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Arnaud Llinas, Lyxor Asset Management

Pioneer ETF firm offers essential range

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In terms of ETF assets under management, Lyxor Asset Management is in the top three in Europe, with USD54 billion in assets in ETFs, behind iShares and Deutsche Bank.

Arnaud Llinas (pictured), Head of ETFs and Indexing at Lyxor Asset Management says: "We are one of the major players in this industry in Europe , and the second largest issuer of ETFs in Europe in terms of inflows year to date." The firm first launched ETFs in Europe in 2001. "What we have particularly focused on since our creation is innovation. We try to be at the forefront of innovation, launching emerging market or smart beta ETFs."

The Lyxor ETF Essentials range of ETFs is the subject of their focus at the moment. 

"The problem that investors are facing, specifically retail investors and allocators, is how to choose from the vast number of ETFs available," Llinas explains.

"There are more than 4,000 ETFs in the world, while in Europe there are 1500, so plenty. And if you take an index like the Euro Stoxx 50, you will find more than 15 ETFs tracking it. Not only is it a question of choosing between issuers, but also the basic building blocks of your portfolio."

Lyxor decided to select an essential range from its offering of 230 ETFs. "We tried to make a tight, very concentrated selection of the best ETFs, which represent the major equity and bond indices from across the world."

Some 14 existing Lyxor ETFs were selected, based on the best indices in terms of liquidity, performance and their representation of the underlying economies, both from equities and fixed income.

 The `best in class' selection contains ETFs with a minimum of USD1 billion, represent 50 per cent of all assets held in Lyxor ETF, and are each in the top 100 of the most traded ETFs in Europe. 

"These ETFs are liquid and tight in terms of bid offer spread, trading at less than 10 basis points," Llinas explains. "We have changed some features for some of them – created a distribution share class where it is needed, and refreshed certain characteristics to make sure they are perfect in all aspects."

It is these ETFs that Lyxor will propose to clients who want a model portfolio. "Here we have created a range of ETFs, which can form the building blocks of any portfolio; whether it is aimed at retirement savings, aggressive growth, or a simple balance of global equities and bonds. The aim is to make it easier for new clients by cutting through the overwhelming choice, and focusing on just a few key exposures." 

Llinas believes that until now ETFs have been used in Europe by institutional clients and that ETF issuers have worked to serve the needs of institutional clients. 

"The idea of this is to increase our offering and added value for clients, directed towards distribution types of clients such as private banks, retail clients and wealth managers."

Lyxor also caters for the more adventurous investor. "We have a lot of ETFs which are not available from other competitors, especially in emerging markets and other remote and complex underlying markets. As soon as the underlying liquidity is enough to support an ETF, we make sure our clients can access it."

Another focus has been on finding better ways to construct indices than the classical capital market weighted way. "As a wealth manager, the proposal of Lyxor is that we can help you invest the way you want to. Whether that is using core, liquid indices, or getting more granular, and focusing on a specific region, country or, sector, or even a specific quantitative or fundamental strategy. That is the flexibility Lyxor can offer"

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