ETF Deep Ecosystem

The growth in the ETF Industry over the past decade – in April, total global ETF assets topped $4 trillion – is undisputed. In the past five years alone, the number of U.S. issuers leapfrogged from 45 to 78 [1]. This growth, along with our deep knowledge of the ETF universe and fervent evangelism, led us to the next logical step: developing Toroso ETF Index, which is licensed by the ETF Industry Exposure & Financial Services ETF (TETF). By doing this, we continue to illuminate what is happening in the ETF space, while bringing together ETF leaders who can lend their expertise in researching, monitoring, benchmarking, and forecasting the future of the ETF ecosystem.

Balancing was a little like three-dimensional chess. It became a matter of determining how to weight each tier, what market cap breakdown to use, and the extent to which each ETF constituent would be represented.

We determined that sponsors should comprise 50% of the index, exchanges 16%, index/data 15%, service 12%, and liquidity 8%. Tier A (50%), we decided, would consist of substantial participants with direct financial impact, Tier B (25%) would be those with substantial participation and indirect financial impact, Tier C (15%) would be companies that have moderate participation and indirect financial impact, and Tier D (10%) would be those that are new or that are minor participants. Within each tier, participants were equally weighted and any one security within a tier was subject to a 9% maximum weight.