ETFs Need a Name to Stand Out, Even If That Name Is Quincy JonesBy
Crowded market has providers turning to celebrity starpower
New thematic streaming music fund licenses a legend’s brand
Quincy Jones is now at the helm of the ETF spaghetti cannon.
In a new, potentially quixotic, attempt to stay relevant, distributors of exchange-traded funds are no longer content with branding their products with star investors like State Street Corp. did with DoubleLine Capital LP’s Jeffrey Gundlach. Instead, they’re turning to actual celebrities.
Exchange Traded Concepts LLC in conjunction with Vident Investment Advisory, is the first to try this, licensing the name of Quincy Jones -- the 84-year-old music legend who produced everyone from Ray Charles to Michael Jackson -- to draw attention to its new fund. The Quincy Jones Streaming Music, Media & Entertainment ETF filed with the Securities and Exchange Commission on June 22.
Perhaps it’s the growing swamp of 2,000 U.S. ETFs or the record pace at which passive funds keep attracting new investors. But, industry veterans are wondering if turning to the legendary music producer for branding is a new milestone on the way to peak ETF.
“It’s a crowded world for ETFs out there, and it shows how issuers are a little more desperate to get attention these days,” Eric Balchunas, Bloomberg Intelligence ETF analyst, said on Bloomberg TV Tuesday.
The fund is sub-advised by Vident Investment, the same firm responsible for other thematic products like the $715 million Robo Global Robotics and Automation ETF, with ticker ROBO. Launched in 2013, Robo has done well, nearly doubling in assets this year.
This time around, Exchange Traded Concepts and Vident are relying on a less known name for the index itself -- Beans Markets LLC, which according to the filing is an “index origination, licensing and research company.” The fund tracks companies related to streaming services. For their part, Jones and his eponymous product company have nothing to do with the fund, except for offering up his name.
All of which has the ETF industry somewhat confused. Jones is well known, but his best days as hit maker were from the 1950s to the 1980s. Since thematic ETFs tend to attract younger investors, it’s questionable how much appeal his name actually has among the fund’s audience. After all, he isn’t exactly Drake or Taylor Swift.
“The younger generations of investors are disproportionately gravitating toward ETFs,” said Todd Rosenbluth, director of ETFs and mutual funds at CFRA Research, an independent research provider. “Gen X and Millennials are more likely to be using them than baby boomers, and Quincy Jones’s time in the spotlight was decades ago.”