In a recent episode of “Behind the Ticker,” Garrett Stevens and Rich Malinowski from Exchange Traded Concepts (ETC) discussed the firm’s unique position as the first white-label ETF issuer and its role in supporting clients from concept to launch. ETC, which has been operating for 13 years, has launched over 100 ETFs with a combined $7.5 billion in assets under management. The firm provides a turnkey platform for ETF issuers, handling everything from regulatory filings and portfolio management to marketing and website development, while also offering individual services for established funds.
About Garrett Stevens & Rich Malinowski and Exchange Traded Concepts
Stevens highlighted a growing trend in the ETF industry: wealth management firms launching their own ETFs based on existing strategies. This shift allows advisors to offer tax-efficient, liquid, and operationally streamlined investment vehicles to their clients. He emphasized that these advisor-driven ETFs are often not marketed publicly but are used as tools to enhance the client experience and differentiate wealth management firms from competitors.
Investment Strategy and Approach
The conversation also touched on the growing popularity of actively managed ETFs, which now account for about 75% of new launches. Stevens explained that while thematic and passive ETFs dominated early growth, the focus is now shifting toward active strategies that allow for sector rotation, cross-asset class exposure, and unique management styles. He noted that active ETFs require a longer runway for success, as they often depend on performance to attract investors, contrasting with the quicker adoption of thematic passive products.
Rich Malinowski added insights on mutual fund-to-ETF conversions and semi-transparent ETF structures. He explained that while mutual fund conversions have slowed due to operational challenges and intermediary resistance, they remain an area of interest. Additionally, semi-transparent ETFs face hurdles related to their limited visibility for market makers and custodians, but Malinowski expects gradual acceptance as the industry adapts to these innovative products.
Portfolio Construction and Implementation
Both Stevens and Malinowski emphasized the importance of preparation and infrastructure for ETF issuers. They advised aspiring ETF managers to secure sufficient assets at launch, target a $30 million breakeven point, and build strong relationships with service providers to ensure operational success.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Garrett Stevens & Rich Malinowski covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
You have to establish performance. It's got to have a trade record of it. It takes time to really bring a successful product to market. You've got, you know, the importance of a track record is as important for an ETF as it is for a mutual fund.
So back when I was with Altimus, we did a, our first mutual fund conversion about three years ago now. And it was quite a process, definitely a learning experience, it got done, successfully converted, mutual fund with multiple share classes, consolidated, all of that, moved it over and now it's an exchange traded product. I think the trend has slowed down, mostly as a lot of the intermediaries and gatekeepers, don't seem to be fans of it. At the same time, there's still questions about who's holding the products and how will they hold them after a conversion that leave some questions on answered.
Market Context and Positioning
And then you've got all of the recent share class applications with the SEC to copy the Vanguard model and offer either an ETF share class of a mutual fund or a mutual fund share class of an ETF. And I think the outcome of that is really going to end up dictating where conversions end up going. We could definitely see a lot of current active products not having to undergo a whole transformation if they can simply bolt on ETF abilities to a current mutual fund.
And I think the industry is definitely meeting customer demand. With that said, I have no idea what's going to come down next on the pike, but at the same time, whenever that idea comes up, I'm fairly certain that the industry is going to be pretty quick to respond to it. Gary, do you have any ideas around that? I mean, what we're seeing is certainly the trend is more towards active. At this point, I think 75% or something of new funds being launched are active at this point, rather than the index based stuff.
So, how do you view the growth, or how do we gain broader acceptance among investors with these types of products? You know, I think that it, I think investors and advisors and the people bringing those are accepting them. I think there's a lot of operational nuance to the, to the non-transparent or semi-transparent. You have the whole market making community. You have gatekeepers at various wirehouses and things who are maybe less inclined to be in favor of the non-transparent.
Notable Insights
"Well, we are actually here live at the ultimate client summit and I met one of your partners here, Rich and so Rich, why don't I give you the opportunity to give your background and say hello to everybody and kind of where you fit in over at ETC?"
"Well, I think the biggest thing that that we're seeing and that we talked to people about and to Rich's point, you know, that this is a change is to try and make sure that when you bring the fund to market, you bring it with some assets."
Key Takeaways
- In a recent episode of “Behind the Ticker,” Garrett Stevens and Rich Malinowski from Exchange Traded Concepts (ETC) discussed the firm’s unique position as the first white-label ETF issuer and its role in supporting clients from concept to launch.
- The firm provides a turnkey platform for ETF issuers, handling everything from regulatory filings and portfolio management to marketing and website development, while also offering individual services for established funds.
- This shift allows advisors to offer tax-efficient, liquid, and operationally streamlined investment vehicles to their clients.
- The conversation also touched on the growing popularity of actively managed ETFs, which now account for about 75% of new launches.
- Stevens explained that while thematic and passive ETFs dominated early growth, the focus is now shifting toward active strategies that allow for sector rotation, cross-asset class exposure, and unique management styles.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Garrett Stevens & Rich Malinowski highlights important considerations around active management. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of active management and growth investing discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Garrett Stevens & Rich Malinowski, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.