VettaFi Tracks the “ETF Flight Path” at Exchange

For issuers, launching an ETF is more challenging than ever. VettaFi’s Chief Revenue Officer Sebastian Jakob and Director of Research Cinthia Murphy joined SS&C ALPS Advisor’s Paul Baoicchi and T. Rowe Price’s Christopher Murphy for the session “Tracking the ETF Flight Path: Concept to scale. The session explored how to align index design, product strategy, and distribution before day one.

The Changing ETF Market

Cinthia Murphy opened by telling the audience that launching an ETF in 2026 is a completely different ballgame than it used to be. “The market get smore crowded, there are more brands in there.” Murphy added, “Just ten years ago, there were just under 2,000 ETFs on the market. It took 24 years to get to 2000 ETFs. It took us 9 to get to 5000 ETFs.”

“In some ways, the ETF market is a bit of a paradox right now,” Baoicchi said. There isn’t much white space or opportunity to differentiate yourself. “At the same time, there are more options than there ever have been to get on the ETF highway.” Anyone who wants to launch an ETF has several ways to go about it: go out to a white-label provider, convert a mutual fund, or convert an SMA via a 351 Exchange into your own ETF. 

Expanding Value Proposition and Brand Presence

Chris Murphy shared his experience coming into the ETF market. “The first ten ETFs we launched were mirrored against mutual funds,” he shared. They were essentially clones of strategies T. Rowe Price already had, but since then, their ETFs have been wholly distinct. After some initial semi-transparent products, they have pivoted to fully transparent products. As the industry evolves, Murphy noted that issuers are also evolving their thinking and finding better ways to help advisors.  

Good ETF Ideas are No Longer Enough

“All of us in the room, we’ve all heard this story: A good idea is not good enough anymore,” Jakob said. Product, distribution, and PR need to work closely together before a product launch, which doesn’t happen often enough in today’s market. “If you don’t have a distribution edge before you launch a product, you are likely going to lose.” He shared that VettaFi has a lot of data on what investors are thinking. “This is data that is so valuable from a product development perspective,” Jakob said, noting that behavioral data can be a huge edge as you work to bring a product to market. Understanding the audience for the product before you even develop the product is critical. “This is what differentiates the wheat from the chaff.”

Baoicchi added, “The truth is that it’s as difficult as it’s ever been to launch an ETF, but you have to take steps to ensure success.” This means determining whether there’s appetite for a particular product, having conversations, and ensuring that distribution forces know how to tell the product’s story is key. “You have to ensure that everything is operating and optimized.”

Playing the Long Game

Chris Murphy articulated the tension between needing to be patient and also being rushed at the same time. You need to come to market fast, but you also need to button everything up and put it together thoughtfully. Some funds can be slow-growing, and tides can take a long time to mature. “That patience has to be married to conviction.”

He also talked about what it means to launch a mutual fund vs and ETF. Shifting from a mutual fund provider to an ETF provider requires being reintroduced. “You have to do a lot of rebranding,” he said, adding, “ You have to make the benefits of active management tangible.” He pointed to sector investing and classification as a particular opportunity for active managers. Technology is one sector where an active manager’s intervention can provide tangible value.

Trust is the Currency of the ETF Industry

Asked about partnerships and trust, Jakob noted that “The way we as a company try to differentiate ourselves is by saying we don’t leave when the product is built. We try to grow the product when it is market.” Index providers tend to do a lot of work on the early side of a product, pre-launch. There is ongoing work, but most of it is at the beginning. However, Jakob noted that though a majority of the work happens early, “you make more money as the product get sto scale.” He encouraged issuers to make the index provider work for their fees.

VettaFi provides behavioral data, writes content, and helps the products staked in its indices reach the next milestone.

Jakob also noted that many newer firms have small marketing budgets and can easily blow them all on awareness campaigns. Ignoring the funnel, however, and focusing on advisors that are likely to be interested in a product can be more successful. “That’s the kind of advise and consulting and data that we show up with to build that trust.”

Understanding Your Strengths

For issuers, it is important to understand your strengths. “You need to be clear-eyed about what it is you are good at,” Baoicchi said. Understanding what you can do at the margins that differentiates you is important. “The way you go about it just can’t be product first.”

Has AI Changed Things For ETF Issuers?

Asked how AI has changed things, Baoicchi said the obvious low-hanging fruit is crafting emails. “What we’ve seen evolve is building a dossier, a book report if you will, on an advisor.” It can take a long time to find all the information about a specific firm, but AI tools can help pull it together faster.

Jakob noted that it is increasingly important ot use behavioral data in distribution. “That behavioral data is getting better and better with AI.” But there are also things happening on the product creation side. In the past, a spark of an idea would lead to research and work, while today that initial spark can be sent to an AI to create something half-baked.” That half-baked idea is farther along, much faster than a manual creation. 

For more news, information, and analysis, visit VettaFi | ETF Trends. 

Earn free CE credits and discover new strategies