Dutch retail broker BUX announced on Monday that it has become the first company to offer active ETFs in Europe via customisable, automated plans.
The broker is adding the plans for customers in the Netherlands, Belgium, Ireland, Austria, Spain, France, Germany and Italy.
BUX has launched the product in partnership with JP Morgan’s asset management division. The US investment banking giant has $38bn in assets under management within its portfolio of actively managed ETFs.
Clients that want access to the new products can access them via the BUX Prime subscription product. The broker is calling the new actively managed ETF product Prime Plans.
Actively managed marketing
The rise of actively managed ETFs has been more of a US phenomenon.
Partly this appears to be a marketing ploy. Investors have come to see active management as risky, with passive ETFs that track an index becoming more and more popular over the last decade.
Simple though it may seem, rebranding actively managed funds as ‘active ETFs’ is one way to counteract this.
The other point is that active ETFs convey tax benefits on US investors. If you invest in an ETF, you can swap your holdings for shares that the fund holds. The result is the ETF does not have to pay capital gains tax at the fund level.
This also explains why investors that may have put money into a regular mutual fund, choose instead to buy an active ETF.
However, in the UK and Europe, these tax benefits do not exist. Consequently active ETFs here are more about marketing. Whether it will work for BUX remains to be seen.
