Best ETF provider - iShares
iShares continues to dominate the global exchange traded fund market, as is reflected in it winning the award for best exchange traded product (ETF) provider for the second year in a row. More than $620bn is invested in iShares 474 funds, 43 per cent of the global market. Yet the provider is determined not to rest on its laurels and to continue to expand both its fund range and its presence at a local level.
“We are not complacent in any way and are on a process of continuous improvement,” says David Bower, head of European marketing. “For example, we have opened an office in Copenhagen this year to provide a local servicing capability for Danish and wider Nordic based investors. We now have offices and dedicated iShares ETF teams in France, Switzerland, Germany, Austria, Italy, Denmark, the UK, and the Netherlands, and we’ll continue to build that out as the market in Europe grows.”
Mr Bower explains that iShares do not yet cover the full set of asset classes with their products and will have continue to expand their offering. He points to the launch of their first non-fund products in Europe this year – the four physically-backed exchange traded commodities (ETCs), providing exposure to gold, silver, palladium and platinum, along with a dollar high yield fund in September.
Mr Bower is not surprised by the increasing interests of regulators towards the European ETF industry. “This is not surprising given that ETFs have become a more mainstream product within the European marketplace, coupled with recent innovations in ETF manufacture in the investment strategies available and the structures utilised,” he says. “It is important to note that ETFs are already amongst the most highly regulated investment products available.”
One area under review by regulators is the approach being taken to index replication by the ETF industry. There are broadly two methods, namely physical replication and synthetic replication, and iShares definitely leans towards physically-backed ETFs. Of the 109 Dublin domiciled funds listed on the London stock exchange, 107 are physically replicating, and two use synthetic replication, while the German fund range has just one synthetically replicating ETF.
“iShares is committed to physical replication where the underlying market allows, and when the market does not allow tracking by physical replication, we will use our market leading synthetic model (multiple counterparties, strict collateralisation policies and transparency of swap fees),” says Mr Bower. “These are the standards iShares clients expect, and the standards we will adhere to in any structure we manufacture.” ES
