Seven years ago, Credit Suisse exited the business with exchange-traded funds. Now the bank has announced its return – and expects the funds to also satisfy pent-up demand for another product class currently in favor with investors.
Investors have long been asking their bankers at Credit Suisse for exchange-traded funds (ETFs) and now Switzerland’s second-largest bank has relented: starting with immediate effect, the asset management at Credit Suisse is again offering a range of ETFs.
The Credit Suisse ETFs will be covering areas of the business where they have an advantage over the index funds that the bank still offered to its clients after selling the ETF business. Two of the three new ETFs are linked with sustainability benchmarks.
Escaping the Swiss Stamp Duty
The reason why Credit Suisse will have two ESG-based ETFs is based on demand from clients for ESG-products and the promise of the asset management division to gear its business towards sustainable investments, said Valerio Schmitz-Esser, head of Credit Suisse asset management index solutions, in an interview with finews.com.
The bank will register the ETFs in Ireland, because in Switzerland, funds, in general, are exempt from stamp duty, but not ETFs. That had also been the reason why Credit Suisse originally exited this business, Schmitz-Esser said.
Additional Distribution Channel
Credit Suisse, which will list the three ETFs in Switzerland, at Borsa Italiana, and in Germany, expects the funds to have some 700 million Swiss francs ($716 million) in assets at the start as it is merging three Luxembourg-based funds into the new Irish ETF structures.
The ETF business will give Credit Suisse an additional distribution channel, not least fo active products, and funds, said Schmitz-Esser. ETFs can be bought directly via the stock exchange, giving them high visibility in the market.
In Sync With a Digital World
Credit Suisse expects exchange-traded funds to gain in importance in the future because trading platforms are increasingly digital. With the growth of fintechs and with the emergence of robo advisors, banks have to provide appropriate structures and funds, said Michel Degen, the bank's head of asset management in EMEA and Switzerland. ETFs are ideal instruments for such platforms, even if it remains an open question which of the various platforms will emerge as the frontrunner in the coming years.
The asset management division has to be able to launch such products on all the possible future platforms, Degen said. Active products may in the future be offered as exchange-traded funds, as has been done in the U.S. already. Credit Suisse is looking into this option, he said.
