Increasing number of ETF providers look to self-indexing to cut costs

High fees from index providers

A number of asset managers are looking at self-indexing the ETFs they launch in order to avoid the high fees from index providers and differentiate themselves from their peers.

Although not a new phenomenon, ETF providers are increasingly looking at ways to save costs and improve margins in a low- yield environment, with self-indexing one of the potential options. Since entering the European ETF space last October, J.P. Morgan Asset Management (JPMAM) has launched two "alternative beta" products and seven fixed income vehicles, all of which are self-indexed. This is also the case for Franklin Templeton Investments which, after entering the European ETF market in September 2017, self-indexed its LibertyShares smart-beta ETF suite. One key issue industry co...