Photographer: Yuriko Nakao/Bloomberg
JPMorgan Weighs Buying an Exchange-Traded Funds FirmBy , , and
Asset-management unit has met with Global X, ETF Securities
ETF Securities has spoken with as many as 10 potential buyers
JPMorgan Chase & Co. is shopping around for an ETF business that would boost its presence in the $3.5 trillion U.S. exchange-traded products market, according to people familiar with the matter.
The bank’s asset-management unit has had talks with the U.S. business of ETF Securities, said two of the people, who asked not to be identified because the information is private. JPMorgan also spoke with Global X, which it held a minority stake in at one point, though that firm entered into a definitive agreement this week to be purchased by South Korea’s Mirae Asset Management, the people said.
ETF Securities’ U.S. unit, with about $2.8 billion in assets, specializes in precious metals and commodity exchange-traded products. The company has been in conversations with as many as 10 potential buyers, including U.K.-based Aberdeen Asset Management, and is expected to be acquired some time in the first quarter, one person said.
Shares of WisdomTree Investments Inc., an issuer of ETFs, were up 7.5 percent to $10.51 at 2:29 p.m. in New York, extending gains after Bloomberg reported JPMorgan’s interest in takeovers. Invesco Ltd. rose 1.7 percent to $33.76, reversing earlier declines.
Chloe Etsekson, a spokeswoman for New York-based JPMorgan, said the firm doesn’t comment on market rumors. Representatives for Global X, ETF Securities and Aberdeen also declined to comment.
JPMorgan launched its first ETF product in 2014 and has expanded to about $3.5 billion in combined assets, according to data compiled by Bloomberg. The firm’s asset-management unit offers more than 20 smart beta funds, including strategies focused on equities, fixed income and alternatives.
The industry is undergoing consolidation as companies seek to meet fund investors’ demand for cheaper products. In November, WisdomTree Investments Inc. agreed to buy ETF Securities’ $17.6 billion funds business in Europe. A month earlier, Invesco, the fourth-largest ETF issuer with $133 billion in assets, reached a deal with Guggenheim Investments to buy $37 billion in exchange-traded assets.
“Traditional asset managers are looking to get into the space and acquire ETF businesses for their expertise and potentially getting some sort of scale out of the gates," said Andrew Craswell, vice president of investor services at Brown Brothers Harriman & Co. in London. “It’s a quick route to market."
— With assistance by Yakob Peterseil, and Lukanyo Mnyanda