ETF provider Source is launching a new platform – Source Markets II Plc – for which Legal & General Investment Management (LGIM) will be the investment manager with Northern Trust providing the administration and custody services.
Source said the platform will enable it to provide a wider range of physically replicated products, which will grow its existing range of some 15, including fixed income, precious metal and China ‘A’ shares products.
The launch will not provide a substitution for or convert any of its existing exchange traded products, that are built on a multi-counterparty swap model.
Lee Kranefuss, chairman of Source, said: “The new platform is all about increasing investor choice. We want to enable our investors to select the structure they prefer and are most comfortable with. Furthermore, having capabilities to launch more physical products will also allow us to target a wider investor base. Over 75% of investor flow since January 2014 has been into physical ETFs, so there is clearly strong demand for this type of replication method, and we intend to offer all of our investors the choice they deserve.”
All Source ETFs will offer intraday trading, and a full list of holdings published daily on the provider’s website, Kranefuss added. The benefit of having a platform for physically replicating ETFs means that the provider’s pipeline of products for 2016 can now be considered in light of whether physical or alternative replication will be the better way for investors.
“We will do this on a product-by-product basis,” Kranefuss said.