New ETF Issuers Overcame Obstacles to Thrive in 2023

The ETF industry mushroomed last year, despite multiple headwinds.

Finance Reporter
Reviewed by: Staff
Edited by: James Rubin

New ETF issuers thrived in 2023, despite difficulties in accessing brokerage platforms, fierce competition on fees, and a saturated market.

Assets under management (AUM) in U.S. ETFs ballooned to $8.9 trillion in the first quarter of this year, and issuers brought in $598 billion in inflows over 2023. About 520 new product launches helped spur that growth, along with a recovering equities market. 

"We have a decent brand and especially in a lot of the channels we have pretty deep relationships, so that was an advantage we had,” said Patrick Ryan, president of mutual funds and ETFs at Madison Investments, which has reached $253 million in AUM since introducing its first fund last August. “So we were able to get all of the ETFs over $50 million in AUM. Size wise we grew pretty quickly.”

Among others, Morgan Stanley has accrued nearly $2 billion in AUM since entering the market in February 2023, while Tema ETFs, a new thematic issuer, has generated $125 million since the firm debuted in May 2023. 

Madison, Morgan Stanley and Tema are all nominees for the 2023 Best New ETF Issuer award. announced the winner on April 17 at its annual awards event. The New Issuer category recognizes issuers that introduced some of the year's most exciting, and often lucrative new products. 

Their success reflects their ability to recognize opportunities in a fast-evolving market. It also underscores the impact of the ETF Rule, which the SEC adopted in 2019, to remove key regulatory barriers for entering the ETF market. 

The streamlining of the SEC approval process, coupled with the proliferation of "white label issuers" have made starting a new ETF from scratch far easier than it previously was, according to Morningstar ETF analyst Bryan Armour. White label issuers provide the financial and legal infrastructure for issuers to introduce products to market faster by offering an existing platform to help debut the fund. 

New issuers' challenges also include developing ETF expertise that enables them to market to financial advisors and retail investors more effectively, and having the right infrastructure so their products can be easily accessed. The right combination can help them increase assets rapidly and establish themselves. 

“It’s a bit of a chicken or the egg situation, where you need to launch to start building assets, but you don’t have the assets yet so you might not be as operationally efficient as possible,” Armour explained.

Large legacy asset managers often have an advantage with distribution networks and investment expertise, but even they must often expand teams and learn how to operate in an increasingly cutthroat environment.

Legacy asset managers, including Morgan Stanley, Calamos Investments, and Madison Investments, who have been in the mutual fund industry for decades, unveiled exchange traded funds in 2023. Calamos is also a nominee for Best New ETF Issuer. 

Anthony Rochte, global head of ETFs at Morgan Stanley, called the ETF Rule transformational for active ETF issuers. It enabled his own firm to get exchanged traded funds to market faster. 

Mutual Fund to ETF? 

Matt Kaufman, Head of ETFs at Calamos, said in an interview with that expanding a capital markets team is a key differentiator between operating a mutual fund and an ETF, since ETFs trade throughout the day like stocks.

“Relationships with authorized participants and market makers can really make or break a product, as well as getting distribution right,” Kaufman said. “Gathering assets requires a plan—and a daily execution of that plan.”

Madison's Ryan echoed that sentiment, explaining that interacting with market makers, authorized participants, and the creation and redemption process was new for the firm. “A lot of the learning curve initially came through the operation process and understanding how these vehicles are different from mutual funds,” Ryan said. 

The firm’s subadvisor, Tidal Financial Group, which operates as a white label issuer, helped with the launch process.

Issuers interviewed by noted that getting an ETF on distribution platforms is one of the biggest challenges for new entrants, whether they are already an established asset manager or not.

“You need a track record and a certain level of assets to start getting consideration from some of the wirehouse platforms,” Armour said.

Tema ETFs, a new thematic issuer that unveiled products in 2023, has a unique funding model as a venture backed issuer that did not use a white label firm to help launch their products. Yet the firm emphasized that it faced many of the same hurdles when launching products.

One problem for new issuers that are launching their first products is recruiting talent, Matt Keeling, CFO of Tema said in an interview. 

Recruiting seasoned portfolio managers is a challenge for new issuers without a proven track record, particularly active managers, Keeling said.

First to Market

Growing the infrastructure to launch a product, while still being the first to market, is especially challenging for issuers competing in the thematic equity space, Keeling said. 

“You immediately have to think about your marketing and distribution plan and quite crucially, your speed to market,” Keeling explained. “Because the first market advantage is very real as the active ETF space is becoming ever more crowded.”

Yet not all issuers are concerned about finding untapped themes, and instead are focusing on their management strategy. “I'm less focused on the whitespace because there's a lot of ETFs globally, where we think we can differentiate ourselves purely through active management and our existing investment capabilities,” said Rochte.

Contact Lucy Brewster at [email protected].

Lucy Brewster is a finance reporter at covering asset managers, emerging technologies, and regulation. She hosts webinars and appears on Exchange Traded Fridays,’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.