How 3 Fund Issuers Design & Launch ETFs During Market Mayhem

It takes time to design and launch an exchange-traded fund, and market conditions can vary greatly from idea to fruition. 

For large issuers, the current market turmoil may not factor into when a fund debuts but, for others, especially smaller firms with limited budgets for marketing and other costs associated with launching products, selloffs may matter if they see a drop in their assets under management, said Christian Magoon, CEO of Amplify ETFs, who has launched more than 70 ETFs. 

Time to Reassess New ETFs?

Because Amplify’s product line is more niche, the firm would rather launch products as soon as possible to build a track record and to generate awareness. His firm has three ETFs expected to launch soon, including two covered call Bitcoin ETFs and a natural gas infrastructure ETF.

However, he said, given the velocity of the market selloff, he wouldn’t be surprised if some firms reassess their plans.

“I'm sure there's a little shell shock. I think it will slow down product development here for the next couple of months. I do think that smaller firms will be more cautious,” he said. “The larger firms will probably continue on with their initiatives just because that's more of a strategic goal, and they may be a little bit more insulated from kind of the underlying financial implications of a bigger decline.”

Large Firms Stay the Course

That seems to be what the larger firms are doing.

BlackRock declined to comment, but a spokeswoman pointed to two funds released the week of March 31: the iShares Large Cap Max Buffer Mar ETF (MMAX) and the iShares MSCI World Small-Cap ETF (WSML).

Scott Davis, head of ETFs at Capital Group, said the firm plans to stay the course.  

“We’ll continue to listen to our clients and launch new ETFs where there is demand and where we can offer something durable and meaningful that meets a need. We are long-term focused and don’t chase trends or react to short-term events or market moves,” he said.

Perryne Desai, senior manager, fixed income product at Vanguard, said the firm takes a long-term view when designing products, considering factors such as the asset class’s enduring investment rationale, how clients will use it in a portfolio and what Vanguard’s unique proposition is in the space. Still, she said market conditions can have a short-term impact. 

“Market surprises can certainly impact product launches, typically pausing investor cash flows or widening spreads temporarily. We have seen these issues resolve as normal market conditions resume,” she said.