WisdomTree, the exchange-traded fund sponsor, had record trading volumes in Europe last month and has added two authorised participants to its Ucits ETF platform.
WisdomTree said in a statement that Cantor Fitzgerald and IMC have become authorised participants for the Ucits ETF platform taking the total number of APs to 17. Authorised participants are the only parties who are able to officially create and redeem ETF shares on investor demand directly with the ETF issuer.
The firm plans to continue grow the number of authorised participants to increase localised service in Europe as its smart beta Ucits ETFs are listed on exchanges in five countries. Most of these smart beta ETFs are dividend-weighted, high-yield strategies that may be beneficial in the current low-interest rate environment. The Ucits ETFs range also includes a number of currency-hedged share classes, based on WisdomTree’s flagship US-listed strategies.
Hector McNeil, co-chief executive of WisdomTree Europe, told Markets Media: “We have the majority of the universe of liquidity mapped so we can provide as much liquidity as possible to our clients.”
WisdomTree Europe celebrated the first anniversary of the launch of its European Ucits ETF platform last November with assets increasing from $160m to $708m. Ucits is a single European regulatory framework for an investment vehicle that allows the authorised product to be distributed across the whole of the European Union.
McNeil added that WisdomTree Europe was continuing to see growth in the Equity Ucits ETF, which has increased assets from $77m in January to more than $200m. The firm said the asset inflows follow the recent launch of currency hedged and unhedged share classes, helping the Equity Ucits ETF more than triple in size over the past five months. The Equity Ucits ETF provides a broad exposure to Eurozone exporters, weighted by dividends and offers the choice of a US dollar hedge, sterling hedge or an unhedged euro share class.
Viktor Nossek, WisdomTree Europe’s director of research, said in a statement: “The Fed rate hike has cemented the continuation of monetary policy divergence in 2016, with the widening of the interest rate premium that US assets enjoy over Eurozone assets keeping the euro fundamentally weak. Investors seeking the to take advantage of more positive sentiment in Eurozone equities as a result of euro weakness may want to consider to hedging their Eurozone equity exposure as a result.”
McNeil added that WisdomTree Europe had record flows this year into Oil 3x Leverage ETFs. WisdomTree Europe includes the Boost ETP range of short and leverage products in equities, fixed income, currencies and commodities. At the end of January WisdomTree Europe had a total of 22 Ucits ETFs listed across five exchanges and net assets under management of $793.7m across its Boost and WisdomTree product ranges.
“We had record trading volumes of $1.5bn in February,” McNeil added. “Leveraged products optimise the use of capital and in volatile markets investors are trading more tactically than a year ago.”
In a report yesterday BlackRock said the ETF managed portfolio segment is projected to double to over $700bn by 2020, driven by increased ETF adoption by multi-asset strategies. BlackRock surveyed multi-asset managers at over 40 fund managers representing approximately $19 trillion in assets under management, and found that ETF managed portfolios comprise an estimated $350bn in assets.
Multi-asset strategies hold $2.8 trillion and are predicted to increase to 10% of the global asset management industry and represent over 25% of new business in five years. Half of the multi-asset managers surveyed said their clients are actively requesting that ETFs be used in their portfolios.
BlackRock said in the report: “ETF managed portfolios are projected to account for 19% of multi-asset strategy assets by 2020, growing from the current level of 12.5%.”
The research said active asset managers are using ETFs for a variety of reasons including for liquidity or cash needs, as replacements for futures and to access broad asset classes.
Daniel Gamba, head of BlackRock’s iShares Americas Institutional Business, said in the report: “Asset allocators in particular have taken to building portfolios using ETFs because they offer cost-effective and easy access to a huge range of markets, and enable them to meet their goals whatever they might be.”
BlackRock defines ETF managed portfolios as investment strategies with a minimum of 50% allocation to ETFs.
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