Turnkey ETF launch solution-a speed-to-market approach

[The creation rate of ETFs has demonstrated great industry and investor interest signaling rapidly expanding growth and innovation. The U.S. has led this accelerating charge with 746 new ETFs launches in 2024 and 481 launches in the first half of 2025.

Fueling this growing movement has been new ETF participation from active investment managers, alternatives going mainstream, advisors running model portfolios, and family offices. Also adding to the rising momentum is a more modernized turnkey process into this marketplace through time- and cost-efficient platform launch capabilities that help new ETF sponsors gain entry with a speed-to-market approach.

To better understand the mechanics of ETF creation and how you can launch your own ETF, we were introduced to J. Garrett Stevens, Chief Executive Officer of Exchange Traded Concepts – an SEC registered investment adviser that created the first white-label ETF firm in the world specializing in helping new ETF sponsors create, launch, and manage custom ETF vehicles as a turnkey solution.

We asked him questions to learn more about his ETF-IN-A-BOXTM launch solution and how financial firms can participate strategically in the continued growth and diversification of the ETF marketplace.]

Tooth: What motivated in 2011, in the early days of ETFs, to launch the first white label ETF platform?

Stevens: My motivation for launching a white label ETF platform came from my personal experience in launching my own family of ETFs. We did our first archives in 2008, and what we learned was that it took twice as long and cost twice as much as it should be to market those first ETFs. That process was extremely painful. We have set up all infrastructure – built our own trust, our own board of directors/managers, all service providers and paid lawyers paid nearly a million dollars to do all legal archives.

The crucial moment was when we ended three of our not successful ETFs, I actually got several phone calls from people who said, ‘Hey, we want to buy you. We just want to take advantage of the SEC -exemption request process and your place in line. You have already fully built up the infrastructure. We want to launch our own ETFs, but we don’t want to wait a year. ” ‘

That is really where the idea of the white label came to me. Because we already had everyone and everything structurally in place, why don’t we help other people to launch their money? So we have essentially changed our ETF experience to a service company that can help other ETF sponsors to avoid the painful, expensive and time-consuming process that we have experienced and be able to use the infrastructure that we had already built to create a more efficient path to the market for new ETF expenditure.

Tooth: Can you judge what the most important component functions are behind making and launching an ETF that new sponsors have to plan?

Stevens: The most important ETF component functions of starting an ETF are:

Legal and regulatory – You need lawyers who submit the ETFs, the continuous reporting and compliance.

Board of Trustees – You are obliged to have an independent board of directors under 40 ACT.

Commercial and portfolio management – The infrastructure and the team of traders and portfolio managers who will actually do all the trade in the funds.

Legal requirements – You must have a program for liquidity risk management and if you have derivatives, you must have a derived risk management program. Everything must be submitted to Finra. Your distributor must assess and approve before you can use it.

Adapted mand process – The adjusted basket process makes ETF’s tax efficient. Most companies have no idea how to do that process.

Considerations of marketing and distribution – Once you enter the 40 ACT world, it is a completely different look worms from a regulation perspective and what you can and cannot say. Distribution is a complex process that many people do not fully understand or get confused with which strategy they should follow.

Many companies underestimate the complexity of these components, in particular the adapted basket process and the legal requirements that are unique to ETFs.

Tooth: How and to what extent does a Turnkey -Platform -Benadert call time and expenditure for launching an ETF?

Stevens: The most important advantage of a Turnkey approach is to offer an extended ETF infrastructure that is already built in advance where the organizational work is all done, so that the long-term installation process is essentially eliminated when starting all over again. This results in game-changing, dramatically faster launch period lines.

To illustrate this, when you come to launch an ETF on our platform, we can prepare your prospectus in about two weeks and receive it at the SEC, which has an assessment period of 75 days. That means we can have you ready to go within 90 to 100 days to launch your ETF full launch of your ETF. If you do that alone, it takes six months to a year to get it all done.

With regard to cost savings, a platform can use and negotiate over widespread cost reductions via its economies of scale that represent his collective customer base. In our case, we have more than 110 ETFs that we currently advise or advise that they represent around $ 15.5 billion in assets under management (UAM). So we get favorable prices from the different service providers, much less than as individual ETF sponsors themselves negotiating. We are also able to distribute costs across all funds, which means that our customers pay a fraction of the organizational costs instead of all of them.

Also having an experienced independent administration consisting of a wide range of ETF professionals with specialized knowledge that understand ETFs, and the lay of the Land of ETF suppliers and required specialty services, another important factor in lowering costs, speeding up and supplying expertise. It is not so easy to find board members who have long been in the ETF world.

For all the reasons mentioned above, that is why a turnkey approach offers such a significant value.

Tooth: In addition to making and launching an ETF product, can you explain your current portfolio management services?

Stevens: We have decided to offer current ETF portfolio management services because we saw that many traditional investment companies miss the experience and expertise with ETF-specific investment processes, such as adapted baskets, that are crucial for maintaining tax efficiency.

We can also act in a sub-advisory role, we have a trade desk with a team of traders and portfolio managers who can do all trade in the funds for our customers, we can do the adjusted mand process, as well as index tracking, rebalances, support for security selection and tax efficiency management.

Tooth: What are some of the most important misconceptions or inaccurate assumptions that some investment/asset managers have about launching ETFs that they must be aware of?

Stevens: There seems to be a persistent series of important misconceptions that investments and asset managers have about launching ETFs that relate to the regulatory environment, marketing restrictions and the reality of building a successful ETF in today’s busy market. These include:

“If you build it, they will come” Mentality – One of the biggest misconceptions there is that a ready market is waiting to take advantage of your ETF investment chance. We must always remind people that this is not such an industry or marketplace, such as the early ETF days. We now have more than 4,500 ETFs and we are in the middle of an ETF explosion of new launches.

Launch day is just the beginning – With all the work that is about launching the ETF, many become enthusiastic about the first trade date and consider that as the finish, but they must realize that only the starting line is … That is when the hard work really starts.

Distribution and marketing challenges – The hard work of sales, marketing and distribution of ETFs has its own dynamics and challenges that many sponsors do not fully understand or get confused in this market.

Approval process of the wire house – For new ETF sponsors you should not count on the large wire houses as an important part of your initial strategy, because these high assivaminima and track record requirements have before they even start the due diligence. They will probably not approve for years.

Because of these constant misconceptions and others, we have set up etc marketing services to offer personalized marketing and distribution services to increase the profile, visibility and involvement for your ETF products more strategically.

Tooth: What are the most meaningful ETF trends that you have seen from your vantage point?

Stevens: I think the most important shift that happened, from ETF index funds to adapted ETF strategies to reflect existing active strategies. When we first came to this company, they were mostly index funds. They spread around new indices and ideas for a theme, whether it was about trends, robotics, country/regional/industry, you name it, there were and continuously were created.

The current propulsion of new ETF creation is driven to a certain extent by active investment managers who create tax efficient versions of their existing strategies that offer customers the option to place their taxable money in the ETF and the non-taxable money on the SMA account. Advisors who perform model portfolios also make ETF versions because when they make portfolio changes to their model, currently create taxable events and do not generate any, or at least minimal capital gain in the ETF investment vehicle.

New market participants that we are increasingly seeing ETFs are family agencies and hedge funds. The latter because of their frustrations in order not to be able to bring their hedge funds to the market due to advanced investor rules. They realize that they can put their active strategy or a light version strategy in an ETF.

An interesting trend that I see is a new focus on customer-specific ETF products instead of the mass market. If you can get $ 30- $ 40 million in an ETF, it is break life, covers its own costs, and so you can build and offer the ETF vehicle specifically for your customers. I think you will continue to see this trend increasing advisers who build custom ETF products only for their customer base or demographic.

This article was Originally published here and is re -published on WealthTender with permission.

About the author

Bill -Stand

Founder Institute for Innovation Development

Bill Hortz is an independent business adviser and founder/dean of the Institute for Innovation Development- a company on business innovation of financial services and network. With more than 30 years of experience in financial services, including expertise in sales/marketing/branding of asset management companies, as well as creative restructuring and developing internal/external sales and strategic account departments for 5 large financial companies, including Oppenheimerfunds, Neuberger & Berman and Templeton Funds Distributors. His broad experiences have led Bill to a strong conviction, passion and advocate for strategic thinking, making innovation and strategic account management as the coherence of business skills needed to tackle a business environment that is challenged by an acceleration percentage.