Conventional wisdom has it that millennials have an affinity for exchange-traded funds and will be a growth driver for this product class as they attain more investible assets. But two millennials who basically don’t have enough money to invest in ETFs are taking this to another level by trying to create an actual ETF.

Stephen Benvenuto, Jr. and Mark Harkin, 20-year-old students at New York University, have created a concept they believe can be a hit with investors. This isn’t a class project for academic credit; rather, it’s a bona fide idea that has caught the attention of people within the ETF industry who have offered encouragement and the research muscle needed to potentially bring their concept to market.

That concept is a fund that tracks the entire ETF ecosystem. Their proposed Exchange-Traded Financial System (ETFS) product currently is in the hands of Indxx, an index provider that’s putting its best minds to work on the idea to see if it can devise an investible index that can underpin a tradable ETF.

When they first kicked around the idea for ETFS in April 2016, there wasn’t a product like it on the market or in registration with the Securities and Exchange Commission. So Benvenuto and Harkin thought they were on to something truly unique as they toiled away last summer to create the fund’s methodology.

But a similar product was filed with the SEC last November that was based on an index created by Toroso Investments LLC, a New York City-based asset manager. And that product, the ETF Industry Exposure & Financial Services ETF (TETF), began trading in April on the NYSE Arca exchange as the first ETF dedicated to the various sectors and companies behind the ETF industry.

Even though the TETF fund got there first, Benvenuto and Harkin aren’t deterred.

“Once we heard about TETF we were initially worried,” says Benvenuto, a junior from Allenwood, N.J., who’s studying finance and management. “However, that soon passed. We read the filing, and we noticed some key differences that substantiated our idea.”

TETF currently holds 37 companies that play a role in the process of taking ETFs from initial idea to investible product, and is organized into four tiers designed to overweight companies with the most exposure to the growth of the ETF industry. Fifty percent of the index contains ETF sponsors and the rest is composed of what Toroso calls the other four parts of the ETF ecosystem: liquidity providers; index providers; back office support and the exchanges.

As Benvenuto and Harkin are quick to point out, TETF is domestic-focused while their concept is globally focused.

“We feel that a global approach is more appropriate as one-third of the assets in ETFs are held internationally,” says Harkin, a sophomore from Ridgewood, N.J., who’s studying management and global finance. “As of April, this [industry] is $4 trillion dollars. By our math, they are missing out on $1.3 trillion in the value of the ETF ecosystem.”

But Mike Venuto, chief investment officer of Toroso Investments, notes that while the TETF fund currently is domestic-focused, it can go global and he says there are a couple of overseas companies on their radar they are considering for possible inclusion down the road.

An Involved Process

The duo’s quest is fueled by a youthful idealism born in the spirit of, "What the hey?" But it’s also a pragmatic endeavor that just might fly, as evidenced by the assistance they’ve received from established ETF players

“We heard about the growth of the ETF industry and I began working in professional settings where ETFs are prevalent, so we started kicking around some ideas on how we could get involved in the action,” says Harkin, who’s interning at ETF provider WisdomTree Asset Management. “We both kind of said, ‘Why not?’ We both work in finance, so we both should know how to do that.”

But they quickly learned it’s a little bit more complicated than that.

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