Dutch asset manager Robeco has announced the launch of its first exchange-traded funds (ETFs) today. This move positions Robeco among a growing list of traditional active managers venturing into the expanding ETF market.
A Shift in the ETF Landscape
Historically, most ETFs have been passive index-tracking funds. However, actively managed ETFs have surged in popularity in recent years. Currently, they account for approximately $1 billion of the overall ETF market, which has $14 billion in assets under management, according to consultancy ETFGI. In the U.S., actively managed ETFs have captured 72% of the new net fee revenue from ETF inflows this year, as reported by Morningstar, while actively managed mutual funds continue to see significant outflows.
In Europe, the active ETF market is still developing, representing about 2% of the continent’s $2.2 trillion in ETF assets. However, momentum is building, with firms like Cathie Wood’s Ark Invest and BNP Paribas Asset Management launching their first active ETFs earlier this year. BlackRock’s iShares also introduced its initial active equity ETFs, while Jupiter Asset Management and Eurizon Capital are expected to follow soon.
Robeco’s New Offerings
Robeco’s new suite of four active ETFs, based in Rotterdam and a subsidiary of Japanese financial giant Orix Corporation, marks the company’s entry into the ETF space. These funds leverage Robeco’s existing expertise in sustainable investments, a niche the firm embraced long before it became widely popular.
As of June, nearly all but €3 billion of Robeco’s €196 billion in assets were managed according to environmental, social, and governance (ESG) principles. The firm has also built two decades of experience with enhanced indexing strategies through systematic quantitative investing, which makes up €76 billion of its assets.
The newly launched ETFs include the 3D Global Equity, US Equity, and European Equity Ucits ETFs, which aim to balance risk, return, and sustainability. The fourth ETF, the Robeco Dynamic Theme Machine Ucits ETF, utilizes advanced natural language processing techniques to identify emerging investment themes early.
All four ETFs will be listed in Frankfurt, with plans for additional listings, including on the London Stock Exchange, expected in the coming months. The 3D ETFs will have fees ranging from 0.2% to 0.25%, while the Dynamic Theme ETF will be priced at 0.55%.
Strategic Move Amidst Outflows
Nick King, head of ETFs at Robeco, stated, “Robeco has a long heritage of active management and is recognised as a leader in sustainable investing.” Additionally, the firm plans to introduce a 3D Emerging Markets Equity ETF in the first quarter of 2025, along with fixed-income ETFs set to launch next year.
Robeco has experienced significant outflows from its mutual fund range, with a net €7.7 billion leaving the firm in 2023 and €881 million exiting in the first eight months of this year, as reported by Morningstar Direct. However, Robeco asserts that the decision to enter the ETF market is part of its broader corporate strategy for 2021-2025, rather than a direct response to these outflows.
The company emphasized that active ETFs serve as an additional means to capitalize on its intellectual property in sustainable investing, quantitative strategies, credit, and thematic investing.
Industry Recognition
Peter Sleep, an investment director at wealth manager Callanish Capital, praised Robeco’s new ETF offerings, calling the firm one of the highest-quality asset managers in Europe. He noted, “They were thought leaders in ESG before everyone else jumped on the bandwagon and have a team of research professionals comparable to AQR and Dimensional,” referring to two highly regarded U.S. quantitative firms.
Regarding the fees for the 3D ETFs, Sleep commented, “That strikes me as very reasonable and consistent with what we have seen from other big low-tracking-error active funds from JPMorgan, Fidelity, and Franklin Templeton.”
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