The National Exchange Traded Funds Association’s efforts to represent the trillion-dollar investment banking industry have been shelved due to “lack of demand.” Its stunted start offers insights for other budding groups.

The National Exchange Traded Funds Association (NETFA) website currently sits dormant, replaced with a placeholder site full of unrelated links. For an association launched less than two years ago with fanfare, it was an unceremonious end—at least, for now.

What happened? Well, several potential problems new organizations face were factors. Among them was that after the association’s launch, NETFA officials say, there was a “lack of demand.” Other issues the association faced:

Lack of big players: At the time of the launch, NETFA’s three founding firms (U.S. Commodity Funds, ALPS, and IndexIQ) had combined assets of $7 billion. That might sound like a lot, until you realize that the industry was worth $1.2 trillion in 2012—and three firms (Blackrock, Vanguard, and State Street Global Advisors) account for 81 percent of the total industry. Without their support, NETFA’s viability faced challenges.

Stiff competition: While NETFA hoped that it could succeed by focusing on a narrower segment of the investment banking space, the Investment Company Institute, which covered a larger swath of the industry, ultimately held more appeal for the larger exchange-traded fund (ETF) companies. NETFA Chairman John Hyland, the chief investment officer at United States Commodity Funds, argued that the larger group was too broad to offer comprehensive value to firms focused mostly on the fast-growing ETF space. “Our concern is that it has just not been active enough in the ETF space,” he told Financial Advisor magazine last year. But many larger companies that consider ETF only part of their business stuck with the established group.

No budget, no leader: Lack of support equaled a lack of funding. And without proper funding, there was nobody to run the show—leaving the organization to languish. “We were never able to fund a full-time executive to run the group, and that’s what it would have taken to get it off the ground,” IndexIQ’s Adam Patti, the vice chairman of the association, told Barron’s.

Decline in regulatory pressure: The association launched at a time when there were a number of specific regulatory concerns for ETFs, such as a slow review process from the Securities and Exchange Commission. These lessened, leaving ETFs with less of a need for an advocate.

Risk of the unknown: In a 2012 Barron’s piece, at least one of the big firms pinpointed the group’s lack of procedural history as a liability. “The F in ETF stands for ‘fund,'” Joel Dickson, a senior ETF strategist for Vanguard, told the magazine. “To separate ETFs from other fund-industry issues, to us, runs a huge risk of negating many of the protections and disclosures that have been in place for 70 years.”

While NETFA currently has its lights off and its website on lockdown, Patti says the association still might relaunch next spring, if the timing is right.

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