Brains Behind ETF-Industry ETF to Help Others Get in on the Game

(Bloomberg) -- The man behind a very meta ETF is doubling down on exchange-traded funds.

Michael Venuto, chief investment officer of Toroso Investments -- a New York-based consultant, asset allocator and sub-adviser, as well as the index provider for the ETF Industry Exposure & Financial Services fund -- now wants to become an issuer.

The company will seek regulatory permission to sell both actively managed and indexed ETFs, but plans to use that approval to issue funds on behalf of others rather than itself, Venuto said. This style of issuance is commonly known as “white label.”

“For three years, I’ve been doing this same thing, and now I can offer this final piece,” Venuto said in a phone interview. “I tend to look at it as consulting to the next level as opposed to a brand new white label.”

The white label business came into being as firms that received Securities and Exchange Commission approval to sell ETFs, only to see their funds close, started using their regulatory status to help other wannabe asset managers bring their ideas to the market.

But as the approvals process eased, the business evolved and many white labels added distribution platforms, marketing and even website design to their services. Now some firms are coming in from the opposite side, with Toroso planning to leverage its existing consulting business to create an issuer.

The firm’s unit that does this will be spun out and rebranded Tidal ETF Services, Venuto said. Eric Falkeis, most recently chief operating officer at leveraged-ETF specialist Direxion, has joined as chief executive officer of the new business, which will also offer fund sales and marketing.

“We want to be basically a holistic platform,” said Falkeis, who previously helped U.S. Bancorp set up its fund services platform. “We’re going to have true partnerships and put a significant amount behind the marketing and helping grow our clients.”

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