These ETF service providers allow small money managers to dip into the ETF market without establishing a separate trust and board, compliance, legal and audit, and other operational infrastructure. Instead of paying millions of dollars to launch their own ETFs, money managers just pay a smaller upfront fee to the ETF service provider and they are off to the races.
These ETF platforms typically cater toward managers that do not have the time or money to go through the exemptive relief regulatory process. Instead, they seek out so-called rent relief from an existing ETF provider and serve as either a subadvisor or index provider to the ETF turnkey platform.
The ETF turnkey platforms may make sense for managers who do not want to launch a large suite of ETFs, do not want to develop the operational expertise specific to ETFs or are interested in testing out the ETF market, according to John Alshefski, senior vice-president at SEI.
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.