L&G to launch ETFs

[hiriskpaul]

https://uk.reuters.com/article/uk-legal ... DF0T2?il=0

The downward trend in ETF fees has stalled fo a while in Europe, hopefully this will get it moving again. In the US, some of the fees are now incredibly low with S&P 500 and similar ETF fees down to 0.03% and a recent set of price cuts by SPDR taking the fee on a Developed World ex-US ETF (SPDW) down to only 0.04%.

[Hariseldon58]

The more providers the better, it is likely they will need to compete on price to make any impact on the marketplace.

[Lootman]

The more providers the better, it is likely they will need to compete on price to make any impact on the marketplace.

The problem is that those low expense ratios derive, in a large part, from very large sums under management. By definition a new player won't have those economies of scale early on, which makes me wonder whether L&G are subsidising these new ETFs to price them more competitively.

Some of the smaller ETF providers prefer to offer niche products, like so-called smart beta funds or leveraged/inverse funds, because they carry better margins. Competing with the big three on volume and price is very tough to do.

[hiriskpaul]

It will be interesting to see what L&G do with ETFs. I agree they are going to need to compete quite hard on price to get anywhere with vanilla cap weighted ETFs. They may be able to do the trick of basing their ETF assets on their existing tracker funds, as Vanguard do in the US, otherwise I think they are likely to struggle for a while. They may instead keep to the more exotic ETFs currently run by ETF Securities.

Strange thing is, Widom Tree have also bought ETF Securities European business, including $17.6bn of assets, so not really sure what ETFs L&G will be taking over.

https://www.ft.com/content/58cd0af4-c86 ... 9fb7d6163e