Christopher Friese
Director, Head of Lyxor ETF Asia @ Societe Generale
In the run-up to the Inside ETFs Asia conference, Jobs in ETFs sat down with Christopher Friese, the Head of Lyxor ETF business in Asia. Chris talks about the main differences between the European and Asian ETF markets, what made him decide to take on the new challenge and a preview of the core message he will present at Inside ETFs Asia in Hong Kong.
Jobs in ETFs: Please tell us about yourself and your experience. How did you get into the ETF industry and how did it progress?
Christopher Friese: I joined the ETF industry in 2007 in a Product Development capacity for iShares in Europe and switched to an ETF sales role later on. After a short intermezzo at RBS, I used to work as an Institutional Lyxor ETF Sales in Germany and was also responsible for covering our ETF clients in Eastern Europe. In early 2017 I moved to Hong Kong and am now responsible for the Lyxor ETF set of products and our clients in the region.
JE: Why did you decide to take on the challenge of looking after the Lyxor ETF business in Asia?
Chris: We have seen a lot of interest from Asian Institutional clients in Lyxor ETFs in recent years and with 19 listings in Singapore we already have a long established presence in the market. While the Asian ETF market is lacking in growth vs. the US and Europe, I do believe that this market has potential and that a lot of clients are looking to diversify their asset allocation towards a more global exposure. This trend has just begun, both in the Equity and Fixed Income space and it is exciting to be present in a market, which is not as established as other ETF markets worldwide. It is a wholly different perspective to Europe.
JE: What would you say the main differences are between the European and Asian ETF markets?
Chris: The main difference is the focus on the on screen liquidity for institutional clients. Clients in Asia look for large on exchange trading volumes , similar to trading larger stock positions, while in Europe clients almost exclusively order Over-the-Counter. I think this is also why the local ETF market tends to underperform in terms of asset gathering vs. other regions, as liquidity on screen for local listings is usually below levels in the US and Europe. We see a gradual shift in client behaviour, but it will take time before an ETF is not treated just like a traditional “stock”, but an instrument whose liquidity is dependent on the underlying stocks of the index. The Creation/Redemption mechanism is something that a lot of clients in the region are not yet entirely familiar with. Another difference is that clients here tend to be more US centric than in Europe in terms of their asset allocation, apart from large allocations to Asian Equities.
JE: What key skills do you think are necessary to have in order to be employable and successful in the industry?
Chris: Key skills are in my opinion to understand the product inside out, to anticipate your clients needs, to be in touch with the ETF community regularly, be it brokers or other index- and ETF provider and especially to be “hands on”. The ETF business is a people business in my view, much more so than in other areas of the Asset Management industry. Pro-activity is the absolute key to success in this business, which I cannot emphasise enough.
JE: What would your career advice be to people wanting to enter the ETF industry now?
Chris: I think there has never been a better time to enter the ETF industry with asset collection records in both the US and Europe. In my view, people should focus on getting as much product exposure as possible within an entry role, in order to understand the product by heart and join an established and reputable ETF house.
JE: You’ll be speaking at Inside ETFs Asia about the differences in buying local, US-listed ETFs & UCITs in Asia. Can you give us a preview of your core message?
Chris: As mentioned, clients see large differences in on screen liquidity profiles between Asian listed ETFs and US-Listed and European-listed UCITS products, but also take into consideration their own analysis on tax efficiency, cost structure and trading hours in terms of product selection. Some Asian clients might wonder for example why they should trade a European Equity ETF in the US, whenever the underlying market is closed. All of these will eventually lead to a client preferring one structure to another, as there are major differences between vehicles.
JE: The growth of ETFs has been phenomenal. What would you say are the biggest trends that will shape the industry going forward?
Chris: The biggest trend in the ETF space is retail investors getting a taste for the product. With MiFID II in Europe and other regulatory changes approaching fast, I believe retail investors will become a more important part of an ETF provider’s client base. Key to this is the trend towards mandatory fee disclosure and transparency and new entrants such as robo advisors becoming more and more prominent. The ETF business in Europe and Asia is an institutional market to a large part for now, but I can see that the trend towards more retail participating is unstoppable.