Newport Beach, Calif.-based Rayliant Asset Management has signaled a move away from the series-trust provider that has administered the four ETFs in Rayliant’s fund complex since their inception.
The firm has announced plans to form a trust to support its complex of ETFs; it will also create a board of trustees for the first time to oversee those funds.
The new infrastructure signals an effort to move governance of Rayliant funds in-house and move away from outsourcing arrangements such as its agreement with Advisors’ Inner Circle Fund III, the series-trust provider that has administered Rayliant’s four-ETF, $213m fund complex since the funds were launched.
A spokesperson for the firm said that the goal is to pivot away from a more institutionally focused approach and put greater emphasis on an effort to broaden its role as a financial adviser while extending its roster of 40-Act funds.
The firm filed to establish its trust early in the year and continues to build staff, but all four of the firm’s ETFs still operate under the umbrella of the Advisors’ Inner Circle Fund III trust.
Those funds include the $99m Rayliant Quantitative Developed Market Equity ETF (RAYD), the $76m Rayliant Quantamental Emerging Market ex-China Equity ETF (RAYE), the $21m Rayliant Quantamental China Equity ETF (RAYC), and the $16m Rayliant SMDAM Japan Equity ETF (RAYJ).
The spokesperson declined to comment on whether it planned to move its four current ETFs into the newly created trust.
The Rayliant Funds Trust, officially established Jan. 24, 2025, currently includes only funds for which Rayliant has already filed, but have not yet come to market. Those funds include the Rayliant-ChinaAMC Transformative China Tech ETF (CNQQ), the Rayliant-ChinaAMC Select China 500 ETF (CSP) and the Affinity World Leaders Equity ETF.
Makeup of the new board
The new board currently includes two independent trustees and one interested trustee, though the Rayliant spokesperson said the company is actively seeking one additional independent trustee and may consider an additional interested trustee in the future.
The new trust’s two inaugural independent members include John Hyland and Laura Morrison, both of whom are ETF industry veterans.
Hyland, 66, has served as a director at several other complexes, most recently including seats on the boards of Matthews International Capital Management and the Esoterica ETF Trust.
Hyland also currently serves as an indie on the Kurv ETF Trust.
Prior to his career as a fund director Hyland held prominent positions in the asset management industry, including a stint serving as Bitwise’s global head of ETPs from 2018 to 2019. He was also CEO and chairman of the PointBreak ETF Trust from 2015 to 2017, and CIO of USCF for nearly ten years from 2005 to 2015.
Morrison, 59, also an experienced fund board member, sits on the boards of the World Funds Trust, the ETF Opportunities Trust, and the Precidian ETF Trust, roles she has held since 2024.
Her previous career includes serving as CRO of Direxion and as SVP and global head of listings for Cboe Global Markets.
She is the owner of LVM Advisory, who serves as a director and a member of the nominating and governance committee for the non-profit organization Women in ETFs.
The trust’s sole interested trustee, who also serves as the board’s chairman, president, and treasurer, is David Scott, 46, who is the CFO and COO of Rayliant.
The trust’s CCO is James Ash, 49, who has served in the position since the trust’s inception in January.
The trust hired law firm Thompson Hine as its legal counsel.
Currently, the board does not oversee any active portfolios or funds.
The newly created trust will maintain only one standing committee, an audit committee, which comprises all independent trustees and is chaired by Hyland.
Estimated compensation was not listed for the trustees on the initial filing; however, a spokesperson for the firm shared that it would likely fall within the low five-figure range.
According to SEC filings, each Rayliant trustee will serve indefinite terms unless an individual resigns or is removed from their seat on the board.
Rayliant’s move to a new trust under its own name also represents a relatively new practice in the ETF industry, particularly among new start-up ETF issuers, who often lack the necessary capital to establish a new trust and appoint a board of directors when they initially start their business.
This forces them to initially operate under a “white label” trust to preserve capital as they establish their businesses, then, at some point, many of these firms will reach a level of AUM and revenue where they feel comfortable enough to expand and develop their own trust and board, similar to what Rayliant is currently doing.
Rayliant, a Newport Beach, Calif.-based global investment management group, held a total of $213m in AUM as of the end of July, according to Morningstar Direct.
