ETFs, like traditional mutual funds, typically consist of a broad basket of assets such as equities and fixed‑income securities. What sets ETFs apart from other fund types is that they are bought and sold on the stock exchange in real time, and investors pay a brokerage fee on each transaction.
ETFs are usually passively managed and track a specific index, such as OMXS30, but they can also be actively managed or thematic, focusing for example on renewable energy or commodities.
“The ease and efficiency of investing in ETFs – for both retail investors and institutional players such as pension funds and insurance companies – is a key reason behind their success. But ETFs also offer major advantages for issuers”, says Jonas Andersson, ETF & Derivatives Sales at SEB.
Gustaf Dahlström, Senior Business Analyst, explains the benefits from an issuer’s perspective:
“When a fund management company issues an ETF, it isn’t dependent on getting the fund listed on various distribution platforms. The fund becomes visible on stock exchange listings as soon as it is launched. On top of that, trade administration is far simpler compared to a traditional fund, resulting in smoother back office and settlement processes.”
The number of Swedish ETF issuers now looks likely to grow. A recent government proposal suggests allowing asset managers to combine different distribution channels within a single fund structure. In practice, this would make it easy for fund companies to launch exchange traded funds, ETFs, alongside their traditional offerings.
“We’re expecting an upswing. That’s a development that would mirror the trend already seen across continental Europe, where more than half of all capital invested in funds already flows directly into ETFs”, says Gustaf Dahlström.
Both Jonas Andersson and Gustaf Dahlström are part of the SEB team that provides and develops services for financial institutions, such as fund companies looking to issue ETFs. Currently, they are working on a new solution for this very group.
“At SEB, we’re now developing an exciting new service for institutions looking to join this trend and issue their own ETFs. But for now, I can’t reveal much more than that”, Jonas Andersson concludes.