Asset managers who are wary of jumping through all the hoops necessary to launch a fund may partner up with a white label ETF provider to quickly and cheaply bring their investment strategies to market through an ETF wrapper.
For example, the ROBO Global Robotics & Automation Index ETF (NYSEArca: ROBO), the original ETF dedicated to robotics investing, and the Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ), which helps investors gain targeted exposure the growing emerging market consumer sector, have been popular investment strategies that came to the ETF market through a partnership with Exchange Traded Concepts. ROBO now has $2.1 billion in assets under management and EMQQ has $425.9 million in assets.
“So, we’ve really been helping, you know, the little asset manager, who’s taken and created an index, and then brought to market. So that’s really been one of our strengths,” Mike Cronan, Director of Marketing Services for Exchange Traded Concepts, said at the 2018 Morningstar Investment Conference.
Seeking to grow their assets under management, small money managers are taking a closer look at ETFs. However, some are turning to so-called white label, or turnkey, ETF companies to build and launch an investment idea.
ETF issuers like Exchange Traded Concepts help go through the regulatory approval process, provide a board of directors and get an ETF listed on an exchange for a relatively small fee in startup costs.
Some small hedge fund managers see ETFs as an ideal way to increase assets under management. Smaller funds typically find it harder to bring in large pension funds and institutions that target large hedge funds with billions in assets under management and long track records. As a result, more are beginning to look at ETFs as a way to market their investment strategies, targeting financial advisors and retail investors instead.
“So having someone to guide you through the filing process, the 19b-4s, and really to respond to everything correctly is a great sort of consultative services to have,” Cronan added.
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