FAQ | Tidal Financial Group

Frequently Asked Questions

General Questions

What services does Tidal Financial Group provide?

Tidal is a full-service ETF platform, offering:

Strategy & Product Planning
Trust & Board Management Services
Fund Management & Operation
Regulatory & Compliance Services
Active Portfolio Management & Trading Execution Services
Marketing & Research
Sales & Distribution Support

How can I contact Tidal Financial Group?

You can reach Tidal via [email protected]

ETF Creation and Management

What is the process for launching an ETF with Tidal?

Launching an ETF with Tidal involves:

Concept development and strategy formulation
Regulatory filings and compliance setup
Operational infrastructure establishment
Marketing and distribution planning

Tidal provides end-to-end support throughout this process.

Advisor and Sub-Advisor Roles

What is the difference between an advisor and a sub-advisor in the ETF space? 

In the ETF industry:

Advisor: Responsible for the fund’s strategy and operations; may own the trust.
Sub-Advisor: Provides investment management services under the advisor’s oversight.

Tidal offers solutions for both roles, with varying levels of control and responsibility.

Compliance and Legal Considerations

What is the Investment Company Act of 1940, and how does it affect ETF management?

The ’40 Act governs registered investment companies like mutual funds and ETFs, establishing rules around governance, disclosure, and fiduciary duties. Understanding this framework is crucial for navigating the ETF space with confidence.

What are the fiduciary responsibilities in ETF management?

Fiduciary duties involve acting in the best interest of investors, ensuring compliance with regulations, and managing risks effectively. These responsibilities vary based on the role (advisor, sub-advisor, trustee).

Investment Strategies and Tools

What are derivative ETFs, and how can they be used?

Derivative ETFs use financial instruments like options or futures to achieve investment objectives. They can be employed to hedge downside risk, enhance returns, or gain exposure to specific market segments.

What are fixed income ETFs, and how can they be used?

Fixed income ETFs invest primarily in bonds or other debt instruments, offering exposure to the fixed income market. They can be used to generate income, manage interest rate risk, or serve as a core portfolio stabilizer.

What are thematic ETFs, and how can they be used?

Thematic ETFs focus on specific trends or ideas such as clean energy, artificial intelligence, or healthcare innovation rather than broad market indexes. They allow investors to target growth opportunities they believe will shape the future economy.

Conversions

What is a Section 351 conversion?

A Section 351 conversion enables investors to contribute appreciated assets from a separately managed account (SMA) into a newly formed ETF without triggering immediate taxation. This structure defers capital gains and preserves the original cost basis and holding period of the transferred securities, maintaining full tax continuity through the transition.

How does Tidal assist with Section 351 conversions?

Tidal provides a full-service platform to guide advisers through the 351 conversion of SMA assets into an ETF, offering portfolio structuring to meet IRS and regulatory standards, coordination of all filings and documentation, operational implementation, and ongoing post-launch support.

What are the benefits of a Section 351 conversion?

The primary benefits include:

Tax Efficiency: Defers capital gains taxes until the ETF shares are sold.
Operational Simplicity: Consolidates multiple SMA accounts into a single ETF, simplifying portfolio management.
Liquidity: ETFs offer intraday trading, providing enhanced liquidity compared to SMAs.

Are there any considerations before proceeding with a Section 351 conversion? 

Yes, it’s essential to evaluate:

Diversification Compliance: Ensuring the ETF meets IRS diversification standards.
Asset Compatibility: Assessing if the assets are suitable for the ETF structure.
Regulatory Requirements: Understanding the legal and compliance obligations involved.

New ETF Launches

How can Tidal assist in launching a new ETF?

Tidal provides a full-service platform for launching new ETFs, including strategy and product planning, trust and board management, fund operations, and marketing & distribution support.

What is a white-label ETF provider, and how does it benefit new launches?

A white-label ETF provider allows asset managers to leverage an existing platform’s infrastructure to launch their own ETF. This reduces time and costs, and provides operational support while allowing the manager to focus on strategy.

Can Tidal assist in launching specialized ETFs?

Yes, Tidal has experience in launching specialized ETFs.

Create and Redeem

What is the creation and redemption process in an ETF?

The creation and redemption process is the mechanism that adds or removes ETF shares from the market to match investor demand. It ensures that an ETF’s price stays closely aligned with the value of its underlying portfolio, supporting liquidity and efficient trading.

Who is involved in creating and redeeming ETF shares?

Authorized participants, usually large financial institutions, handle the creation and redemption of ETF shares. They exchange baskets of securities for ETF shares or vice versa, ensuring the fund stays liquid and efficient.

Why does creation and redemption matter for ETF investors?

This process helps maintain fair pricing and prevents large premiums or discounts from forming. It also supports the tax efficiency and liquidity that make ETFs attractive to investors.

Convert Your SMA to an ETF with Tidal

Tidal’s use and promotion of the 2025 US Awards received was undertaken in coordination with ETF Express, for which compensation was paid.