UBS ETFs haemorrhage assets following Credit Suisse takeover

UBS posted the largest net outflows for exchange traded funds in Europe last month, amid investor concerns about its takeover of Credit Suisse.

Europe’s ETF industry as a whole recorded inflows of €13.1bn in March, with iShares collecting the largest inflows at €7.7bn, according to Morningstar data.

But UBS ETFs had €2bn in net outflows, while Credit Suisse had the second largest in Europe at €179mn.

UBS’s MSCI ACWI Socially Responsible ETF was hardest hit with €1bn in outflows, while its MSCI Canada and MSCI Australia ETFs had the third and eighth largest outflows at €517mn and €347mn respectively.

Amin Rajan, chief executive officer of Create-Research, an asset management consultancy, said: “Investors have been worried about the organisational chaos in the wake of the shotgun wedding with Credit Suisse.

“They also worry whether key staff would be poached by competitors.

“Even at the best of times, mergers are seen as disruptive: senior executives always end up managing events, not the business.”

Michael O’Riordan, founding partner of Blackwater Search and Advisory, said: “It is also worth bearing in mind that a lot of the ETF assets held at UBS come from their internal wealth platform, so it could be their large wealth clients expressing macro views.

“Remember ETF flows very often tend to be the first indicators of how the general markets are thinking.”

UBS ETFs had net inflows of €1.3bn in January and €964mn in February, before Swiss authorities orchestrated the merger between UBS and Credit Suisse last month.

Credit Suisse ETFs had net inflows of €118mn in January and €72mn in February.

“Our UBS ETFs had net inflows for the first quarter,” a UBS spokesperson said.

“During March, we saw a change in asset allocation towards bonds driven by UBS Global Wealth Management’s [chief investment office], as well as similar moves by a number of third-party clients, resulting in a sizeable shift out of equity funds into fixed income.”

The merger will create the fourth-largest ETF provider in Europe, slightly ahead of Vanguard, with combined assets of €87.4bn and a market share of 6.4 per cent as of the end of March, according to Morningstar data.

UBS will be Europe’s third-largest asset manager overall and the second-largest provider of passive funds, as Ignites Europe has previously reported.

Switzerland’s federal prosecutor has opened an investigation into the takeover.

*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at igniteseurope.com.