Smaller asset managers are getting creative as they look to take the fight to the likes of BlackRock. Meet the Boa Constrictor.
The UFC heavyweight best known for winning bouts with a rare judo chokehold burst onto the exchange-traded-fund scene earlier this year as an unlikely advocate for a cannabis fund run by ETF Managers Group. At a dinner arranged by the issuer in midtown Manhattan last month, Boa -- real name Alexey Oleynik -- taught impromptu lessons on how to throw a punch, and flexed for tough-guy photos in a shirt branded with the company’s logo.
It may seem like a gimmick, but the intent is serious: Oleynik is bringing ETFMG to the masses, bearing the firm’s name during fights and spreading its brand on social media. Conventional campaigns that tout low costs or smart strategies won’t cut it for smaller issuers in the $4 trillion industry dominated by BlackRock Inc., Vanguard Group and State Street Corp. So investors get oddball celebrities, charity giveaways and even astronaut costumes. The battle for survival is so daunting that regulators are taking a look.
“What we’re seeing now is a monopolization of assets,” said Phil Bak, founder and chief executive officer of Exponential ETFs, which has $413 million in assets under management. “You could say, ‘wow are the bigger issuers’ salespeople so wonderful that no one wants to work with anyone else?’ Or you could ask what is it in the ecosystem that is driving all of that?”
Marketing Moves
It’s certainly a tough landscape: The Big Three account for about 82% of assets in U.S. ETFs. So, to stand out from the crowd, many smaller issuers have embraced thematic strategies focused on niche investments such as cannabis, social media, video games or robotics that could become the next boom industry. But with assets in these funds stalling under $50 billion, some are concluding that firms need to get a bit wacky to make a splash.
For example, when ProcureAM listed its first fund -- the Procure Space ETF -- in April, the firm dispatched a NASA wannabe in an astronaut costume to appear at locations around New York to promote the fund’s exposure to the nascent space industry.
“I’d seen numerous times at corporate bell ringings mascots of that company going around the floor of the exchange,” Procure CEO Andrew Chanin said. “It makes it more memorable.” So too does the fund’s ticker -- UFO -- which was also chosen to “stick in people’s minds,” he said.
Meanwhile OppenheimerFunds Inc., which was bought by Invesco in May, last year hosted a “factor derby” to draw attention to its smart-beta funds. Designed to coincide with the Kentucky Derby, anyone from moms and pops to professional advisers were encouraged to build and race their own “thoroughbred portfolios.” The winner could donate $25,000 to the charity of his or her choice.