The asset management arm of the FTSE life insurer announced Wednesday it intends to buy Canvas from ETF Securities, in the latest move in the ongoing pricing war between active and passive houses.
Although LGIM currently has a range of index-based strategies, low-cost passive/active hybrid products, on offer, this will represent its first foray into the ETF arena. Its tracker funds make up about one third of its total $1.2trn (£909bn) in assets under management (AUM).
As part of the deal, Britain’s biggest fund manager will absorb Canvas’ platform and ETF infrastructure, as well as $2.7bn of existing assets across 17 products and partnerships.
Target firm Canvas is a Ucits compliant, open architecture platform which houses a diverse range of ETFs. While the firm oversees a number of investments on the platform, managers have the option to manage and launch their own ETFs.
A team of Canvas employees with specialist ETF skills will join LGIM as part of the transaction.
LGIM CEO Mark Zinkula called the acquisition “a natural step in our strategy to develop products for a wider audience,” which will allow the firm to tap into “one of the fastest growing segments in asset management” and broaden its footprint across Europe.
While the US still dominates the ETF/ETP market in terms of AUM, Europe is growing at a faster pace and has seen 37 consecutive months of net inflows, taking in a record $95bn year-to-date.
“A number of long-term macro trends, including the increasing use of passive vehicles and the drive to digitalisation, will lead to a growing demand for ETF products,” said Zinkula.
“The acquisition of Canvas enables us to cater to a growing base of clients across Europe and further grow our market share in both retail and institutional markets. LGIM shares a strong cultural alignment with Canvas and we look forward to working with the team going forward.”
The transaction is subject to regulatory approval.
