Strategic Marketing for Exchange-Traded Funds

Abstract

The exchange-traded fund industry has seen tremendous growth in the past years. Experts still see high potential for a future increase in assets and trading. When things go so well, it isn’t usually the time to think about how to improve strategic marketing. Strategic marketing includes strategies to efficiently reach clearly defined target groups with an optimized mix of products, price, message, brand, and products. The other side of the coin of the remarkable growth of the industry is that the ETF industry is still a dwarf when it comes to absolute figures. Few investors are savvy about ETFs—less than 5% of European ETF assets belong to private investors, according to estimates by the largest providers. Relatively well-educated institutional investors hold the rest of the assets in larger lots. ETFs are definitely not yet a mass market phenomenon. To get there, we need smart, strategic marketing. Although many investors could take advantage of ETFs, there is no budget for broad marketing and lots of competition. The article analyzes the current situation in Europe, provides insight into the mechanics, and makes suggestions on how to cope with these restrictions to make ETFs more accepted.