Wells Fargo’s $1 Trillion Opportunity to Become an ETF Issuer

wellsfargoIf recent regulatory filings are any indicator, Wells Fargo & Co (NYSE:WFC) could soon start issuing its own exchange traded funds.

The company recently filed for “exemptive relief” with the SEC, which would open the door for WFC to begin offering its own funds. From ETF.com:

It doesn’t get much bigger than Wells Fargo, the largest bank by market cap ($248 billion) and the third-largest U.S. bank by assets ($1.85 trillion). Wells is familiar with ETFs by way of providing indexes for funds like the SPDR Wells Fargo Preferred Stock ETF (PSK), the Etracs Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETN (LMLP) and the Etracs Linked to the Wells Fargo Business Development Company Index ETN (BDCS).

Wells had filed for an active short-term bond fund under a different exemptive relief request a while back and has yet to move further ahead. But certainly as an index and mutual fund provider, Wells is in a good position to begin offering both passive and active funds.

Other banks to enter the space recently include Goldman Sachs, Legg Mason, and Franklin Templeton. The ETF world is red hot right now, with new issues over the past year up about 10% from the year prior. Many newer ETFs face liquidity issues, however, which exchanges like Nasdaq are taking unusual steps to try and remedy.

Time will tell if Wells actually follows through and begins issuing ETFs, but the opportunity is huge. The company boasts over 6,300 physical bank branches, and its Wells Fargo Advisors arm claims over $1.17 trillion in retail client assets under management. That’s a whole lot of potential money to push into its own funds, which it would then earn fees on.

Wells Fargo shares $48.12 fell $0.81 (-1.67%) in Wednesday afternoon trading. WFC has lost 11.5% year-to-date, badly trailing the 7% gain in the benchmark S&P 500 index.

WFC-2016-08-10

Perhaps a dip into the ETF world would provide WFC shares the catalyst they need to start rising again.

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