Who Really Owns a White-Label ETF?

When White-Label ETF Partnerships Break Down

An April 2026 Delaware Supreme Court decision involving Benchmark Investments and Pacer Advisors offers an important lesson for the growing white-label ETF industry.

The dispute involved two parties operating under what the court described as a white-label arrangement.

Benchmark was the ETF sponsor and index provider, while Pacer served as investment adviser and provided services under the white-label arrangement.

As the court explained, sponsors use these arrangements in part to avoid having to build costly ETF infrastructure themselves.

The disagreement ultimately centered on the termination provisions in their ETF Services Agreement.

Benchmark notified Pacer of its intent to terminate the agreement and proposed a reorganization of the funds.

After that proposed reorganization was not approved, Pacer treated Benchmark's notice of intent as an actual termination. Benchmark disagreed.

The Delaware Supreme Court sided with Benchmark on that question.

It found that under the parties' agreement, a notice of intent to terminate was not the same as an actual termination.

The court reversed the lower court and remanded the case with instructions to grant summary judgment to Benchmark on that issue.

There are additional claims and issues surrounding the dispute, but for the ETF industry, the case raises a much broader question:

When multiple parties help launch and operate an ETF, where does one party's role end and another's begin?

The Rise of the Fractional ETF Business

White-label platforms are part of a much larger change taking place across the ETF industry.

Launching an ETF business no longer necessarily means building every capability internally.

An issuer can use outside expertise for portfolio management, compliance, operations, fund administration, capital markets, legal, distribution and other functions.

In many ways, the modern ETF issuer can assemble a business using fractional expertise.

White-label platforms take that concept even further by providing much of the infrastructure required to bring an ETF to market.

That can lower the barriers to entry and allow an emerging issuer to concentrate its resources on the areas where it believes it has an advantage, whether that's investment management, intellectual property, distribution or brand.

That's a good thing for the ETF industry. But it also makes something else increasingly important: clearly defining the relationship between all of those parties.

Outsourcing the Work Doesn't Define Who Owns What

Hiring someone to perform a function and giving that party ownership or control are two very different things.

An issuer might outsource portfolio management.

It might use an outside capital-markets consultant. It might hire a third party for distribution.

Or it might use a white-label platform for much of the infrastructure surrounding the fund.

The contracts need to clearly establish where those relationships begin and end.

Who owns the brand?

Who owns the index or investment intellectual property?

Who has rights to particular economics?

What happens if one party wants to terminate the relationship?

Can certain functions or intellectual property move to another provider? What rights survive termination?

And perhaps most importantly, what happens if everyone gets along at launch but wants something different five years later?

Those questions can seem far less important when an ETF has $5 million than when it has $500 million.

That's exactly why they should be answered at $5 million—or preferably before the ETF ever launches.

Don't Forget About the Economics

Ownership and control aren't the only things that should be clearly established at the beginning. The economics matter too.

Some ETF relationships include management-fee sharing or other revenue-sharing arrangements.

That may not seem particularly significant when a fund is small, but the economics can look very different if the ETF eventually attracts hundreds of millions—or billions—of dollars.

Does the original fee-sharing arrangement continue indefinitely?

Does it change at certain asset levels? What happens if one party's responsibilities change?

What happens if the ETF moves to another platform or the relationship ends?

There isn't necessarily one right answer.

The important thing is that the parties agree on the answer early.

A fee-sharing arrangement that helped get an ETF off the ground shouldn't become a source of disagreement simply because the fund became successful.

This Isn't an Argument Against White-Label Platforms

The lesson from the Delaware case shouldn't be that ETF entrepreneurs should avoid white-label platforms or fractional expertise.

Quite the opposite.

Fractional resources can allow a smaller asset manager or entrepreneur to access capabilities that would be extremely expensive to build internally.

A good white-label relationship can provide infrastructure, experience and scale while allowing the issuer to concentrate on growing the business.

The same is true throughout the ETF ecosystem. Not every issuer needs every capability sitting inside its own four walls.

But the more parties involved in building the business, the more important it becomes to make sure everyone understands their role.

The relationship should be clear when things are going well, not just when something goes wrong.

Cross the T's Before the ETF Becomes Successful

White-label platforms and fractional providers can give ETF entrepreneurs access to infrastructure and expertise they might never build internally.

That's one of the reasons these relationships are so valuable.

The lesson from Delaware isn't to avoid them. It's to make sure the contracts clearly establish who owns what, who controls what, how the economics work and what happens if the relationship eventually ends.

The best time to answer those questions isn't after the ETF becomes successful.

It's before it launches.

Disclaimer

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.