•  Kip Meadows, founder at The Nottingham Company, estimates up front costs range from $50,000 to $75,000, when a new ETF is added "to an existing series trust with all the exemptive orders in place." He also details operating expenses start at approximately $180,000 and go up incrementally as assets increase.
• "ETFs must register with the SEC in a shared (series) trust or in a standalone trust format. A series trust is designed for advisers who want to start their own funds but avoid the complexities associated with organizing a standalone trust. In the series trust model, the organizational structure, including its Board of Trustees, is already in place, reducing costs and saving time."
• Conversely, a standalone trust is preferred for those that want to establish a family of funds and/or have greater involvement in the administrative duties of the fund. "Advisers have more control with standalone trusts than with series trusts, such as having a key role in the selection of the initial board of trustees, fund officers, fund counsel, custodian, auditor, and administrator."

Start Up Costs

• Investopedia explains start up costs for a new ETF can range from $100,000 to several million dollars and provides links to digital platforms, such as ETF Managers Group and Exchange Traded Concepts, that assist in creating and launching new ETFs.
• ETF.com clearly states the start up costs and first year's expenses will be at least $300,000. They explain, "Much of the corporate governance structure looks the same for ETFs as it does for mutual funds. (A new ETF) will need a trust, an advisor and a board of directors. The board will likely hire a number of service providers, such as custody, fund administration, transfer agency, distributor, and audit."
• According to independent financial-product consultant Bob Tull, start up costs for an ETF "from start to finish, for all the contracts, the average is between $750,000 and $1.25 million". But he adds that white-label firms, a kind of private label for financial products, can reduce ETF start up costs dramatically, closer to $100,000.
•  Specific start up costs include the registration of the ETF with the SEC, initial exchange listing fee, and initial marketing of the ETF.
• The SEC registration can cost approximately $100,000 for a generic type fund or upwards of a half a million dollars for more complex funds.
•  Index listing costs between $5,000 and $10,000.

Operating Expenses

• Several years ago, it was stated that initial operating expenses ranged closed to $150,000.
• Yahoo! Finance estimates annual operating costs between $250,000 to $500,000 a year for one single ETF.
• Bloomberg estimates, "It costs about $250,000 per year to run an ETF, with the exact amount depending on what the fund owns, which service providers it hires, and the issuer’s broader business."
• John Jacobs and Richard Keary's white paper published in EFT Bild explains, "Roughly $650,000 in operating capital (is) needed to sustain an ETF for at least three years (average time frame for an ETF to hit breakeven). This does not include a marketing budget or seed capital. This number is an approximation for new issuers who are using a third-party platform. The costs will be higher if the manager is planning to handle all operational procedures internally."
• Typically, operating expenses include a subadvisor and fund administrator, in addition to the most expensive expense category, marketing. Marketing costs vary widely based on the intention of the fund manager.
• It is explained, "Licensing an index is not expensive, particularly in the early days of an ETF when total assets under management (AUM) are still small. According to industry sources, plain-vanilla U.S. equity ETFs often face 0.03-0.04% of total assets to license their underlying benchmarks. Specialized indexes can cost more, but paying 0.10% a year of AUM for an index is rare."
• The index listing annual maintenance fee ranges from $5,000 to $40,000.

Examples

• The SPDR S&P 500® ETF Trust Statements of Operations line items operating expenses (found on page 11) including trustee expense, S&P license fee, marketing, and legal and audit fees. The proportional ratio for each expense may be calculated using either the listed AUM or annual operating income.
• Expenses for the iShares MSCI Emerging Markets ETF include investment advisory fees, commitment fees, professional fees, miscellaneous expenses, income taxes, and interest expense.

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