1) Wells Fargo Asset Management to Become Allspring Global Investments; Initiates Leadership Transition
PR Newswire | 7/26/2021
Because… After the acquisition by private equity firms, rebranding became necessary for the newly independent asset management firm. The new name Allspring reflects “its commitment to renewal, growth, and meaningful client outcomes,” according to the news release. The industry is not short of renaming examples. Genworth Wealth Management became AssetMark, and ING U.S. was turned into Voya, for instance. However, not all rebranding efforts are embraced by the investing public. Earlier this month, Standard Life Aberdeen officially changed its name to abrdn, which caused considerable controversy and even invited a lot of ridicule. Joking aside, most people do not know how to pronounce it. While the abbreviated name has generated free publicity, we are unsure how dropping three “e”s contributes to building a stronger brand identity. The firm claimed that the name is modern and digitally enabled, but critics deemed that desperately wooing young investors would not help stem outflows. We believe a name should be pronounceable and recognizable first in order to enhance brand equity and raise investor awareness.
2) Aon and Willis Towers Watson Mutually Agree to Terminate Combination Agreement
Aon | 7/26/2021
Because… Despite an earlier approval from Europe, U.S. regulators put the brakes on the $30 billion deal. The merger, which was announced in March 2020, would bring together two of the three largest global insurance brokers, making the combined company the world’s largest. The U.S. DOJ filed a civil antitrust lawsuit in June, alleging the transaction “threatens to eliminate competition, raise prices, and reduce innovation for American businesses, employers, and unions that rely on these important services.” We agree that every industry should offer more choices and encourage competition. In the mutual fund space, big companies are getting bigger through either organic growth or acquisitions. They not only boast economies of scale, but also have financial resources to invest in technology. By bringing in investor assets at a faster pace, they pose significant threats to the growth of smaller firms. However, not everyone wants to go to the giants. Smaller firms should be given a chance to compete if they have a unique value proposition and are able to deliver solid results as expected.
3) ETFs Hit $500B in Flows This Year
ETF.com | 7/27/2021
Because… As we expected, ETF sales topped $500 billion in July. This is an important milestone because it is very close to last year’s record high of $504 billion. At the current pace, ETF flows will undoubtedly set a new record this year. The sales may even approach $1 trillion should a year-end rally materialize. Strong stock market performance likely has attracted investors. As of June, the S&P 500 Index generated 15.3% for 1H21, which was the second-best first-half performance since 1998, behind only 2019’s 17% return. In comparison, the index gained 18.4% in 2020. Based on the Morningstar data, U.S. Equity already raked in $174.1 billion in the first six months, surpassing its 2020 intake of $129.6 billion. International Equity absorbed $96.4 billion, more than tripling its inflows of $29.8 billion throughout 2020. Flows of $79.0 billion into Sector Equity also exceeded its 2020 sales of $70.2 billion. These equity asset classes accounted for 75% of the industry’s total sales. Investors are likely to keep flocking to equity ETFs if the bull market continues its run for the rest of the year.