Carne recently hosted an ETF workshop in New York alongside Morgan, Lewis & Bockius LLP and the NYSE, exploring the opportunities and challenges shaping the next phase of ETF growth.

The discussion covered developments across product design, distribution and market infrastructure, with a particular focus on selecting the right structure for each investment strategy.

Several clear themes emerged from the workshop:

Active ETFs continue to gain ground

Active ETFs are creating new opportunities for managers to bring differentiated strategies to a wider investor base. Active fixed income, credit and income strategies are particularly well suited to the ETF structure where the underlying assets can support transparent pricing and daily liquidity.

The workshop also explored different routes for entering the market, including share-class and Section 351 conversions, as well as the growing use of ETFs across wealth platforms and model portfolios.

Private market strategies require careful structuring

Demand for private credit, infrastructure, real assets and differentiated income is encouraging managers to explore new ways of reaching wealth investors.

An ETF cannot create liquidity where it does not exist in the underlying assets. However, less liquid assets may become more liquid when included in ETFs.  Nonetheless, daily trading and valuation expectations can be difficult to reconcile with investments that are priced or traded less frequently.

For genuinely illiquid strategies, alternatives such as ELTIFs in Europe or interval funds in the US may offer more appropriate liquidity and redemption terms.

Distribution is influencing product design

Distribution is no longer a consideration that follows product development. It increasingly determines how a strategy should be structured from the outset.

ETFs can provide access to adviser platforms, wealth channels and model portfolios, but the right approach depends on the intended investor, target market and underlying assets. Managers must therefore consider the product and route to market together.

Market infrastructure remains critical

A successful ETF depends on more than the investment strategy. Valuation, market-maker support, trading spreads and redemption arrangements all influence whether a product can operate effectively.

These considerations become especially important for less liquid or harder-to-value assets, where market makers may be assuming greater valuation and inventory risk. The strength of the supporting infrastructure can ultimately determine whether an ETF is commercially viable.

Tokenisation remains a longer-term opportunity

Tokenisation and digital settlement could support greater transferability and operating efficiency across investment products.

However, the regulatory, pricing and liquidity infrastructure required for wider adoption is still developing. Tokenisation may improve how an investment structure operates, but it does not resolve a fundamental mismatch between daily access and illiquid underlying assets.

Partnership models offer another route into the market

Co-brand and white-label models can help managers enter the ETF market without building every capability internally.

These partnerships can provide access to the operational infrastructure and distribution support required to launch and manage an ETF. Their effectiveness depends on ensuring the investment strategy, wrapper and intended distribution channel are aligned from the beginning.

Looking ahead

The workshop reinforced the importance of starting with the investment strategy and intended investor rather than a preferred wrapper.

Underlying liquidity, valuation frequency, redemption terms, distribution channel and operating capabilities should guide the decision. ETFs can offer significant scale and reach when those elements align, while other structures may provide a better fit for genuinely illiquid strategies.

Thank you to everyone who joined us, and to our speakers, Clair Turketo, John McGuire, Partner at Morgan, Lewis & Bockius LLP, and Thomas Champion, Director, Exchange Traded Products Group at the NYSE, for sharing their insights.

If you’d like to discuss what these developments mean for your business, please reach out here.