Custodians and fund administrators that have been rated in Global Custodian’s latest ETF Administration Survey have received praise from asset managers in supporting their entry and expansion in this ever-growing market.
In the second iteration of the survey, Global Custodian received responses from over 80 global ETF issuers representing nearly $3 trillion in assets under management (AuM).
Overall, the majority of providers improved on last year’s scores, as the average score for each category increased (see Table 1). The most improved service category was ETF Basket Services (6.39), while Onboarding/Launch Support (5.97) reported the smallest growth. Technology (5.69) received the lowest average score, yet this was still an improvement from last year’s survey.
Table 1: Range of scores (widest to narrowest)
Category | Average Score 2021 (weighted) | Minimum | Maximum | Range |
Securities Lending | 6.07 | 4.50 | 7.00 | 2.50 |
Reporting to Institutional Investors/ Authorised Participants | 6.05 | 5.48 | 7.00 | 1.52 |
Technology | 5.69 | 5.08 | 6.56 | 1.48 |
ETF Basket Services | 6.39 | 5.60 | 7.00 | 1.40 |
On-boarding/ Launch Support | 5.97 | 5.31 | 6.71 | 1.40 |
Fund Accounting | 6.07 | 5.44 | 6.71 | 1.27 |
ETF Workflow Process | 6.20 | 5.30 | 6.52 | 1.22 |
Client Service | 6.07 | 5.54 | 6.61 | 1.07 |
Compliance Support | 5.91 | 5.61 | 6.64 | 1.03 |
Price | 5.67 | 5.22 | 6.17 | 0.95 |
ETF Servicing Model | 6.18 | 5.62 | 6.53 | 0.91 |
The collective scores of all the providers shows that respondents were very happy with the service delivered during a time of increased operational strain and changing market factors.
Providers that received the highest scores were those who were able to deliver a more full-rounded offering to help smaller firms enter the market, while also enabling those already active to expand into new product types.
In addition, the differentials between scores were fairly small, signifying a high level of consistency around the main ETF services offered by providers. Securities Lending had the widest differential, whereas the ETF Servicing Model was rated fairly similarly between providers.
The survey highlighted how asset managers rely more on their providers to not only carry out fund administration or ETF basket services, but to be a true partner whereby they consult and educate clients from launching a fund all the way to the back-office.
Prior to conducting the survey, Global Custodian conducted a review with leading ETF servicers around how it can improve the experience for both the respondent and the provider, while also consulting on what new categories can be included to reflect the changing dynamics of the ETF market.
As such, the 2021 survey included two new categories. The first was ETF Workflow to gauge client sentiment around order capture, data delivery, speed of processing, and connectivity to execution platforms. The other was Securities Lending, which has become a growing segment within the overall ETF offering of providers. While the number of respondents that use securities lending services was relatively low – a reflection that the practice still has a long way to go to reach maturity – those that did were able to rate their provider around quality of collateral, revenue returns, counterparty risk selection and market coverage.
To view the results of the 2021 ETF Administration Survey, please click here.