MutualFundWire.com: The Answer to Your ETF AUM Problem Starts With Marketing

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Monday, July 8, 2024

The Answer to Your ETF AUM Problem Starts With Marketing

There's no denying that ETFs have evolved into the modern investor’s preferred vehicle — and market analysts are sounding the oversaturation alarm after 520 new ETFs launched on US exchanges last year — pushing the total listings to over 3,100.

Alexandra "Alex" Levis
Arro Financial Communications
Founder, CEO

Today, competition in the industry is fierce, and new entrants — big or small — often underestimate the marketing muscle required to break through the noise and engage in the ultimate battle for assets under management (AUM).

Now more than ever, fund managers are turning to specialized marketing services for an edge. Marketing teams quarterback the sales and distribution teams; they work hand in hand with the former handing off the tools necessary to make the fund's existence known, generate buzz, drum up interest and eventually close a sale.

Here's why (and how) a well-honed marketing strategy is the secret weapon for success in the ETF space:

Stand Out from the Clutter

New issuers often fall into the trap of assuming a fund will simply "sell itself." The "if you build it, they will come" myth has been debunked for years, yet many firms still fall for this trap. The most important thing to keep in mind when launching new products is that investors are bombarded (and often paralyzed) with the array of options available in their brokerage. Therefore, outlining a clear value proposition and identifying a niche is crucial for ETF firms to survive.

Effective communication strategies will ensure your fund's value proposition is well defined and that your firm's core message resonates with investors. A robust marketing plan should consist of a beautifully designed, mobile-friendly website, educational and eye-catching marketing collateral, and a timely PR campaign. Content should focus on timely topics as well as evergreen ones (topics that are always relevant). Your target audience should always be top of mind for all initiatives: What are they reading? In which publications? Do they attend events? Which ones and when? You need to meet them where they already are to stand out from the competition.

Befriend Your Compliance Officer

Underestimating the complexity of regulatory compliance can lead to delays — and even more missed opportunities. Compliance is no joke and it's not free either: failing to account for the ongoing costs associated with running and keeping a fund publicly listed can quickly erode profitability. Ensure that key sales and marketing executives have a clear understanding of 1940s act rules when it comes to marketing and promotion, and that those compliance checks are worked into the marketing plan with ample time for review. There's nothing worse than a website, PR campaign or ad campaign not getting a final blessing by compliance prior to IPO day.

Partner with the Best

Going at it alone doesn't work anymore, especially in the ETF space. While it's common to keep everything in house at legacy mutual fund firms, the ETF space relies heavily on outsourcing a variety of roles. Partnering with specialized financial services vendors is key for new fund launches. These firms offer expertise in communications, sales, compliance, back office and distribution — all areas critical for success and longevity. Experienced sales teams can navigate the complex advisor landscape, and a robust distribution network could get your product listed on the right platforms. PR and marketing agencies can ensure that your target audience via financial media is well informed about your product and expertise.

Hit the Right Target

Finally, recognize the changing investor landscape and accurately target your end investors. The rise of the "new age" retail investor has shifted target audiences for all kinds of asset managers. Digitally savvy individuals demand clear, concise messaging delivered through the (mobile-friendly!) channels they frequent. Gone are the days of relying solely on traditional financial media and banking on a few advisors to create buzz around a fund. Now, all classes of investors are online. Social media engagement, educational content creation, and innovative marketing campaigns are crucial for attracting and retaining this new generation of investors outside of wirehouses and family offices.

Conclusion

By standing out from the clutter, befriending your compliance officer, embracing strategic partnerships, and being laser focused on your prospective client base — new and seasoned ETF issuers can gain a competitive edge and ensure their survival. In an industry saturated with ETFs, a well-defined marketing and PR strategy will be the deciding factor in attracting investors and achieving lasting success beyond launch — and for years to come.

Alexandra Levis is founder and CEO of Arro Financial Communications, a full-service marketing and public relations agency specializing in the financial services space.

Printed from: MFWire.com/story.asp?s=67624

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