The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:So You Want to Launch an ETF Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, July 21, 2021

So You Want to Launch an ETF

Reported by Neil Anderson, Managing Editor

The ETF side of the asset management business continues to be a hot space for both new entrants and existing fund firms to debut products. Yesterday several leaders at back-office allies to fundsters offered some tips for fundsters eyeing the ETF space.

Start With Demand

Sonja Ursul Formato
Foreside Financial Group, LLC
Senior Director
When considering an entry into the ETF space, fundsters may want to avoid Field of Dreams logic.

"First off, you want to make sure that the marketplace is looking for whatever you're bringing to market," Sonja Formato, senior director at Foreside, said yesterday during the day one sessions of the two-day SunStar Strategic 2021 ETF/MF Conference. Formato was speaking on a panel, entitled "ETFs: The surge to participate and how to grow," that also featured: Mike Castino, business development officer and senior vice president of exchange-traded products at U.S. Bancorp Fund Services; and moderator Bret Eichenberger, practice leader of the registered funds group at Cohen and Company.

"It's not 'Build it, and they will come' anymore," Formato adds.

"You're not going to tell the marketplace what it wants," Castino agreed.

Castino and Formato urged fundsters to reach out to key regional B-D, wirehouse, and RIA allies before launching new ETFs.

"What are they trying to solve for? What do their clients need?" Formato asked.

"The ETF space is very receptive to people reaching out pre-launch or pre-discovery," Castino said. "I'd rather bring out the right product in due time than the wrong product in a short amount of time."

ANTs Are Great, But ...

Formato and Castino discussed the recent introduction of translucent ETFs (i.e. "semi-transparent" ETFs or "active non-transparent" ETFs, also known as "ANTs") to help active asset managers enter the ETF space without disclosing their secret sauce on a daily basis. Yet it's not the only option for active managers entering the space.

"There is still great work being done on the active, transparent side," Formato said. "Ark has had great success, and they're fully transparent."

MF to ETF Conversions Aren't For Everyone

Converting an existing mutual fund into an ETF can be a way to tackle the seed investment needs. (Castino noted that exchanges traditionally required at least 100,000 shares for at least $25 per share, which translates into $2.5 million in seed capital.) Yet such conversions are "not for everyone," Formato warned.

"It's a very lengthy process. There's a lot of considerations that go into that," Formato said. "It's a comprehensive project."

One key issue can be investor retention, Formato and Castino noted.

"If you've been around for a long time, and you've had a successful mutual fund, there will be a subset [of your fund's shareholders] that has no interest in converting to an ETF," Castino said.

That leads to another option: instead of converting an existing MF into an ETF, one could instead keep the MF and create an ETF that is meant to be a mirror image of the MF. That does translate into higher costs (since you're running two funds instead of one), but it may be worth the cost, Castino said.

"Why would you forgo those anchor clients ... who still want a mutual fund?' Castino wondered aloud. 

Stay ahead of the news ... Sign up for our email alerts now

 Do You Recommend This Story?

Return to Top
 News Archives
2024: Q3Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Add to My Yahoo!
follow us in feedly

  1. MFDF webinar - Lessons Learned from the Regional Bank Volatility and the Impact on Registered Funds, June 18
  2. IMEA webinar - Snapshot on the Talent Landscape, June 18
  3. 2024 MMI National Accounts Roundable, June 18
  4. MMI webinar - RIA Consolidators: The New Key Accounts?, June 20
  5. MFDF Director Discussion Series - Open Forum (Philadelphia), June 20
  6. MMI webinar - DoL Fiduciary Rule Update: What Are the Implications?, June 21
  7. WE Chicago - Pre-Morningstar Conference reception, June 25
  8. Celebrating 100 Years of the Mutual Fund, June 25
  9. New York YPEM Cornhole Classic, June 25
  10. Morningstar Investment Conference Conference 2024, Jun 26-27
  11. 2024 MMI Institutional Roundtable, June 26
  12. WE PNW Seattle - Pickleball and Networking, June 27
  13. Celebrating 100 Years of the Mutual Fund, July 11
  14. MFDF webinar - Mid-Year Tax Update for Registered Investment Companies, July 16
  15. MFDF Director Discussion Series - Open Forum via Zoom, July 17
  16. MFDF Director Discussion Series - Open Forum (New York), July 23
  17. IMEA Portfolio Construction Roundtable, September 19
  18. MFDF Continuing Regulatory Impacts on Fund Boards program, October 15
  19. 2024 MMI Annual Conference, Oct 15-17
  20. IMEA Philanthropic Day, October 22
  21. IMEA Leadership Summit, October 23
  22. IMEA Star Awards Celebration, October 23
  23. IMEA Marketing Summit, October 24
  24. 5th Annual ETFGI Global ETFs Insight Summit, October 29
  25. MFDF Director Discussion Series - Open Forum (Denver), November 6
  26. MFDF webinar - Digital Assets in the Fund Space (part 2 of 2), November 7

©All rights reserved to InvestmentWires, Inc. 1997-2024
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use