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Banking

BGI wins the ETF round

The exchange traded fund market is an area in which Barclays Global Investors can lay solid claim to being more successful than State Street Global Advisers. BGI has built up its ETF business (iShares) in five years to a level of $178 billion, compared with SSgA’s $80 billion.

In theory, this shouldn’t have been the case. SSgA developed and launched the ETF market with the American Stock Exchange in 1993 with the Standard and Poor’s Depositary Receipt (the Spider), the first and still the largest ETF, with assets of $47 billion. Given the significant headstart, the 47% share of the ETF market today ought to be SSgA’s, not BGI’s.

The way BGI handled the launch and development of its iShares products clearly indicates the new aggressive mood that has taken hold of the once sleepy manager, and is surely accountable for its success in the area.

BGI knew it needed to extend its customer reach to retail clients. “At first we thought we needed a mutual fund company, but knew we didn’t have any expertise in this area and would have had to hire a huge sales force,” says Chris Sutton, CEO iShares Europe & Asia ex-Japan.

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