Howie Li, head of ETFs at Legal & General Investment Management, is aiming to double the number of ETF products it offers to between 40 and 50 by the end of next year.
Speaking to Investment Week, Li laid out his plans to transition Canvas, which has rebranded to L&G ETFs, from a specialist provider to a full service one following the firm's acquisition of the ETF Securities platform last year.
Along with continued plans to build-out its thematic equities and diversified commodities ranges, Li said products would be launched across the core equities, fixed income, smart-beta, ESG and alternatives spaces while also expanding the distribution team on the European retail side.
"2019 is going to be a big year for us," Li said. "The market will see a steady stream of all these products being launched and a better understanding of where we are providing distribution covering.
"At the moment, we are getting things ready for next year," he continued. "We are going to make a far more meaningful step into core equity and fixed income solutions. This is not an overnight process but is something you have to spend time and plan for."
On the core ETF range, Li said it was important to crucial to remain competitive from a fee perspective with the key players however, predicted fees in Europe to not go much lower from this point.
In March, Lyxor challenged its rivals by launching a core ETF range that charges between 0.04% and 0.12%.
"From an ETF specific perspective, it has gotten to the point where we have hit a floor," Li commented. "Investors in fact do not mind about a basis point here or there, they want to focus on other factors such as how you replicate and manage the index money.
"L&G has been managing index money for a long time so there is a huge amount of pragmatism that can be deployed to help preserve value for investors."
The ETFs head said the products launched on this side of the business would reflect LGIM's identity of responsible investing and corporate governance on the active side.
This means, Li said, many would have an ESG overlay while all ETFs would be subject to the firm's active engagement programme.
"You can expect a series of ETF products that have this ESG flavour," he added. "The LGIM Future World fund is a good demonstration of how we will tackle ESG products."
Furthermore, Li predicted smart-beta would be the biggest growth area across the ETF market due to where it sits between active and market-cap weighted products.
Currently, the main area of focus for ETF providers, Li said, was in fixed income smart-beta where investors wanted to consider factors such as quality, yield and liquidity and not just who the largest issuers are, which is what happens in a market-cap vehicle.
The smart-beta space globally grew to $1.9trn assets under management (AUM) in 2017 with BlackRock predicting it could almost double to $3.4trn by 2022.
"Smart-beta is the biggest growth area in ETFs," Li said. "Some investors are not comfortable with market cap due to certain characteristics, while some business models such as robo-advisors do not allow them to invest in active funds or they are too expensive for some investors."
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