Amplify Purchase of ETFMG Sets Up Thematic ETFs Future

Now that Amplify ETFs has bought the 14 funds holding $3.7 billion that once belonged to troubled asset manager ETF Managers Group, the real work begins. 

That job is restoring the reputation of the funds that were tarnished when ETFMG’s former CEO Sam Masucci resigned in the wake of a Securities and Exchange Commission probe. Masucci and the firm agreed to pay $4.4 million to settle charges they misled trustees to secure $20 million in financing to avoid bankruptcy. 

Lisle, Illinois-based Amplify is aiming to get those ETFs on brokerage platforms they were previously barred from trading on due to what CEO Christian Magoon described as “reputational damage,” fallout from the regulatory scrutiny ETFMG faced.

“Certainly, some of the reputational issues that ETFMG had restricted their ability to be on all the platforms,” explained Magoon.

Amplify Closes ETFMG Purchase 

Amplify last week wrapped up its acquisition of the funds that had been managed by Summit, New Jersey-based ETFMG. The deal, previously announced in June, pushes Amplify’s assets past $9 billion. Amplify rebranded the 14 funds, including the now renamed Amplify BlueStar Israel Technology ETF (ITEQ), the Amplify AI Powered Equity ETF (AIEQ), and the first cybersecurity ETF, the Amplify Cybersecurity ETF (HACK). 

Amplify began eying the market for potential acquisition targets early last year, and was attracted to the diversity of ETFMG’s products, Magoon said.

“Looking at the ETFMG product line, we thought adding those thematic [funds] would be a nice balance to our income-heavy asset base,” he said to etf.com. “We felt like this was a good chance to buy at a bit of a cyclical low for thematic growth.”

The announcement of the deal came amid regulatory scrutiny of ETFMG regarding its cybersecurity ETF (HACK) in 2019 and its Alternative Harvest ETF (MJ). ETFMG founder Masucci resigned in July after facing SEC charges over alleged nondisclosure of conflicts of interest only a month after the sale of ETFMG’s funds to Amplify was announced.

Magoon said two people, both in sales roles, will be joining Amplify from ETFMG. An ETFMG spokesperson confirmed in August that the firm is shutting down. 

Magoon noted that Amplify is still on the lookout for other opportunities to expand through acquisition. He added that because of the competitiveness of the ETF industry and the number of smaller, indie issuers, the current environment is a “buyer’s market” in the ETF space.

Contact Lucy Brewster at [email protected].