Exchange traded funds (ETFs) are expected to command increasing market share in the investment community among both institutional players as well as the consumer market. However, while the ETF space is growing by leaps and bounds, success is no sure thing. In fact, of the 204 ETFs that launched in 2014, 92 have gained less than $10 million each in assets—that’s a 45 percent flop rate.
To this end, KPMG is launching a new series entitled, ETF Playbook: Drawing up a game plan for ETF success. The Playbook will help its audience gain a thorough understanding of the ETF landscape, complete with pitfalls and potential.
The initial section explores the growing “ETF opportunity” and addresses some essential elements needed to launch and operate a successful ETF, including the need to have the right product, the right distribution game plan and the right execution strategy. Upcoming playbook chapters will address taxation of ETFs, formation and launch, audit and regulatory requirements, operations and technology, and sales and distribution.
As the first chapter in the ETF playbook series, ETF Tax Efficiency addresses taxation of ETFs. Exchange traded funds (ETFs) are widely regarded as being more tax efficient than comparable mutual funds. This is one of the core selling points that ETF sponsors raise when discussing the “ETF advantage.” And, it often is true.
But why is it true? Read: ETF Tax Efficiency: Fact or Fiction?
This chapter of the ETF playbook takes a look at some of the unsung—but critical—“players” involved in ETF tech and ops roles, the impact they can have, and the questions you need to ask before “drafting” them to be part of your team.
Are you a mutual fund sponsor looking to expand into the exchange traded fund (ETF) arena? An ETF sponsor wanting to launch another fund? Or are you new to the ETF game? This section addresses the need to comply with the complex accounting, financial reporting, and internal control requirements for ETFs.
The roles in the ETF industry represent an ecosystem of different and specialized operational services and technology capabilities. For more details of the ETF industry roles, please reference our ETF ecosystem glossary.
Read: ETF playbook glossary