ETF expedited fund launch
An investment adviser managing $20 billion in SMA and open-end mutual fund assets required an exchange-traded fund (ETF) solution that met several needs as they sought to enter the ETF market. The requirements included:
• ETF market expertise and guidance
• Support for the required SEC registration and filing requirements of an ETF
• Access to the most economical, cost-effective means of launching and operating an ETF
Although this fi rm had signifi cant mutual fund industry and fi nancial markets experience, they required consultative ETF knowledge and detailed education regarding the ETF industry. They were looking for a service provider to guide them through their required ETF exemptive application and registration, educate them about ETF capital markets, clarify the economics of running an ETF, and to detail ETF specifi c benefi ts such as the in-kind creation/redemption process.
U.S. Bancorp Fund Services provided a team of ETF professionals in the areas of legal administration, operations, capital markets, administration and accounting that seamlessly guided the manager through the ETF launch process. The investment manager determined to launch their ETFs in a multiple series trust (MST) sponsored by U.S. Bancorp Fund Services, called ETF Series Solutions (ESS). The MST structure provides signifi cant time and cost savings, as well as effi ciency and inherent ETF expertise.
U.S. Bancorp Fund Services fi led on behalf of the Fund, the ETF exemptive relief, registered the ETF, and coordinated the launch of the ETF for the investment manager. The U.S. Bank Custody and our Fund Administration teams provided comprehensive ETF industry and product knowledge in all aspects of the project, including:
• SEC fi lings – ETF exemptive application required of the ETF adviser, ETF fund registration, coordination and fi ling of SEC comments to the registration, and exemptive application
• Fund expense modeling and industry expense benchmarking
• Education to the manager regarding all roles and responsibilities in ETF operations and processing – exchange listing, lead market maker (LMM), authorized participants (APs), index receipt agent, custodian, fund accountant, fund administrator, transfer agent and distributor
• Education to the investment manager’s operations, compliance and portfolio management individuals regarding the ETF launch requirements and process timeline
• Introduction of LMM and APs to the client in order to create a market for the client’s ETF
The investment manager was exceptionally pleased that the successful ETF launch process took only fi ve months. In addition to the effi cient launch within ESS, the client realized a signifi cant cost reduction, which would not have been the case had the manager chosen to launch the fund in a proprietary trust.
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