Targeted Musings on Financial Marketing

SEC Adopts New Rule to Modernize Regulation of ETFs

21 Oct 2019

On September 26th, 2019, after a long period of speculation in the finance world, the SEC announced via the appropriately-titled press release, “SEC Adopts New Rule to Modernize Regulation of Exchange-Traded Funds,” that it had voted to establish “a clear and consistent framework for the vast majority of ETFs today.” Although to most laypeople this announcement may seem yawn-inducing at best, the new “ETF rule” has enormous implications for the ETF industry overall.

Previously, every ETF had to go through a painstaking, laborious, and expensive process, applying for what’s known as exemptive relief from the SEC. That’s because ETFs are hybrid financial products that were not originally allowed according to existing securities laws. Under the new rule, ETF issuers will only need to comply with a standardized set of guidelines, rather than apply for exemptive relief every time they wish to launch a new ETF. That translates into an awful lot of extra cash—tens of thousands of dollars—that ETF issuers will no longer need to spend on obtaining exemptive relief.

What follows are the top five marketing initiatives ETF issuers should be spending this unexpected windfall on:


A Kickass Website

Let’s face it: investors often do judge ETFs by their websites—a clunky, difficult-to-navigate website cluttered with tired imagery such as skyscrapers and men in business suits shaking hands is likely to leave prospective investors unmoved at best, and running away from your fund at worst. By assembling a well-designed, mobile-friendly website, you’ll boost your fund’s chances of resonating with its target audience and hooking would-be investors right from the start.

See also: Is Your ETF Website Behind the Mobile-First Revolution?


Public Relations

Even the most compelling, timely, low-cost ETF won’t garner the attention it deserves in today’s highly competitive ETF landscape. Now that it’s become easier than ever to launch an ETF (thanks to the new ETF rule), you need to ensure your ETF gets noticed by prospective investors, and the most reliable way to reach the public is through—you guessed it—public relations. By obtaining coverage from reputable third parties such as financial journalists, your fund gains street cred from the get-go and can begin gathering assets under management from day one.


An Animated Video 

An unfortunate consequence of the mobile revolution and the digital age? No one seems to have time to read anymore, and attention spans are shorter than ever. Is it actually realistic to expect a would-be investor to download your fact sheet or read your prospectus? Perhaps some will, but the majority are looking for something easier to digest, that requires less mental horsepower to process. Animated videos are the perfect medium for ETF issuers who want to go the extra mile in educating prospective investors without boring them to tears. By breaking an ETF’s core selling points down to their absolute simplest form and communicating their nuances visually, animated videos can connect with investors like no other medium can.


The bottom line

The new ETF rule is going to make it substantially easier and faster to launch an ETF, but this could only serve to increase the competition. By spending the money that would’ve gone towards applying for exemptive relief on marketing initiatives, you’ll be giving your ETF a leg up on the competition and helping to boost AUM in the process.