Targeted Musings on Financial Marketing

The underappreciated utility of ETF investment cases

10 May 2018

If you’ve been in the ETF industry for any length of time, you’ve probably already become familiar with a little document that lives on most, if not all, ETF fund webpages: Fact Sheets. Typically data-heavy, and often featuring technical language lifted directly from an ETF’s prospectus, these documents fulfill an essential role for potential investors curious about investing in a given product, but frequently amount to a missed opportunity when it comes to sales and marketing. This is where investment cases come in.

An investment case is an ETF issuer’s opportunity to make their case to website visitors about why they should invest in their particular ETF. While it can provide some basic information about the fund—the “what”—where they really shine is explaining the “why”—the reasons that this ETF could be the investment solution the investor is looking for, and the ways in which it seeks to deliver those solutions to the investor.

Related: Cut to the Chase: Your ETFs Message Should be Simple, Even if the Fund is Complex

Investment cases can best be thought of as a conversation of sorts between an ETF issuer and a prospective investor, which helps communicate the main selling points in plain language that takes nothing for granted on the part of the reader. We find it’s best to formulate investment cases in a loose “question/answer” format, so as to preserve the conversational tone of the piece. If done right, investment cases can anticipate all of a prospective investor’s most pressing questions and address any lingering concerns they might have before taking the plunge and making an investment. If poorly executed, investment cases can amount to an intimidating “wall of text” for a reader, chock full of incomprehensible financial jargon that causes a reader to disengage.

In other words, the devil is in the details when it comes to producing an effective investment case. For starters, most ETF issuers are “too close” to their funds when it comes time to begin the marketing and messaging process. At this stage, it can be difficult to take a step back and look at the ETF with a fresh pair of eyes, but it’s absolutely necessary. This is an excellent opportunity to have someone (or better yet, a number of outsiders) unfamiliar with the ETF take a look at it and share their questions and thoughts; it could be a member of another team, or it could be an outside vendor that is producing the ETF’s marketing materials on the issuer’s behalf. In any case, this lack of familiarity with the fund is crucial when deciding what to include in an investment case, as it helps encapsulate the experience an investor might have when they first learn about the fund.

A hybrid investment case/fact sheet, sometimes referred to as an “enhanced fact sheet” is another option ETF issuers can consider. Enhanced fact sheets will typically include the required performance and index data that ordinary fact sheets usually contain, but will go a step further, laying out the fund’s main selling points in just a few concise sentences or bullet points, using plain language as devoid of financial jargon as possible.

Simplicity, natural language, and taking nothing for granted will all be helpful when crafting these pieces. By going a step further in their ETF marketing materials with an enhanced fact sheet or investment case, ETF issuers stand a better chance of connecting with prospective investors and educating them on their funds to the point where they could feel comfortable making an investment.