The country’s newest ETF player, ETF Shares, is set to launch three US-focused funds on Cboe on Tuesday, priced at a 0.29 per cent management fee.
Namely, the ETFS US Quality ETF (BEST) will provide investors with exposure to 100 US large caps that have “superior quality characteristics”, defined by free cash flow margin and free cash flow return on invested capital.
The ETFS US Technology ETF (WWW), meanwhile, will be a portfolio of the largest and most liquid technology companies in the US, while the ETFS Magnificent 7+ ETF (HUGE) will provide investors exposure to the 10 largest companies on the Nasdaq.
According to ETF Shares, the launch also marks the first time an index ETF provider has chosen Cboe as its exclusive listing venue.
With only some five index ETF issuers actively operating in the Australian market – compared to almost 30 in the UK and over 20 in Canada – ETF Shares said it aims to disrupt the country’s highly concentrated sector.
“Australia’s ETF market has grown rapidly but remains highly concentrated,” said the firm’s chief executive Cliff Man.
“Our goal is to inject meaningful competition into the index ETF space – something advisers and investors have been missing.”
According to the ETF issuer, its primary focus will be the adviser market, noting that unlike global trends, ETF flows in Australia are largely driven by advisers rather than institutional investors.
In conversation with InvestorDaily last week, chief investment officer David Tuckwell said that overseas ETF issuers might have less of a grasp on Australia’s more nuanced sector.
“If you’re a giant European or American investment bank, you don’t want to be selling ETFs to mums and dads or high street advisers. You want to be selling them to giant pension funds, selling them to hedge funds, or selling them to some other kind of institutional investor,” he said at the time.
“The DNA of a lot of these overseas financial giants isn’t really geared to the rules of the road here in Australia,” he said. “I think that’s a competitive advantage for us, not only having that in-house expertise, but also having the willingness to do it as well.”
On Monday, ahead of the launch, Tuckwell added: “We understand the local advice landscape, including the regulatory shifts following the royal commission.”
“That knowledge, combined with our product expertise, positions us to serve advisers in a way other providers simply can’t.”
ETF Shares is backed by ETFS Capital, the venture capital firm of Graham Tuckwell, who will also chair the board.
Man, David Tuckwell and chief revenue officer Arjun Shanker were all part of the senior team at ETF Securities Australia, which later rebranded to Global X ETFs following its acquisition by Mirae Asset Global Investments in 2022.
