Fuse Blog

To Grow Fast, it Helps to Start Big

Sponsors of new ETFs can dramatically increase the probability of attaining scale by starting with larger amounts of seed capital. FUSE reviewed ETFs launched from 2020 through 2022 to determine how the starting asset base impacted their asset level at the end of 2023. As we expected, the failure rate for ETFs launched with smaller amounts of seed capital was dramatically higher than their better-seeded counterparts. As noted in the exhibit, success among the surviving products showed a similar advantage for larger-seeded ETFs. 

  • About one-quarter of ETFs that launched with $5 million or less in seed capital passed $50 million in assets by the end of 2023.
  • On the other hand, about half of ETFs that launched with more than $5 million were above $50 million by the end of 2023.

Percentage of Funds >$50M in Assets as of December 2023

Blog 2.27.24

Source: Morningstar, FUSE Research Network