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For Sale: What Asset Managers Want in Indie ETF Shops

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For Sale: What Asset Managers Want in Indie ETF Shops

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That might be the ETF market's new motto, thanks to a surge of M&A deals including Goldman Sachs buying options ETF provider NEOS Investments and T. Rowe Price buying fixed income provider F/m Investments. Acquisition of an indie shop lets many large asset managers avoid FOMO by adding specialization and differentiating their product lineups. The fastest way to get into the game or to expand their ETF footprint is by buying another firm, said Brittany Christensen, senior VP of business development at Tidal Financial Group. But what makes an ideal acquisition candidate?

"It's partially about your brand recognition, as well as being known for a specific type of ETF strategy," Christensen said. That strategy can complement what the large asset manager offers or help them expand in a space where they've failed to be competitive.

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The motivation for a firm's purchase of an ETF shop is often the underlying infrastructure, because it can take a while to bring an ETF to market, Christensen said. It's about finding smaller shops with existing distribution or that are well known by ETF allocators. A lineup of ETFs or a "repeatable idea" that can be used on different indexes or on different underlying names or portfolios to build out a suite of products is also attractive, Christensen added.


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