringing Baader Bank’s artificial intelligence-led ETF to market.
HANetf also announced two new clients – Guinness Asset Management and Harbor Capital Advisors – within the past month.
Hector McNeil, co-founder and co-CEO of HANetf, said the pipeline remains strong.
“There are around 100 ETF brands in Europe, versus 300-400 in the US, there is no way the European market can grow to US levels without white-label providers helping them to distribute,” he said.
“Europe is two or three years behind, but it will continue to rise.”
The active catalyst
Driving much of this fresh pipeline is the wave of active ETFs in the US starting to lap at European shores.
Henry Glynn, head of ETF capital markets and distribution at Waystone ETFs, said: “We have seen the active wave – which is finally hitting the industry – building for the past two years.
“Almost every new launch now is an active manager coming to market. There has got to be an explosion, we will see a whole plethora of active managers with varying strategies coming.”
Active asset managers including Janus Henderson, Robeco and American Century are set to launch active ETFs in Europe imminently, while ARK Invest Europe has already launched strategies, with many more binding their time, according to Glynn.
“You can think about it as the first break off group in a peloton waiting to see what happens to the others before entering.
Especially with BlackRock coming to market, many will be waiting to see what investors are drawn too,” he said.
McNeil agreed, adding: “I thought this mass adoption would happen two years ago, but the major catalyst has been the success of the active wrapper in the US.”
He added the tax benefit in the US is not as powerful as some make out, noting the withholding tax benefits of Irish-domiciled funds and the potential to be caught up in US state tax if you are holding ETFs, which could drive uptake in Europe.
Final word
For those looking to enter the ETF market for the first time they will have to look beyond broad-based passive beta, a market sown up by the major players in Europe.
The active ETF space in Europe is currently dominated by JP Morgan Asset Management’s ‘light-active’ approach, but a peloton of active mangers are binding their time and are likely to offer varying approaches, including “true active” strategies.
One thing is likely to be true, many will be in search of a white-label provider to help them.
