Head of ETF Strategy @ WisdomTree Europe
Nizam Hamid has worked at most of the major ETF issuers in Europe.
Starting out as a humble analyst in the 1990s, he worked his way through UBS, Deutsche Bank, BlackRock and Lyxor before his current role as head of ETF strategy for WisdomTree Europe.
Nizam talks to Jobs In ETFs about the crisis of confidence in French banks when he was at Lyxor, his search throughout his career for new opportunities and the importance of working for a company that can add value for clients.
That education challenge was critical in the early years, and remains so today, as we’ve moved away from market cap to smart beta. It’s still about education.
JE: How did you get into the ETF industry and how did it progress?
Nizam: I read economics and during the summers I interned as a small company equity analyst, which led to an offer from UBS in London to join its analyst team. I moved to Japan with UBS and worked there for four years, and I was ranked a top quant analyst in a Greenwich Associates survey. And then I left UBS to BZW, the precursor to Barclays Capital, working mostly on factors and quant portfolios for non-domestic clients.
I came back to the UK for personal reasons and moved on to Nat West. In 1996 I was rated the number one quant analyst in Europe.
Then at Deutsche Bank, I worked with the X-tracker team which included Manooj Mistry and others, and saw how ETFs worked from a sales and distribution perspective. At that time ETFs were relatively expensive – nothing with a single digit basis point TER – and even with futures trading at discount there was still growing interest in ETFs.
When iShares approached me in 2008, I thought it was a very interesting opportunity as they were completely focused on the ETF message and business model and getting these funds out to a broader range of clients, and the dedication of resources was on another scale.
I left iShares in 2010 to join Lyxor as deputy head of their ETF business and it was the number two provider in Europe. This was just before the crisis of confidence with French banks, and that coincided with a very public debate around replication techniques – physical versus swap-based structures. Lyxor was an entirely swap-based issuer. CDS spreads and rates rose dramatically so in terms of counterparty risk, clients needed to be more convinced about the synthetic structure even though it was robust and that became relatively challenging.
I left in November 2012. After working as a consultant for FTSE – I still sit on three of their index committees- and 18 months at a small hedge fund, I came to WisdomTree.
JE: WisdomTree Europe co-CEO Hector McNeil described your hire in 2015 as a “coup” for the company. What tempted you to join WisdomTree after your wealth of experience?
Nizam: WisdomTree was a very interesting opportunity as it was much more focused on targeting smart beta, a strategy that exists here but you can’t buy what we offer from any other issuer. I was tempted by the uniqueness of the offering.
If all you’re doing is licensing an index, the same index everyone else is licensing, it just becomes a conversation with clients about fees. When we talk to clients it’s all about differentiating what we do and how we can add value through smart beta.
JE: As you moved up throughout your career, what questions were you asking yourself when it came to taking the next step? Can you give some examples?
Nizam: When I joined iShares, I knew I would be joining Lee Kranfeuss and the leading issuer in Europe, and that was very attractive. It made sense to go. At Lyxor, it was a chance to be deputy head of business with a broader scope of involvement across many areas, and was also a completely different opportunity to past roles. At WisdomTree, as I have described, we have unique products and an edge, and that produces a totally different conversation with clients.
JE: What has been your biggest challenge so far?
Nizam: At the onset of my career, at Deutsche and even at iShares, it was getting people to understand why they would buy ETFs. It wasn’t a given. In the institutional space investors were using other products and were hearing a lot about ETFs but not always buying them.
That education challenge was critical in the early years, and remains so today, as we’ve moved away from market cap to smart beta. It’s still about education. A lot of what we do is non-standard; it’s not super complex, but non-standard, and a case of explaining how ETFs fit into portfolios and model portfolios.
JE: And conversely, what has been a big highlight of your career?
Nizam: At iShares we kept our number one position for many years, even throughout the credit crisis of 2008. You saw people putting money into ETFs during that time. There were outflows from the rest of the industry but ETFs grew assets. I’m not saying it was counterintuitive but clearly people were happy to buy low-cost and transparent passive products.
It was gratifying. There was a real buzz. It was also a time of change of ownership from BGI to BlackRock, but the fact we could still gather assets meant there was a positive vibe in the office.
JE: What would your career advice be to people wanting to enter the ETF industry now?
Nizam: Find an area where you’ve really got a chance to show how you add value to clients. There is so much commoditisation as the market has become so competitive and the world of five or six basis point TER products is not great.
I would advise searching for a niche player. Wherever you go, it’s important to understand the mechanics and the nitty gritty.
JE: What would you say are the biggest trends in the industry?
Nizam: We’re seeing a shift in investors’ use of ETFs and there is big growth of Robo Advisers and low-cost ETFs, which is great. With MiFID II you will see change as to how people pay for products and advice, and there will be greater transparency, which is something the FCA has been looking at too.