UBS ETF looks at growing its product range in Italy

With $25.8bn inflows in the first five months to the European ETP industry,
Simone Rosti, executive director, head of UBS ETF Italy, says the company is
poised to launch more products on the Italian market.

Present in the European market since 2000, UBS ETF dived even deeper
into the international ETF market from 2011.

Up to that point, the company had only offered ETFs following internal request. Since then, thanks also to a change in management, the business’s overall AUM went from €4bn to €14bn and Italy has become as
equally an important market as Switzerland, the UK and Germany.

In 2013 alone, UBS ETF launched some 60 products on the Italian market, and most of them were also listed on the Italian stock exchange.

Tagging on to a positive year for the industry, UBS ETF posted some €200m
inflows in Italy from the beginning of 2014 to end of May.

“In order to meet our clients’ interest, we recently changed our offer by
merging retail and institutional pricing under a single class,” Rosti (pictured) says.

Focusing mainly on classic core equities from developed and emerging markets such as the US, Japan and Europe, UBS also decided to cut its prices and offer a 30bps spread on the MSCI Index, Rosti explains.

“Within core equities strategies, we are also launching satellite products
on commodities with the currency hedging as well as an active ETF to be launched on Borsa Italiana,” he says.


UBS ETF traditionally focuses its product distribution on institutional investors, as well as fund selectors of discretionary portfolio management,
funds of funds, and insurance products apart from pure institutional such as banks, pension funds and foundations.

The retail segment will be the next frontier to tackle, if flows continue to
come in.

“We do pay attention to the retail end of the client basis by listing ETFs
on the stock exchange. Moreover, intermediaries are evolving in Italy and increasing their market share and that’s very important for us as we believe
that ETFs are products that should be explained to clients by a qualified
adviser,” Rosti adds.

Asked whether ETFs are going from being a niche product to a more mainstream one, Rosti says that the trend is unstoppable, although some
limits remain.

“ETFs are a type of democratic product as they are offered at exactly the same conditions to all types of investors. However, there is still a barrier
linked to the fact that ETFs do not pay a commission fee to intermediaries
and are therefore less attractive for them.

“However, if we look at the US, which I believe is the model market for ETFs, 60% of ETFs are distributed by intermediaries,” Rosti explains.

However, the country head also points out that a shift has already happened
following which ETFs have gone from being an instrument used for tactical
reasons and to get access to niche markets, to being one used to build clients’ portfolio and to generate alpha.

Looking ahead at the second half of 2014, Rosti says that UBS ETF remains
positive on European equities, while searching a more diversified type of

“We are also noticing a comeback of interest in emerging markets, however,
clients remain cautious while expecting returns on equities. The client base is still quite divided between those who still bet on BRICs and others
who look with more interest at Eastern Europe.”

Rosti concludes that they notice great expectations on the euro/dollar currency exchange, while remaining cautious on bonds.

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