New iShares joint chief executive officer Rory Tobin wants his ETF business to maintain the focus on becoming a standalone unit, despite that the identity of its new owner has still to be finalised.
Barclays Global Investors, the current owner of iShares, agreed a €3.1bn sale to CVC Capital Partners, the Luxembourg-based private equity group, last week, though a clause does allow rival bidders to make offers for the next six weeks.
But Mr Tobin, who will head up the global business alongside iShares’ US boss Mike Latham with Lee Kranefuss becoming chairman, has called for an unwavering approach from the world’s biggest ETF manager by assets in the coming months. “We are in the final stretch but we don’t necessarily have visibility in terms of the outcome,” he said.
“The focus remains ‘business as usual’ and our priority is to make sure all of our client-facing teams are fully engaged with clients and also engaged in delivering new products in the pipeline,” he said. “We are planning as of now on the basis of a CVC outcome – that’s what’s on the table.” This also includes keeping the bulk of the iShares team intact under the potential new CVC structure, he added.
He also insisted iShares has had no investor outflows despite speculation about the sale of the ETF business gathering steam weeks earlier. “We’ve had no redemptions and as of the past two weeks we have had positive net creations in our funds in the US and Europe,” he said. iShares has around €225bn in assets under management as of April.
Mr Tobin said that some clients had expressed concern that their money might not be safe in the aftermath of any disposal, but he believes these questions have been answered in recent weeks. “There is no change…assets are managed by BGI and held by an independent custodian and ‘on exchange’ liquidity is still provided by a range of market makers.”
Figures produced by BGI for the end of first quarter 2009 showed assets for the global industry had fallen by 10 per cent, though the MSCI World Index had slipped 12.5 per cent in the same period. Providers are currently planning to launch 729 ETFs across a range of strategies, a BGI report said.
Separately, a study by the Financial Research Corporation found that ETFs have grown at a rate of 35 per cent annually since 1999, making them the fastest growing global fund management products in the last ten years. The study forecast that actively managed ETFs could pose a threat to traditional active equity houses for pension fund money, if they are able to overcome the administrative hurdles currently associated with the ETF structure.
