Surge in ESG queries spurs ETF hiring spree at DWS
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DWS is hiring salespeople in Switzerland, the UK, the Nordics and France to help support the growth of its exchange traded fund business, and respond to a surge in queries about environmental, social and governance issues.
Simon Klein, global head of passive sales at DWS, said it was important to grow the sales team “to have enough capacity for client discussions because demand for ESG education is going up”.
ESG products are not like standard products that track the established benchmark indices, he said. The differences in methodologies between ESG indices were “huge” and this was driving the need for more detailed sales discussions, he added.
Last year, the Covid-19 outbreak and market disruption helped to drive flows into ESG, explained Klein. When clients recalibrated their portfolios and went back into the market after the sell-off, they went for ESG exposure first.
“There were constant inflows into ESG ETFs [after the sell-off] and no outflows,” he said.
This year the company expects increasing demand for ESG products because clients are planning to shift their multi-asset portfolios to ESG strategies. This includes private banks, advisers and discretionary fund managers.
“Traditionally, they have not used ESG products because they have followed a standard benchmark,” said Klein.
“If they switch the investment policy to make products ESG compliant then the asset allocation of the underlying portfolios will change and demand for ESG will accelerate,” he said.
Assets in ESG ETFs sold in Europe rose 137 per cent last year from €38bn to €90bn, according to Morningstar.
This represents 39 per cent of the €132bn overall increase in assets in ETFs sold in Europe last year.
Michael O’Riordan, founding partner at Blackwater Search & Advisory, said ETF salespeople were going to need to “tool up” and “add more depth and context to what they know about products”.
For example, at State Street Global Advisors, the whole ETF sales force and specialists in Europe, including senior management, are being asked to study for the CFA Society of the UK’s certificate in ESG investing by this June.
DWS is not specifically looking for sales staff with specialist ESG expertise for its Xtrackers ETF business, but rather “the right people with the right attitude and capacity to learn”, said Klein.
DWS has an ambition to increase Xtrackers’ market share in 2021, particularly by increasing flows into ESG but also into fixed income and equity products this year.
The main focus will be on launching ESG versions of existing products as well as some conversions of existing traditional ETFs into ESG variants to increase its ESG range.
Klein said there were also a lot of gaps to fill in its fixed income product range.
Last year, Xtrackers had the second-best ETF sales performance in Europe with €13bn in net inflows and an increase in its market share to 11 per cent, according to Morningstar.
iShares was the only firm to do better in Europe, with net flows into ETFs of €51bn and a market share of 44 per cent.
O’Riordan said that despite a record year for the ETF industry, sales teams at most providers were going to get smaller, not bigger.
“Last year has been instrumental in how business is done. Digital marketing, content and webinars do so much of the heavy lifting now in terms of getting the message to clients,” he said.
“Everyone is trying to compress their costs and reduce their overheads as much as possible,” said O’Riordan.
*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at igniteseurope.com.