IU: So that's good news for investors, who will see more price competition amongst ETF providers

Baudson: I've been meeting a lot of investors over the last six months, and we've had an extremely favourable response.  They want competition in terms of products, and they want competition in terms of price.  Swap-based ETFs allow for better tracking, but at the expense of a small counterparty risk, so they want to have as many players as possible.  The fact that we have Crédit Agricole as our swap counterparty, the biggest French bank, is a positive point.   Second, price competition is always welcome for investors.

IU: Where are you listing your ETFs?

Baudson: For the time being, only on Euronext.

IU: Would you therefore say that your target client base, at least initially, is domestic, within France?

Baudson: No, it's not. While the domestic client base is important for us, for CA Cheuvreux French clients represent only 20% of the business.  UK clients represent about 45%, other continental European clients (Germany, Italy, Switzerland) another 25%, the remaining 10% being the rest of the world.

IU: Could you go into more detail about the forthcoming product launches?

Baudson:  The next (December 9) launch will include ten new equity ETFs, covering large international regions, and some European sectors.  In 2009, the next listing will probably be equities again, and we will add some emerging market and style ETFs.  As soon as possible we will add money market and fixed income ETFs to the range.

IU: Are you looking at any inverse or leveraged products?

Baudson: A few of them are planned for 2009 as well.

IU: What was the thinking behind the choice of MSCI as the index provider for your recently-launched European country indices?

Baudson: First of all, we met many clients who required them.  As you know, many institutional investors use the MSCI indices for their benchmark.  Also, there are plenty of existing CAC40, DAX and MIB ETFs, so we didn't feel the need to add to those.  There were no existing MSCI country indices listed in Europe.  There are some listed in the US, which are very expensive, and we felt they didn't represent a good deal for European investors. 

IU: Most of the CASAM assets under management are still in the three "old" ETFs - the S&P Europe 350 and S&P Euro, and the CAC 40, while the recently-launched funds all have €3-4 million invested.  Were they seeded?

Baudson: Yes, a very small amount was used for seeding them.  These ETFs were launched at the end of September, and our dedicated sales team only started two weeks ago.  So we are just starting the real sales process now.   We also need some time for the market to get to know us and our products.  It's always at least a three month process.  So we'll look at our assets under management figures at the end of Q1 2009 and see how we stand then.  The early feedback we've had from clients, and from our sales people, has been very positive.

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