Brieuc Louchard, Head of ETF Capital Markets at AXA Investment Managers, explains to Romain Thomas why his firm is launching an ETF platform with a focus on active management and responsible investment
1.What was the driver for launching this ETF platform?
To meet the changing demands of investors we must always innovate and enhance our investment offering. As an investment vehicle, ETFs can be attractive for our clients alongside our existing range of mutual funds given the easily tradable structure. We believe active ETFs combine some of the potential benefits of mutual fund investing with the convenience, transparency and liquidity of an ETF vehicle. Our ambition is to be one of the leading active ETF players in Europe.
2.Why are you focused on active ETFs?
Most investors have historically used ETFs as index trackers. This can provide a cost-effective way to gain exposure to financial markets through a simpler process than the often highly-intermediated routes to investing in mutual funds. However, an ETF is only a ‘wrapper’, and all kinds of investment strategies can be used in the vehicle. As markets and investor demand have evolved, there have been several innovations in the ETF industry – foremost of which is the introduction of active ETFs. We believe active ETFs combine some of the potential benefits of mutual fund investing with the convenience, transparency and liquidity of an ETF vehicle.
Active funds now account for 3 per cent of the global ETF market at around USD300 billion, according to data from Morningstar Direct. While this is still relatively small, it is rapidly growing and we see this as an opportunity to leverage our key strengths within active management and responsible investing strategies to complement our existing mutual fund range while answering client demand for ETF structured vehicles. The platform will initially launch with two actively UN SDG (United Nations Sustainable Development Goals) aligned ETFs, classified as Article 9 funds under SFDR regulation.
3.What are the plans for the future in Europe?
We have strong ambitions and wish to be one of the leading active ETF players in Europe as soon as possible. We have already launched the AXA IM ETF platform with one active ETF, focused on the biodiversity theme (registered in Germany, Denmark, Finland, Ireland, Luxembourg, Netherlands, Sweden for now). We are exploring the possibility of launching additional active ETFs in the coming months and will communicate in due course.
4.How can ETFs gain further traction in Europe?
ETFs have some inherent characteristics which make them popular among investors (accessibility, diversification, trading, transparency). While the bulk of the ETF market presently consists of passive funds, we believe the potential for growth in active ETFs is potentially huge. We believe active ETFs will play an important role in the evolution of the asset management industry and we believe we are well placed to embrace such an evolution, hence the launch of our platform.