Edinburgh-based investment manager Baillie Gifford is lining up its first active ETFs after hiring a capital markets specialist and filing five active equity strategies with the US regulator.
The growth-oriented manager’s ETF project will be spearheaded by Jamie McGregor who was hired by the $286bn fund shop in August as director of ETF capital markets.
Based in New York, McGregor joins from a capital markets role at Goldman Sachs ETF Accelerator, the now dissolved white-label solution which helped clients launch, list and manage their own ETFs.
Before transitioning to the Accelerator in 2022, McGregor spent seven years in a portfolio manager role within Goldman Sachs Asset Management’s ETF team and before that managed ETFs at Guggenheim Investments.
Although founded in Edinburgh, Baillie Gifford has enjoyed significant growth in the US in recent years and $116bn of its almost $300bn assets under management are now attributable to clients in the region.
The firm launched its first mutual funds in North America more than 25 years ago.
Active ETFs have enjoyed stellar growth in the US over the last decade and a half thanks in large part to tax efficiencies versus mutual funds – an advantage that does not extend to Europe.
Baillie Gifford’s decision to launch its maiden ETFs in the US also evidences the “hurdles” for new entrants in Europe, according to Michael O’Riordan, founder of Blackwater, an ETF consultancy.
“European fund managers still do not believe the ETF business case stacks up in their home market. The US offers scale, liquidity, and distribution that Europe struggles to match.
“The hurdles to launching in Europe are simply higher. Fragmented regulation, uneven tax treatment and costly distribution. What looks tough in the US looks brutal in Europe,” O’Riordan said.
With regard to the US opportunity, Baillie Gifford reckons the high conviction growth equity strategies in which it built its reputation remain an underrepresented segment of the ETF market.
“Of 235 international large cap equity ETFs, only 11 offer active long-term growth strategies – leaving a clear opportunity for active solutions,” McGregor said.
“Baillie Gifford has an outstanding reputation and deep relationships with clients across North America. My focus will be to build on that, ensuring clients can access our strategies in the format that best fits their portfolio goals,” he added.
By Toby Lawes
Originally published at ETF Stream
