According to data provided by World Atlas, the top five stock exchanges in Europe boast a combined market capitalization of over $14 trillion. With access to such a large pool of capital, one would think more United States-based exchange-traded funds would extend their ETF offerings to the European markets, but due to its high barriers to entry, that hasn’t been the case–until now thanks to HANetf.
Today, HANetf, Europe’s first independent “white-label” UCITS ETF platform announced that Big Tree Capital’s EMQQ Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ) will launch on the London Stock Exchange on Friday, Oct. 5 (EMQQ LN). It’s the first US-based ETF to use a white label platform in order to gain access a market that has severely limited issuance to large asset managers and banks.
HANetf is an independent white label ETF specialist who works specifically with asset management leaders to bring differentiated, modern and innovative exposures to European ETF investors. At the helm of HANetf are two of Europe’s leading ETF entrepreneurs, Hector McNeil and Nik Bienkowski, who have the operational and regulatory experience necessary to manage the complexities of launching and managing an ETF for the European markets.
“The main advantage is really built into our value proposition,” McNeil told ETF Trends. “And our value proposition is two things–one, we have over 100 years of European ETF experience in the firm so that’s really valuable for end clients. And we can also get a fund out in 12 weeks.”
The turnaround time to get a fund operating organically and the costs associated with getting it primed for the European markets may make this a cost prohibitive proposition to many U.S.-based funds. HANetf eases that burden with services, such as ETF set-up, ETF launch, product management, distribution, and marketing–all in all, it gives asset managers who aspire to join the European ETF market a cost effective, scalable and coherent market entry solution.
“You’re talking maybe two to three years to set (an ETF) up from scratch and anywhere between two to five million dollars to get going,” said McNeil.
Fund managers domiciled in the U.S. typically view Europe as a much more complex set of markets compared to the U.S. capital markets. As such, they are accustomed to a market structure that has one or two exchanges, single settlement and clearing, one currency, one language and one tax system.
Compare that to Europe where there are multiple exchanges, clearing, settlement, taxes, languages, currencies and other complexities like Brexit and MIFID 2 that make ingress into the Euro markets more difficult. HANetf is deftly able to navigate through these complexities for the asset manager.
“One of the major differentiators between HANetf and what’s available in the US from our perspective is that our services are really a full, one-stop solution,” said McNeil.
EMQQ is the first UCITS ETF in Europe to launch via an independent white-label ETF platform and this breakthrough could pose a major turning point in the history of European ETFs, expanding access to an industry with high barriers to entry. This follows the path of the US ETF industry where asset managers using a white label platform to launch ETFs has become commonplace.
EMQQ seeks to provide investment results that correspond generally to the price and yield performance of EMQQ The Emerging Markets Internet & Ecommerce IndexTM. EMQQ invests in securities of the index or in depositary receipts representing securities of the index, which is designed to measure the performance of an investable universe of publicly-traded, emerging market internet and ecommerce companies.
Kevin Carter, CEO of Big Tree Capital, Founder and Chairman of EMQQ Index Committee said: “We are excited to be launching EMQQ in Europe with HANetf. Their experience, knowledge of the market and entrepreneurial spirit make them the ideal partner for us or anyone else looking to enter the European ETF market. We believe that European investors will benefit from gaining pure exposure to the fast growing and innovative Internet companies in Emerging Markets which we believe is the best way to access the growth of the digital consumers in this large and important part of the world.”
Furthermore, the index that EMQQ tracks contains over 50 constituents, including Alibaba, Tencent and Baidu, weighted according to a modified market-capitalization methodology with individual constituents capped at 8%. The ETF mirrors a highly successful US listed version of the product that has garnered over $365,000,000 in assets to date.
The fund lists on London Stock Exchange (Ticker EMQQ) with a TER of 86 bps. The opening share price of $8.88 was chosen specifically for the triply auspicious connotations in Chinese numerology.
“The first launch via the HANetf platform is a significant milestone for our team, but also a watershed moment for every asset manager wanting to evolve their European ETF strategy,” said McNeil. “With this launch, HANetf has single-handedly removed the high barriers to creating and launching ETFs in Europe, opening the gates for more asset managers – traditional, systematic or active – to benefit from the powerful distribution potential of ETFs. With a tremendously successful fund in North America, the EMQQ team have been keen to expand their distribution potential and we are delighted to have worked with them over to bring this proven idea to Europe.”
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