Who Creates and Manages ETFs?
With an exponential increase in popularity among retail and institutional investors in recent years, it is safe to say exchange traded funds, or ETFs for short, have become one of the most dominant and fastest growing instruments in the financial world. Therefore, it behooves investors who are both current and prospective ETF owners to know a little about the companies who create and manage the funds. This is not only because it is always wise financial practice to know who is controlling your money, but it is also because certain ETF providers are more inclined to develop new products and technology to stay innovative, and this is something investors can capitalize on. With all of this said, listed below are a few main players in the ETF world with a brief description of their backgrounds and services that every investor should know about.
A leading manager of ETFs in Australia, BetaShares is a Sidney based company that is part of Mirae Asset Global Investments Group, which manages over $90 billion USD, making it one of the largest asset management groups in the Asia-Pacific region. BetaShare’s core objective is for investors to gain exposure to financial markets and asset classes that they otherwise would not have exposure to, and BetaShares accomplishes this by providing ETFs that track market indices, currencies, and commodities. They are best known for bringing the first currency, currency-hedged, commodity, and agricultural ETFs to Australia, which is an impressive list of firsts for the company. A perfect example of how BetaShares is avant-garde and a leader in its field, investors can take advantage of new ETFs that are created and literally expand their investment reach.
Widely regarded as one of the largest and longest-standing financial institution in the entire world, UBS was founded in 1862 and is currently headquartered in Switzerland. Currently, for all of UBS’s wealth management services, gross assets under management are around $3 trillion USD, which places it among the largest wealth managers in the world. Funds under managements for ETFs, however, are around $37 billion AUD. The ETF division of UBS for Australia started in 2012 and has since launched 8 individual ETFs, so it is definitely not the largest ETF creator in Australia. This might be partially because of UBS’s recognition as more of an investment bank than a pioneering ETF developer. Nevertheless, as a whole on worldwide basis, UBS has been managing passive assets (like ETFs) for 30 years, so UBS ETF participants are indeed in good hands.
iShares by BlackRock
Founded in 2000, iShares is a division of BlackRock specifically dedicated to ETF creation and management. Blackrock is widely referred to as the largest asset manager on the planet; current assets under management are around $5.1 trillion USD. Worldwide, iShares has over $1 trillion USD invested in over 700 ETFs, which also makes iShares the largest global ETF provider. With assets of this magnitude, iShares by BlackRock can afford to constantly develop and employ the most advanced technological systems to make sure their ETFs are priced accurately and efficiently at all times. Additionally, they also have a broader range of accessible products ranging from currency-hedged ETFs to fixed income ETFs. One of their most popular index ETFs is IHD, where the ETF aims to replicate the performance of the S&P/ASX.
Headquartered in NYC, VanEck is an investment management firm that oversees $25 billion USD. Founded in 1955, VanEck creates and offers ETFs, among other products and services, for all sorts of investors, both retail and institutional. Their mission in constructing these ETFs is to offer intelligently designed investment strategies to enable investors to take advantage of targeted market opportunities. Although VanEck is respectively smaller than most other investment firms, some of the ETFs offered are “Smart Beta” which is on par with iShares and the larger investment firms. VanEck was one of the first firms to help investors achieve greater diversification by creating products, like ETFs, that facilitate global investing, and they are widely recognized for this throughout the financial industry despite their small size when compared to financial behemoths like BlackRock.
SPDR by State Street Global Advisors
Founded in 1978, Boston-based State Street Global Advisors manages $2.4 trillion USD which places it along side UBS and BlackRock as monumental financial institution. State Street Global is perhaps best known for their popular SPDR (pronounced “spider”) ETF division which offers investment access to baskets of Australian equities, indices, fixed income, and Smart Beta alternatives. The first ETF from SPDR came in 1993, and every new ETF since then has evolved with their motto of opportunity, transparency and a client-first attitude. SPDR truly thinks about the investor holding their ETFs, so they strive to keep costs low and technology up-to-date. In addition to their vowed transparency, all SPDR ETFs in Australia are physically backed by securities, so there are no synthetic ETFs containing risky swaps and derivatives that could cause tracking errors. Australia’s first and only listed global income fund was launched by SPDR in 2013, so they are no strangers to innovation and expansion of investment opportunities.