Mirae Asset Global Investments has snapped up Global X, a $10bn exchange-traded fund provider that is partly owned by JPMorgan, in another example of how asset management companies are moving into and consolidating the fast-expanding industry.
The global ETF ecosystem recently broke past the $5tn mark as investors have continued to pour billions of dollars into the largely cheap, passive products and eschewed pricier, traditional active asset management that has struggled with performance since the financial crisis.
That has led many big investment groups to bleed assets, and spurred several to set up their own passive investment arms or buy smaller players. Just in recent years, Oppenheimer has bought VTL Associates, Legg Mason has acquired QS Investors, Goldman Sachs Asset Management bought Westpeak Global Advisors in 2014, and in 2016 JPMorgan Asset Management acquired a minority stake in Global X.
However, the vast majority of the ETF assets sit inside just three players — Vanguard, BlackRock and State Street together account for nearly three-quarters of the entire industry — and most of the new money is flowing into their funds, leaving many smaller playing scrambling to find niches ignored or avoided by the industry’s giants.
“It’s become harder and harder,” Bruno del Ama, chief executive and founder of Global X, told the FT in an interview last month. “Consolidation will happen over time, as smaller players can’t survive when the industry’s growth normalises.”
Mirae Asset is an investment group owned by South Korea-based Mirae Asset Financial Group, and already owns a clutch of ETF businesses — Horizons in Canada, BetaShares in Australia and Tiger ETF in Asia — but the Global X acquisition gives it a $10bn footprint in the US.
JPMorgan will sell its stake in Global X to Mirae Asset, while Mr del Ama will step down as chief executive and be replaced by Global X president Luis Berruga when the deal closes, which is expected to happen in the third quarter.
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