ETF Sub-Advisory and Launch

Who This Is For

This page is for financial advisors, asset managers, and institutions thinking seriously about launching an ETF. That might mean starting a fund from scratch or transitioning an existing managed account strategy into a fund structure.

If you are deciding whether an ETF or an SMA is the right structure for a taxable client, the SMA vs. ETF decision guide covers that in full, including how the in-kind redemption mechanism works and a four-question decision framework. If you are looking for access to existing Stance strategies through a separately managed account, see the Separately Managed Accounts page. For platform-based or unified managed account access, see the Model Delivery and UMA page. This page is specifically about launching a fund and what Stance can contribute to that process.

The ETF Structure: A Brief Overview

Advisors and asset managers with a distinct investment process have increasingly chosen the ETF as their preferred vehicle for institutional distribution. It appears on custodial platforms, fits into model portfolio frameworks, and reaches the RIA channel and retirement accounts in a way that separately managed accounts may not match at scale.

Stance's Role in Your ETF

Stance is an investment management firm. We do not operate a trust, provide custody, or file regulatory documents. What we bring is the investment capability that sits inside the ETF, and the experience working alongside the platforms, legal counsel, and custodians who handle the rest.

What We Bring

Stance's investment capabilities span quantitative and factor-based equity strategies built on proprietary internal research, machine learning models, and alternative data, as well as sustainable equity strategies. We have managed equity portfolios since the firm's founding, have experience as sub-advisor on actively managed equity ETFs, and have built the research infrastructure, portfolio construction tools, and risk management processes needed to run a strategy inside a regulated fund structure.

For advisors or institutions looking to launch an ETF with a quantitative, factor-based, sustainable, or passive index mandate, Stance contributes the investment strategy, portfolio management, ongoing research, and model maintenance. For passive strategies, Stance owns the index and manages all aspects of its design and methodology, working with specialist index calculation and administration firms to handle ongoing maintenance. The ETF platform contributes the operational and regulatory infrastructure. For an overview of the strategies Stance currently runs, see the Strategies page.

How We Engage

Sub-Advisor. Stance manages the investment portfolio under the direction of the ETF's primary advisor. The advisor of record handles compliance, regulatory filings, and fund governance. Stance executes the strategy and manages the portfolio on an ongoing basis.

Co-Advisor. Stance shares the advisory role with another registered investment advisor, with each party contributing distinct investment capabilities. This structure is common in multi-strategy or multi-asset funds where different managers bring specialized research or portfolio management expertise.

In both cases, the engagement is structured around what the partner is trying to build. We are direct about situations where we are not the right fit, and we are willing to connect prospective partners with platform providers, legal counsel, and other service providers regardless of whether a Stance engagement results.

Platform and Distribution Relationships

Stance strategies are currently accessible through Fidelity, Schwab, LPL, First Affirmative, Adhesion, and SMArtX. We work with established ETF platforms, legal counsel with 1940 Act fund formation experience, and custodians familiar with ETF operations. We do not require a specific platform or provider and are willing to work with partners who have existing relationships in place. If you are working with a platform not listed here, contact us to discuss.

Three Paths to Market

When an advisor or asset manager decides to launch an ETF, the first real decision is the operating structure. There are three primary paths, and the right one depends on your AUM, how much operational infrastructure you want to own, and your long-term vision for the fund.

Proprietary Trust. The manager creates their own 1940 Act trust, becomes investment advisor of record, and builds or outsources the full operational stack: compliance, legal, custody, fund administration, and capital markets relationships. This path offers the most control and the strongest long-term economics, but requires substantial upfront investment and a timeline measured in many months. It is most appropriate for firms with the AUM, the compliance infrastructure, and the long-term commitment to run a fund business as a core part of what they do.

Series Trust / White Label Platform. The manager joins an existing series trust operated by a white label ETF platform. The platform provides the trust structure, compliance oversight, fund administration, and capital markets relationships. The manager focuses on investment strategy. Launch timelines compress significantly, and initial costs are lower. This is the most common path for first-time ETF sponsors and for managers whose primary business is investment management rather than fund administration.

Sub-Advisor Model. An existing ETF advisor brings in the manager as sub-advisor. The manager handles the investment strategy; the advisor of record handles regulatory filings, compliance, and fund governance. This is a low-friction entry point for managers who want ETF exposure without the full operational and regulatory commitment of serving as primary advisor. Economics are lower than the advisor-of-record path, but so is the operational burden.

As a general orientation: managers earlier in their AUM journey typically start with the series trust or sub-advisor model. Managers with a larger, more established asset base and dedicated compliance resources have more realistic options at the proprietary trust level. The right answer requires careful analysis before committing, and we recommend involving qualified legal counsel early.

A Note on Section 351

For advisors whose clients hold deeply appreciated taxable portfolios, Section 351 of the Internal Revenue Code may allow those securities to be contributed to a newly formed ETF in exchange for fund shares without triggering capital gains recognition at the time of contribution. The investor's cost basis carries forward into the ETF shares, and the gain is deferred rather than eliminated.

This may be relevant when a client account has grown so appreciated that even a carefully managed SMA transition would involve realizing a significant embedded gain. Whether it applies depends on a range of factors specific to each investor's circumstances, including IRS diversification requirements for the contributed portfolio and the need for a formal tax opinion from qualified tax counsel. It is not a fit for every situation.

Stance has worked alongside ETF platforms, tax counsel, and custodians on Section 351-seeded fund structures and can bring that experience to engagements where it is appropriate. For a detailed treatment of the mechanism, eligibility requirements, the process timeline, risks, and a full FAQ, see the Section 351 Exchange Primer.

The ETF Launch Process

A well-run ETF launch follows a structured process across three phases. For a series trust launch, the timeline from initial decision to first day of trading typically runs 12 to 16 weeks, though complexity and custodian coordination can extend this.

Phase 1: Strategy and Structure (Weeks 1 to 4). Defining the investment mandate, selecting the operating structure, engaging a platform and legal counsel, and determining the role of each party. Key documents include the investment management agreement, the sub-advisory agreement, and the initial prospectus filing.

Phase 2: Regulatory Filing and Operational Setup (Weeks 5 to 10). The trust platform or fund counsel files the registration statement with the SEC. Custodial, fund administration, and auditor relationships are formalized. Capital markets participants are engaged.

Phase 3: Launch and Post-Launch (Weeks 11 to 16). The ETF launches on exchange. Post-launch responsibilities include ongoing NAV publication, portfolio disclosure, capital markets coordination, and the start of the compliance and reporting cycle.

Starting the Conversation

If you are an advisor, asset manager, or institution thinking seriously about launching an ETF, the first conversation is direct. We will discuss your investment mandate, your existing client base and AUM, the structural path that fits your situation, and whether Stance's capabilities are the right fit for what you are trying to build.

Schedule a conversation.

Frequently Asked Questions

What types of strategies can Stance sub-advise inside an ETF?

Quantitative and factor-based equity strategies; sustainable equity strategies; multi-factor approaches combining fundamental and alternative data signals; and passive strategies where Stance owns and designs the index. We are primarily equity-focused. Strategies requiring fixed income management are outside our current scope.

Do we need to be an RIA to work with Stance as sub-advisor?

Not necessarily. Depending on the structure, Stance can sub-advise to an ETF platform that serves as the primary registered advisor. Advisors or institutions that are not RIAs would work through the platform in that structure. We recommend discussing your specific situation with qualified legal counsel early in the process.

Can an existing separately managed account strategy be moved into an ETF?

In many cases, yes. A strategy with a documentable investment process, liquid equity holdings, and a track record can be transitioned into an ETF.

How does Stance get compensated as sub-advisor?

Stance receives a sub-advisory fee, typically expressed as a percentage of fund AUM, paid by the ETF's primary advisor from the management fee collected by the fund. The specific rate depends on the scope of the engagement and the fund's overall fee structure.

How long does the launch process take?

For a series trust launch, plan for 12 to 16 weeks minimum from the time legal counsel is engaged. A proprietary trust involves considerably more time given the additional regulatory and operational infrastructure required.

What is Stance's investment process inside an ETF?

Stance manages portfolios using a combination of fundamental sustainability analysis, proprietary quantitative factors, and machine learning-based research. The specific approach is tailored to the ETF's investment mandate. Risk management, factor exposure monitoring, and turnover control are integrated into the portfolio construction process, and the resulting portfolio is managed to the prospectus guidelines.