Let’s connect
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
ETFs have become the investment wrapper of choice for millions of investors worldwide. With record-breaking inflows month after month, asset managers are eager to launch the next generation of ETF products.
Here’s the thing: ETFs aren’t without expenses, and the cost of upkeep can be high. If your ETF operations aren’t cost-efficient, even the most brilliant strategy can fall flat.
Ready to slash your ETF administration and operation costs? These seven expert-backed strategies will show you exactly how to do it.
You can’t make cost-effective choices if you don’t consider every expense.
Exchange-traded funds need money to start up and bring to market, but don’t forget about maintenance costs. Issuers creating a new ETF via a mutual-fund conversion must navigate several expenses.
The most important thing that makes an ETF function is how new shares are created and existing shares are redeemed. Creation starts with buying securities, then bundling them into the exchange-traded fund structure. Think of an ETF’s redemption mechanism as a mirror image, with all underlying assets unwrapped into separate components.
Authorized participants, which handle the making of creation units, come with their own price tag. Yet there are several other expenses that go into getting an ETF on its feet. These include:
Potential penalties (if noncompliant)
Don’t forget the costs of distribution, including dividends, interest, capital gains, and return of capital. Managing portfolio holdings and their distributions requires careful coordination with brokerage partners to ensure cost-effective execution. If the ETF strategy pivots or the fund needs to change its structure, that also comes with an administrative price tag.
If you understand every cost and build a cost-efficient exchange-traded fund, the fund expense ratio can be lower. This, in turn, may help you attract more investors.
Many investors are drawn to the benefits of ETFs, including their easy-to-trade, tax-efficient wrapper structure. A lower expense ratio can help sweeten an already sweet deal for investors.
Creating a powerful pricing method for your ETF offers several benefits. That’s because improved transparency leads to greater investor confidence.
Whether you’re working with an actively managed ETF or a passive fund, portfolio managers need investors to understand how investment decisions are made. If investors feel they can look under the hood to see how the ETF is working and why, they’ll be more likely to help the ETF meet its investment objectives. Improved liquidity and higher trading volume will also make it easier for investors to buy and sell shares.
It’s also critical for market participants to engage in arbitrage activity. You want your ETF share price to align with the value of its underlying securities, which could differ from the NAV due to premiums or discounts.
Finally, both passive and active management strategies need ways to ensure the creation and redemption processes are as cost-efficient as possible.
No battle plan survives first contact with the enemy, and no investment strategy survives first contact with the market. Issuers must identify potential risks early in order to reduce losses due to market conditions beyond their control.
Optimize your risk management strategy by:
A strong compliance strategy can save issuers from countless headaches. In the ETF market, complying with Securities and Exchange Commission (SEC) regulations is a day-to-day task.
This applies to different jurisdictions and stock exchanges where your ETF products may be listed. You must disclose your ETF’s market price and Net Asset Value (NAV) at the end of each trading day.
The SEC could request or require many other disclosures, including detailed prospectus information and holdings data. While there are funds with varying degrees of transparency, ETFs must disclose detailed information about their portfolio holdings so investors and the SEC are aware of their daily operations.
These disclosures can seem onerous, but fines for non-compliance and failure to disclose can be extremely costly. Throw in the cost of lawyers and the reputational damages for failing to comply, and the risks quickly add up.
The reputational damage of failing to meet compliance obligations can be particularly devastating. A fast, busy newscycle can seem like a get-out-of-jail-free card for asset managers, but investors will remember these missteps and lose faith.
Another way to keep your costs low is to find the right ETF index service provider.
Index service providers handle the complicated fund administration tasks that go into keeping an ETF operational and compliant.
When an ETF index service provider offers end-to-end capabilities, they can:
Index providers are a low-cost solution compared to building these capabilities in house, but are still an overhead or benchmarking expense.
A responsive index service provider will quickly get you the data you need to build the product you want. By contrast, a slow index service provider will lead you to spend more time in development, giving you fewer opportunities to improve your product before going to market.
You can build the most operationally efficient investment vehicle in the world, but without the right investors, it will go nowhere fast.
Digital marketing matters for your ETF because AUM growth creates powerful economies of scale. Whether you’re launching diversified ETF portfolios across asset classes or targeting niche strategies, more assets mean lower per-unit costs and better margins.
The challenge is to find investors who want what you’re offering. That’s where behavioral data becomes your secret weapon.
ETF index service providers like VettaFi offer access to investor behavioral data and lead subscription services that reveal exactly what potential investors are researching, reading, and considering. Instead of guessing what investors want, you get clear insights into what they’re actually looking for.
Behavioral data shows you which issuers and strategies investors are actively exploring. Instead of your team wasting time on cold calls, they can connect with investors who are ready to buy. The result is shorter sales cycles, higher conversion rates, and steady inflows.
The ETF ecosystem is in a constant state of flux, with active ETFs and passive strategies always evolving. New tools and constantly changing regulations create a steady stream of opportunities. Successful ETF issuers will be on top of the latest regulations, tech advancements, and shifting market trends.
Bringing any ETF investment to market is a challenging endeavor, but efficient operations and exceptional partners can go a long way in helping your ETF achieve its goals.
Choosing an index service provider that can help you stay ahead of administration trends and regulatory compliance will make your ETF operations, marketing, distribution, and maintenance more cost-efficient. More cost efficiency will mean lower expense ratios, more investor interest, and better results.
These seven strategies for cost-efficient ETF operations can take you far, but remember that even the most successful ETF issuers don’t try to do everything at once.
Start with understanding your true costs, building fail-proof compliance processes, and choosing partners who can scale with you. This includes cutting-edge services like VettaFi’s lead subscriptions, which can help you make your marketing strategy as efficient as your operations.
Once you’ve created a solid foundation for your ETF administration, everything else becomes easier. The market rewards efficiency, and the ETF issuers with the most cost-efficient operations will have the flexibility to adapt no matter what the market throws their way.
ETFs have become the investment wrapper of choice for millions of investors worldwide. With record-breaking inflows month after month, asset managers are eager to launch the next generation of ETF products.
Here’s the thing: ETFs aren’t without expenses, and the cost of upkeep can be high. If your ETF operations aren’t cost-efficient, even the most brilliant strategy can fall flat.
Ready to slash your ETF administration and operation costs? These seven expert-backed strategies will show you exactly how to do it.
You can’t make cost-effective choices if you don’t consider every expense.
Exchange-traded funds need money to start up and bring to market, but don’t forget about maintenance costs. Issuers creating a new ETF via a mutual-fund conversion must navigate several expenses.
The most important thing that makes an ETF function is how new shares are created and existing shares are redeemed. Creation starts with buying securities, then bundling them into the exchange-traded fund structure. Think of an ETF’s redemption mechanism as a mirror image, with all underlying assets unwrapped into separate components.
Authorized participants, which handle the making of creation units, come with their own price tag. Yet there are several other expenses that go into getting an ETF on its feet. These include:
Potential penalties (if noncompliant)
Don’t forget the costs of distribution, including dividends, interest, capital gains, and return of capital. Managing portfolio holdings and their distributions requires careful coordination with brokerage partners to ensure cost-effective execution. If the ETF strategy pivots or the fund needs to change its structure, that also comes with an administrative price tag.
If you understand every cost and build a cost-efficient exchange-traded fund, the fund expense ratio can be lower. This, in turn, may help you attract more investors.
Many investors are drawn to the benefits of ETFs, including their easy-to-trade, tax-efficient wrapper structure. A lower expense ratio can help sweeten an already sweet deal for investors.
Creating a powerful pricing method for your ETF offers several benefits. That’s because improved transparency leads to greater investor confidence.
Whether you’re working with an actively managed ETF or a passive fund, portfolio managers need investors to understand how investment decisions are made. If investors feel they can look under the hood to see how the ETF is working and why, they’ll be more likely to help the ETF meet its investment objectives. Improved liquidity and higher trading volume will also make it easier for investors to buy and sell shares.
It’s also critical for market participants to engage in arbitrage activity. You want your ETF share price to align with the value of its underlying securities, which could differ from the NAV due to premiums or discounts.
Finally, both passive and active management strategies need ways to ensure the creation and redemption processes are as cost-efficient as possible.
No battle plan survives first contact with the enemy, and no investment strategy survives first contact with the market. Issuers must identify potential risks early in order to reduce losses due to market conditions beyond their control.
Optimize your risk management strategy by:
A strong compliance strategy can save issuers from countless headaches. In the ETF market, complying with Securities and Exchange Commission (SEC) regulations is a day-to-day task.
This applies to different jurisdictions and stock exchanges where your ETF products may be listed. You must disclose your ETF’s market price and Net Asset Value (NAV) at the end of each trading day.
The SEC could request or require many other disclosures, including detailed prospectus information and holdings data. While there are funds with varying degrees of transparency, ETFs must disclose detailed information about their portfolio holdings so investors and the SEC are aware of their daily operations.
These disclosures can seem onerous, but fines for non-compliance and failure to disclose can be extremely costly. Throw in the cost of lawyers and the reputational damages for failing to comply, and the risks quickly add up.
The reputational damage of failing to meet compliance obligations can be particularly devastating. A fast, busy newscycle can seem like a get-out-of-jail-free card for asset managers, but investors will remember these missteps and lose faith.
Another way to keep your costs low is to find the right ETF index service provider.
Index service providers handle the complicated fund administration tasks that go into keeping an ETF operational and compliant.
When an ETF index service provider offers end-to-end capabilities, they can:
Index providers are a low-cost solution compared to building these capabilities in house, but are still an overhead or benchmarking expense.
A responsive index service provider will quickly get you the data you need to build the product you want. By contrast, a slow index service provider will lead you to spend more time in development, giving you fewer opportunities to improve your product before going to market.
You can build the most operationally efficient investment vehicle in the world, but without the right investors, it will go nowhere fast.
Digital marketing matters for your ETF because AUM growth creates powerful economies of scale. Whether you’re launching diversified ETF portfolios across asset classes or targeting niche strategies, more assets mean lower per-unit costs and better margins.
The challenge is to find investors who want what you’re offering. That’s where behavioral data becomes your secret weapon.
ETF index service providers like VettaFi offer access to investor behavioral data and lead subscription services that reveal exactly what potential investors are researching, reading, and considering. Instead of guessing what investors want, you get clear insights into what they’re actually looking for.
Behavioral data shows you which issuers and strategies investors are actively exploring. Instead of your team wasting time on cold calls, they can connect with investors who are ready to buy. The result is shorter sales cycles, higher conversion rates, and steady inflows.
The ETF ecosystem is in a constant state of flux, with active ETFs and passive strategies always evolving. New tools and constantly changing regulations create a steady stream of opportunities. Successful ETF issuers will be on top of the latest regulations, tech advancements, and shifting market trends.
Bringing any ETF investment to market is a challenging endeavor, but efficient operations and exceptional partners can go a long way in helping your ETF achieve its goals.
Choosing an index service provider that can help you stay ahead of administration trends and regulatory compliance will make your ETF operations, marketing, distribution, and maintenance more cost-efficient. More cost efficiency will mean lower expense ratios, more investor interest, and better results.
These seven strategies for cost-efficient ETF operations can take you far, but remember that even the most successful ETF issuers don’t try to do everything at once.
Start with understanding your true costs, building fail-proof compliance processes, and choosing partners who can scale with you. This includes cutting-edge services like VettaFi’s lead subscriptions, which can help you make your marketing strategy as efficient as your operations.
Once you’ve created a solid foundation for your ETF administration, everything else becomes easier. The market rewards efficiency, and the ETF issuers with the most cost-efficient operations will have the flexibility to adapt no matter what the market throws their way.
