If recognizing the need for change is the first step, actually implementing change is the hard part. Many asset managers who decide to pivot toward owning more of their product shelf quickly encounter what we can call “the launch trap.”
This is the set of structural blockers and frictions that make it difficult to launch new investment products or strategies in a timely and efficient way. Despite strong will and good ideas, firms often find themselves bogged down by cost, complexity, and institutional inertia. Understanding these barriers is critical — it explains why Shelf Syndrome has persisted, and why only a few firms have fully embraced Assetization to date.
03·01The high cost — and risk — of launching
One major blocker is the high cost and risk of launching traditional investment vehicles. Creating a new fund — mutual fund, ETF, or alternative fund — involves significant upfront expense: legal fees, administrative and custody setup, seeding requirements, and ongoing operational costs. Industry sources suggest a basic fund can cost tens of thousands to register and hundreds of thousands per year to operate at scale. These are daunting figures for a mid-sized firm considering one or two niche products.
Without certainty that the product will gather substantial assets, it is a risky bet — and the odds aren’t great. BCG found that of all mutual funds launched in 2013, only 37% were still alive a decade later, implying that nearly two-thirds liquidated or merged due to lack of traction. Cerulli research shows most managers expect a new strategy to reach at least $150–$200 million in AUM within 3–5 years, or else it is likely to be shut down; failing to hit that threshold was cited by 93% of firms as a top reason to terminate a product.
03·02Legal complexity and slow issuance timelines
Any new product structure must comply with a myriad of rules, plus tax considerations for both the manager and investors. Mid-tier managers seldom have large in-house legal teams or structuring experts. They typically rely on external counsel or service providers who charge significant fees and take a long time to deliver. Setting up a private fund or special-purpose vehicle might involve coordinating with lawyers in multiple jurisdictions, drafting offering memoranda, and negotiating with custodians and administrators — a process that can stretch many months.
In rapidly moving markets, taking 6–12 months to stand up a vehicle is often too long. By the time you launch, competitors might have saturated the space or client interest might have moved on. Slow issuance timelines effectively kill the benefit of being nimble.
03·03Platform friction and the distribution catch-22
Say a manager overcomes the cost and complexity and successfully creates a new product — the next question is how to get it onto platforms or into client portfolios. Many mid-sized managers rely on intermediaries to distribute products, and these gatekeepers have their own due diligence and listing processes. Gaining “shelf space” for a new fund on a major wirehouse platform can itself be an arduous journey.
To escape Shelf Syndrome, a manager creates a proprietary product — but then to reach clients, they need to get that product onto someone else’s shelf.The distribution catch-22
KPMG has noted that shrinking shelf space at major distributors is a challenge for asset managers. Large brokerages are curating down the number of funds they offer, not expanding it; they prefer established brands and proven track records. A new product from a mid-tier player may struggle to gain placement, especially against an incumbent product from a big firm. Friction in distribution can result in low adoption, causing the product to languish and eventually close — reinforcing the notion that it was “safer” to use others’ funds.
03·04Internal culture and structural inertia
Many mid-sized asset managers built their businesses over decades as allocators or stock-pickers, not product manufacturers. Shifting that mindset is difficult. Portfolio managers might be great at generating ideas, but packaging those ideas into a formal product requires coordination across legal, ops, and sales — departments not used to working together on development projects. Silos impede speed, and decision-making layers and risk aversion slow approvals for anything unfamiliar.
In a 2024 industry survey, 71% of asset managers said product rationalization and development happen too slowly across the industry, with 43% admitting it is too slow even in their own firm. Even insiders know their processes are sluggish — citing a lack of a straightforward process and reluctance to kill or change existing offerings.
The situation is not hopeless. The very awareness of these barriers has spurred new solutions aimed at helping managers escape the launch trap. While the traditional route to product launch is paved with obstacles, innovations now exist to streamline and de-risk the process — the focus of the chapters ahead.