AMVESCAP PLC, London, is expected to take over distribution of 37 exchange-traded funds run by PowerShares Capital Management LLC, Wheaton, Ill., as early as July, once the acquisition of the ETF operator closes.
The purchase — the first time a money manager acquired an American ETF operator — could be a springboard for more deals.
"It's going to turn out to be a really important transaction" as part of merger and acquisition activity in the money management industry, said Donald Putnam, managing partner of advisory merchant bank Grail Partners LLC in San Francisco.
In an industry with only a few players, "there will be one or two more transactions in the next couple years," Mr. Putnam said. He declined to comment on firms that could be in the market to buy or be sold.
Denise Valentine, senior analyst at Celent LLC, a research and consulting firm in Boston, said the expected introduction of actively managed ETFs also could spur M&A interest by some mutual fund companies.
Aside from M&A activity, the potential for more change in the ETF industry is being driven by a bumper crop of new and differentiated strategies from by all kinds of providers. Within the last several weeks, State Street Global Advisors, Boston, launched six more to now manage a total of 65; WisdomTree Investments, New York has introduced its first family of 20 fundamentally weighted dividend index ETFs; and ProShare Advisors Inc., part of ProFund Advisors LLC, Bethesda, Md., rolled out eight new ETFs with "short or magnified" exposure to an index.
And PowerShares recently filed with the Securities and Exchange Commission to launch 31, 10 of which will be based on money manager Research Affiliates' fundamental indexes, sponsored by the FTSE Group, London.