BLK BlackRock Inc

By Gerrard Cowan 

Credit Suisse is getting back into European ETFs.

The Swiss financial-services giant is launching three new exchange-traded funds in the second half of March designed to give European investors low-cost, convenient exposure to U.S. and international stocks, says Valerio Schmitz-Esser, the head of Credit Suisse Asset Management Index Solutions.

The new products -- CSIF (IE) MSCI USA Blue Ucits ETF, CSIF (IE) MSCI USA ESG Leaders Blue Ucits ETF and CSIF (IE) MSCI World ESG Leaders Blue Ucits ETF -- will be converted from existing index funds, he says.

Credit Suisse left the business on the Continent in 2013, when it sold its ETF arm to BlackRock. While it offers a number of exchange-traded notes in the U.S., the new products mark its first significant re-entry to the ETF domain.

There are two factors pulling Credit Suisse back to ETFs, Mr. Schmitz-Esser says. First, the ETF wrapper brings a number of tax benefits. For example, European investors pay lower U.S. withholding tax through an Irish-domiciled ETF than they would through other types of European funds.

Second, the industry in Europe has evolved since 2013, with fintech specialists and robo advisers increasingly using ETFs as essential building blocks in portfolios, due to their low cost, tax efficiency and ease of trading.

"In order to fill up these allocations, they need efficient ETFs and index funds," he says, adding that Credit Suisse aims to launch more ETFs over the coming year and beyond.

The European ETF market is dominated by the big names in global asset management, with little room for smaller players, says Kenneth Lamont, senior analyst for passive strategies at Morningstar U.K. Credit Suisse's approach -- leveraging existing successful index strategies -- is similar to that of other larger players attempting to establish or re-establish a European presence, he says.

"This is more about providing existing customers with the additional benefits of the ETF structure and perhaps grabbing part of the swelling ETF market, rather than making an all-out assault on an already saturated market," he says.

Mr. Cowan is a writer in Northern Ireland. He can be reached at reports@wsj.com.

(END) Dow Jones Newswires

March 08, 2020 23:14 ET (03:14 GMT)

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