The asset management businesses of major insurers are not known to be particularly aggressive in product offerings or business strategies.
But the ongoing expansion of the exchange-traded fund market has spurred several large insurers to finally put stakes in the ground, through a mix of acquisitions and launches.
And, unlike many fresh entrants to the ETF business, these insurers are able to bring advisers, customers and assets that startup ETF managers often lack.
"There are circular benefits for these companies and issuers," said Todd Rosenbluth, director of ETF and mutual fund research at CFRA in New York. "And it's just hard to justify bringing out new products as traditional mutual funds these days. But third-party investors need to be mindful of liquidity."
Low trading volume can be a deterrent to smaller advisers and retail investors who have been taught to factor trading spreads into product decisions. For example, said Mr. Rosenbluth, three ETFs issued by Nationwide Asset Management in September have more than $100 million in assets but only trade about $5,000 per day.
But Mr. Rosenbluth believes the products offered by insurers' asset management businesses will remain viable. Of the 82 products from eight managers whose parent company's business includes insurance underwriting, 70% have at least $25 million in assets, according to research firm Factset, in line with the ETF market as a whole.
Yet the commonality among these issuers relates only to their core business of insurance and recent entry into the ETF market.
New York Life Investment Management, for example, bought boutique ETF manager IndexIQ LLC in 2015 and now supports 21 ETFs and $3.7 billion under management on that platform. The $1.1 billion IQ Hedge Multifactor, which holds ETFs of other issuers, remains its largest ETF.
TIAA-CREF and The HartHartford Financial Services Group also opted for acquisition: TIAA, which picked up municipal bond specialist Nuveen Investments Inc. for more than $6 billion in 2014, has recently focused on the market for ETFs indexed to environmental, social and governance factors, managing $450 million in ETFs; and Hartford Funds acquired startup manager Lattice Strategies LLC in 2016 and manages $420 million in ETFs.
The John Hancock unit of Manulife Financial, on the other hand, attempted to storm the market with the first ETFs built on indexes developed by adviser darling Dimensional Fund Advisors LP; those 13 products have attracted just $1.15 billion in aggregate in 2.5 years.