The booming U.S. market for exchange-traded funds is making it a popular girl at the dance, with more and more traditional asset managers seeking a place on the dance card. The latest such company looking to cut a rug in the space is Aberdeen Standard Investments (ASI), which on Friday announced it purchased the U.S. business of ETF Securities. Deal terms weren’t disclosed.
ETF Securities developed the world’s first gold exchange-traded product in 2003, and its subsequent product line in the U.S. has focused on commodities and precious metals. The eight ETFs being purchased by ASI comprise $2.8 billion in assets under management.
Until a year ago, ETF Securities had operations in the U.K., U.S. and Australia, with the vast majority—about four-fifths of the roughy $25 billion in total assets—residing in the U.K. The company sold off those U.K. assets in two separate deals last November.
The largest involved WisdomTree’s purchase of ETF Securities' European exchange-traded commodity, currency and short-and-leveraged business, which had assets of $17.6 billion when the deal was struck.
The other deal entailed British asset manager Legal & General Investment Management’s acquisition of Canvas, the European ETF platform owned by ETF Securities. Canvas had $2.7 billion when that purchase was announced.
Regarding Aberdeen, the company has an existing U.S. presence via the mutual fund business of Aberdeen Asset Management. It will now augment that with its newly acquired ETFs.
“The way Aberdeen sees it, it’s tough to be in the asset management business if you don’t have an ETF platform or strategy in some type of way,” says a source familiar with the deal. The source added that investors should expect ASI to leverage its existing active management capabilities to expand ETF Securities’ product line beyond commodities.
Aberdeen Asset Management Plc and Standard Life Plc, both Scotland-based entities, merged last year to become Standard Life Aberdeen. Both companies had been hit with asset outflows from their funds, and the deal was seen as a way to stem the tide. The combined company had assets under administration of $871 billion when the deal was finalized in August.
Earlier this year, Standard Life Aberdeen sold its insurance business to U.K.-listed Phoenix Group in an effort to focus on asset management.
One of the motives behind the recent asset sales by ETF Securities is the desire of company founder and chairman Graham Tuckwell to “move on” from the business and return to his native Australia, according to published reports during the time of the sale of the company’s U.K. business units. ETF Securities is headquartered in Jersey, one of the Channel Islands between England and France.