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First Trust adds cybersecurity and biotechnology funds to European offering


London has seen the addition of two new thematic ETFs from First Trust, the USD127 billion US headquartered investment manager, which launched its first ETF in 2005. 

London has seen the addition of two new thematic ETFs from First Trust, the USD127 billion US headquartered investment manager, which launched its first ETF in 2005. 

The First Trust Nasdaq UCITS Cybersecurity ETF (CIBR) and the First Trust NYSE Arca Biotechnology UCITS ETF (FBT) are listed on the London Stock Exchange and targeted at advisers, wealth managers and discretionary fund managers who want to capitalise on these timely trends. Both funds have a total expense ratio of 0.6 per cent, and are rebalanced quarterly.

Gregg Guerin, Senior Product Specialist and Rupert Haddon, Managing Director, Head of Sales explain that, to some extent, First Trust is one of the largest asset managers that no one has heard of. 

2013 saw it launch ETFs in Europe and the company itself was founded to bring rules-based products in core equities and active fixed income through boutique managers focused on thematics.

Guerin says that biotechnology is one of the longest megatrends in the world. “Biotechnology is the intersection of the two longest megatrends in history. As humans we innovate and live longer, starting with fire and shovels all the way to now trying to solve the coronavirus”. Meanwhile, cybersecurity is also on a huge growth trajectory.

“There is a macro arc from the industrial revolution which changed the world until the computer and that then allowed us to change the world even more by allowing us to have the Internet,” Guerin says. “Every person, business, charity or government is doing more of its business in the cloud and it needs to be secure.”

Cloud computing and as a result cyber security is set for an incredible future, he says, with both individually forecast to have USD1 trillion in revenues over the next five years, and that was before the arrival of the pandemic which has made it clear that Netflix is a better business model than cable television.

Covid-19 has also made it clear that working from home is here to stay, Guerin says with some 74 per cent of those who are now working from home saying that they will continue to do so.

Companies such as Zoom have gone from IPO to a verb in two years, he says, and reports that Microsoft’s CEO Satya Nadella has recently commented that the world has seen two years of digital transformation in two months. 

Biotechnology has equally enjoyed its moment on the world stage with current world events showing how much more quickly tests, bio genetics and engineering can be done.

Guerin says biotechnology feels like the most cutting edge of all the firm’s new thematic ETFs, but is the longest running investment option of anything the firm has done.

Haddon says that the drivers for building a European business in ETFs for First Trust come from a fairly agnostic place in terms of the actual wrapper, so not so much of the evangelical support for the ETF that others demonstrate, and more from it being a better way of trading most things.

Haddon believes that First Trust is the world’s largest active ETF issuer, with USD30 billion in actively managed ETFs in the US. The firm uses indices to create some of its ETFs but in others simply puts the ETF wrapper around a pool of assets that are actively managed.

Haddon says that First Trust likes to work with best of breed managers in the space 

In terms of sales, Haddon spends time on the road, talking to advisors and wealth managers.

“We are an adviser-led business and we are entirely focused on what we can bring to market that will solve the advisers’ problems,” Haddon says. 

“I find the audience generally receptive to ETFs but more receptive to the strategies than the structure.”

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