November 16, 2017

A brief commentary on the acquisition of the ETF business of ETF Securities by Legal & General Investment Management

by Detlef Glow

After selling its European exchange-traded commodity, currency, and short-and-leveraged business to Wisdom Tree Investment, Inc. earlier this week, ETF Securities Limited announced on November 15, 2017, that it also will sell its European ETF platform, known as “Canvas” (including the staff members), to Legal & General Investment Management (Holding) Limited (LGIM) for an undisclosed price. Both parties expect the acquisition, which is subject to regulatory approval, to be finalized in Q1-2018.

With regard to the strategy of the Canvas platform, LGIM said in the press release about the acquisition that the platform will remain open architecture for differentiated products and for the large majority of ETFs to be managed and distributed by LGIM.

Since there were rumors that LGIM was one of the potential buyers of Source, it is not completely surprising that it snapped up the European part of Canvas, even though it had seemed it had shelved its ETF plans earlier this year—as reported by Ignites Europe. From my point of view this acquisition makes sense, since LGIM has a large index business and has now a ready-to-go platform to expand this business into the fast-growing European ETF market. That said, it appears LGIM took the opportunity to snap up a well-established pan-European ETF platform instead of building an ETF business on its own, which can be quite an exhausting and expensive exercise. Instead, the existing ETFs on the Canvas platform are listed on multiple exchanges and are registered for sale in 14 countries, which might enable LGIM to participate right away from the trend toward ETFs in Europe. I am sure we will be seeing new ETFs managed by LGIM in the European ETF landscape quite soon.

The views expressed are the views of the author, not necessarily those of Thomson Reuters.

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