ETF Launching Decisions within a Fund Family Complex

49 Pages Posted: 23 Mar 2021 Last revised: 5 Mar 2024

See all articles by Pedro Saffi

Pedro Saffi

University of Cambridge - Judge Business School

Xinrui Zheng

Zhongnan University of Economics and Law

Date Written: January 31, 2023

Abstract

We investigate asset managers' decisions to launch exchange-traded funds (ETFs) and their interactions with open-ended mutual funds (MFs) within the same fund family. While past performance, investor flows, and economies of scale are shared determinants for ETF and open-ended MF launches, ETF launches also depend on market liquidity and investor demand. ETF industry concentration hinders competition. Fund families with outperforming active MFs tend to capitalize on their brand names and launch ETFs, irrespective of the presence of index MFs. The launching family benefits from abnormal inflows despite no improvements in aggregate performance.

Keywords: Exchange-traded fund (ETF), launching, fund family, market concentration, externalities

JEL Classification: G10, G11, G12

Suggested Citation

Saffi, Pedro A. C. and Zheng, Xinrui, ETF Launching Decisions within a Fund Family Complex (January 31, 2023). Available at SSRN: https://ssrn.com/abstract=3810120 or http://dx.doi.org/10.2139/ssrn.3810120

Pedro A. C. Saffi

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

HOME PAGE: http://www.pedrosaffi.com

Xinrui Zheng (Contact Author)

Zhongnan University of Economics and Law ( email )

Wenquan Building,
Nanhu Street, Hongshan District,
Wuhan, AK Hubei 430073
China

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