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Aberdeen Standard Investments poised to launch new ETFs

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For those who have been around in the ETF industry for a little while, the fact that Aberdeen Standard Investments’ (ASI) US ETF business looks a little familiar will come as no surprise.

For those who have been around in the ETF industry for a little while, the fact that Aberdeen Standard Investments’ (ASI) US ETF business looks a little familiar will come as no surprise.

Steve Dunn, Head of US ETFs, Aberdeen Standard Investments, the largest active asset manager in the UK with USD669.5 billion in assets, explains that the ETF business, with USD3.8 billion in assets is the original ETF Securities US business that was bought by ASI in 2018.

The cash sits in a suite of seven ETFs which are largely based on the commodities markets, particularly physical precious metals. 

Dunn says: “ASI bought us as a diversifier and also to expand and to springboard into other regions. Considering Aberdeen Standard’s global capabilities and reach, it would only make sense that ETFs are in our client solution tool box.”

Dunn says that both the US and UK markets are saturated with big providers and entrenched products which make it important to be mindful where a firm chooses to enter and compete.

In the US, physical precious metals were a good place to be for ASI ETFs. “Gold had a solid year in 2019, up 18.3 per cent,” Dunn says. “Not just in performance terms but also in flows as folks looked for a safe haven standpoint.”

The firm is the only one to offer a palladium ETF and that product was up over 50 per cent last year (54.2 per cent), 36 per cent the year before that. The metal is at record highs because of restricted supply and long-term demand as it is used in catalytic converters in automobiles.

“It’s an interesting situation,” Dunn says. “It’s actually a by-product, not directly mined for, but historically there has been a supply deficit so the classic supply and demand story comes into play. With its primary use in the catalytic process, as emission standards increase, the only way you can make a combustion engine car meet those standards is to increase the amount of platinum or palladium in it.”

Dunn finds that each product has a little life of its own. “Gold is actually fairly well owned along the curve from asset managers to institutions to retail and very retail investors, such as those using Charles Schwab.”

Palladium and platinum are also used by a professional audience.

“From our perspective we are known in this space and we have spent a lot of time since the transaction looking at what’s next for us, what we can pull from our existing IP, within the standing walls, but we are also interested in expanding out of our existing footprint.”

This might come through a thematic approach to expressing a commodity view, such as exposure to new battery technology or something related to an energy component, which is ‘commodity-like’ but not direct commodities.

“It’ll be consistent with our existing themes for which folks know us,” Dunn says.

“While the product footprint may look different, developing global solutions is very much in our nature.  Scale will matter, Dunn says. 

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