DEFINITION of 'Sponsor'

1. In the context of stocks, an influential investor who creates demand for a security because of their positive outlook on it.

2. In the context of mutual funds, an underwriting company that offers shares in its mutual funds.

3. In the context of exchange-traded funds (ETFs), the fund manager or other entity who files the needed regulatory materials with the SEC to create an ETF. The sponsor also solicits and approves an authorized participant to create and redeem ETF shares.


1. Many investors look for wide sponsorship in a stock before investing, believing that the endorsement of well-known investors add a measure of safety to their investment decisions.

2. An underwriter must sponsor a mutual fund issue for investors to have access to it.

3. The sponsor of an ETF is essentially the managerial body of the ETF and brings together the needed parties and regulatory framework to establish the ETF.

  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Fiscal Agent

    An organization, such as a bank or trust company, that acts on ...
  3. Redemption

    The return of an investor's principal in a fixed income security, ...
  4. Creation Unit

    A set of shares or securities that makes up one unit of a fund ...
  5. Underwriting

    1. The process by which investment bankers raise investment capital ...
  6. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
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