Slowdown in Spanish ETFs

It has only been six years since the Spanish stock market picked up the first of sixty-eight Spain-based ETFs. But it looks like this has been enough time for not only to grow into a strong business, but also to max out growth potential. Any example of that can be seen in the assets managed by ETF funds listed on the Spanish stock market. Through 2010 they boasted 200% growth of assets under management (AUM), but in 2011 they closed the year with a 13.67% reduction in assets (32.267 billion euros). Further, according to the latest figures from Bolsas y Mercados Españoles, that decline will extrapolate into this year. ETFs collected 331 million euros in investment capital through February, which is 53% less than what they collected during the same period last year.

This number could continue to fall if we take into account that the only Spanish fund manager that is still confident in national ETFs, BBVA AM, announced that it would liquidate seven out of ten of its ETFs during the next few months and that zero international fund managers with funds listed on the Spanish stock market are trying to increase their offerings of Spain funds for the near term. "At first we are going to focus on registering the products with the CNMV, because customarily it is strategic to roll out funds in Spain, and we want to stick to our bets in that market and also make it easy for investors to access these products," said Engracia Borque, Deutsche Bank's Iberia and Latam spokesperson for investment funds and hedge funds. In other words, in the near term the fund manager is not going to extend the range of ETFs it will offer in Spain. This range includes 27 listed funds currently.

Lyxor, the most active fund manager on the Spanish stock market, is also not planning on increasing the number of funds that it lists in Spain. "The idea is to not list more ETFs in Spain until there are no more market makers, because now there are just the fund managers creating markets, and that could mean they are losing liquidity," said Adrián Juliá, a stock market product spokesperson from Lyxor Asset Management.

Who loses?

Still, the fact that neither of the aforementioned managers have thought to list their funds on the Spanish stock market does not mean that they have lost confidence in the Spanish markets. In fact, both of them have considered expanding their product range via the CNMV or, similarly, they are thinking more about institutional investors than private investors. Borque explains, "at least in regard to other European stock markets, the advantages of the Spanish market are focused on tax implications and price."