Large insurance company takes the plunge into ETFs buying small firm with $1.5 billion in assets under management. Can we expect the same north of the border?
New York Life announced Thursday that its investment management business is buying IndexIQ, a niche player focused primarily on hedge fund strategies. Its biggest fund, IQ Hedge Multi-Strategy Tracker ETF
(QAI), has almost a billion dollars under management and is likely the main prize in New York Life’s eyes.
In its press release, New York Life Investment Management CEO Drew Lawton stated, “IndexIQ has established itself as a true innovator and market leader offering the next generation of liquid alternative ETFs, and we intend to leverage IndexIQ’s capabilities to become the dominant provider of non-traditional ETF solutions to the market.”
It hasn’t said whether it intends to move beyond IndexIQs niche focus but you have to wonder given the rising popularity of ETFs combined with the fact New York Life’s Mainstay Funds has over $100 billion in assets under management. Add to this the October acquisition
of VelocityShares by Janus Capital Group and it’s hard to imagine New York Life not leveraging its distribution to grow AUM.
Granted, actively-managed ETFs still are a very small piece of the ETF pie, but all signs point to New York Life doing something bigger with its newest asset.
So, what can we expect north of the border?
It’s possible Sun Life or one of the other major Canadian insurance companies will take a run at an ETF provider, either one that’s home-grown such as Purpose Investments or one of the many smaller, independent ETF firms in the U.S. Of course, you could say the exact same thing about the banks.
WPs reached out to Jim Ruta, an insurance industry expert, as well as Rob Sedran, managing director of equity research for CIBC World Markets. At press time we’d yet to hear back. As soon as we get their opinions we’ll be sure to report them.
Ultimately, it’s hard to know what the insurance companies in Canada have up their sleeves when it comes to future acquisitions. It stands to reason, however, that yesterday’s announcement is a sign large insurance companies don’t intend to sit idly by while others grab market share in the ETF space.
Whether they do or don’t, one thing’s for sure, ETF M&A continues to heat up.