The ETF marketplace is constantly evolving, with trillions of dollars in assets under management and several thousand ETFs available for investors to choose from. As the market continues to grow, even the most obscure niches within the ecosystem have attracted their fair share of competition, giving rise to smaller and more specific sub-niches of ETFs, with increasingly complex fund methodologies.
This increasing complexity—and corresponding movement into sub-niches—can prove problematic for ETF issuers wishing to implement a straightforward marketing strategy centered around their fund offerings. Further complicating the marketing picture, many of the same people who are intimately involved in the planning and implementation of an ETF’s product structure are frequently tasked with helping to put together the marketing plan and accompanying marketing materials. This can be problematic because it poses a real issue to many ETF experts, who are typically very well-versed in financial terminology and inside baseball, to place themselves in the shoes of a clueless or even moderately sophisticated investor.
Be sure to also see our Primer on Connecting with Retail Investors.
Less is More
In such situations, where ETF marketers are struggling to distill their messaging down to something simple and straightforward, it can be a useful exercise to first list out the three to five selling points or value propositions of the fund in question. From there, ETF marketers should ask themselves the following question: what is the one thing that 1.) sets the ETF apart from the competition and 2.) is a solid reason for an ETF investor to become interested in the fund. Put another way: what is the one problem that this ETF solves for investors, and how does it go about solving it better than any of its competitors in the space?
Especially in the case of more niche or complex ETFs, you may face an educational hurdle in even communicating this one value proposition. For example, if a fund’s main value proposition is “decreased interest rate sensitivity,” it may be important in investor education materials to first establish the importance of interest rates, how they move, and why decreased interest rate sensitivity may be something the investor would be interested in in the first place.
It’s quite common in the investment world for ETF experts to struggle with this portion of the ETF marketing equation. In such cases, it often makes more sense to bring in a third party—ETF marketing experts that aren’t “too close to the product” and can bring a more dispassionate eye to what may resonate with investors, as well as the important ways in which a message’s “one big idea” needs to be adjusted to strike the right chord without overwhelming the target audience. ETF marketing experts that haven’t been involved in the product development process can be invaluable in clarifying, distilling, and calibrating a complex, sophisticated ETF’s value propositions for the target audience in question, while also getting across the nuances that set it apart from its competition.
It’s never “just one thing” when it comes to ETF value propositions and selling points, but by taking a step back and collaborating with marketing experts, you’ll be well-positioned for ETF success.