ETF STARS – Bruce Lavine, CEO @ 55 Capital Partners

 

 

 

 

 

Bruce Lavine
CEO @ 55 Capital Partners

“Find a business you believe in, you can influence and dedicate yourself to it.”

JE: Please tell us about yourself, your experience and your first job in the ETF industry.
Bruce: My ETF career started in mid-1998 when I was working on this potential opportunity for Barclays Global Investors to enter the retail indexing business.  At the time, there was no name for the category today known as ETFs, there were just cubes (QQQ), diamonds (DIA), and spiders (SPDR).
When we filed with the SEC in 1999 to launch a host of these new structures, they asked us what to call them and we used our internal code name-“exchange traded funds” and clearly it stuck!  When Lee Kranefuss took over as the CEO of iShares, I was his first hire as his CFO.

JE: How did you decide to pursue the career you have today and what was the pivotal moment?
Bruce: 
I fell in love with the investment world while working in the treasury department at Bristol Myers Squib helping to manage their pension and 401(k) assets.
I was specifically excited about the ETF world as soon as I started working on it as it was clear that these products were structurally superior to other investment structures and were going to be the vehicle of choice in the future.  I always have said that very few people who are using ETFS suddenly choose less transparent, less liquid, less tax efficient, less flexible, higher fee products.

JE: What are the things you work on in your current role, what are some of the challenges and what do you enjoy the most?
Bruce: As with most of my roles in the ETF industry, I enjoy birthing an attractive new concept into existence. In 2003, I went to London and began building iShares Europe when all we had was a FTSE 100 fund, a DJ Stoxx fund and a EuroStoxx fund.  When I joined Jono Steinberg at WisdomTree in 2006 right before we launched the original funds, I really liked the idea of creating a firm that focused on the best way to index, in addition to all the benefits of the ETF structure.

With 55 Capital, I am happy to be reunited with Lee and to be teamed with some of the best investment talent I have ever met (led by Dr. Vinay Nair) to focus on the most vexing problems facing advisors.  How advisors can harness the full potential of the myriad of ETFs available to create superior investment portfolios.
Today, I spend a fair amount of time talking with a variety of stakeholders as we seek to bridge two worlds in delivering our solutions – using the best institutional portfolio management techniques available and delivering in the most user-friendly way possible to advisors. It has the normal challenges of educating advisors that there is a better way and overcoming their thoughtful reservations one by one.

JE: Was there a time throughout your career when you were unsure about where you were going? How did you combat the uncertainties?
Bruce: Prior to finding my way into the investment world, I felt I was searching for an industry and a career path I could sink my teeth into.  I had been an MBA working in corporate finance and it took an active decision to prioritize a position in the investment world and go make it happen.
I took a not quite lateral career move (to join the predecessor firm to Barclays Global Investors) and a cut in pay to make the switch, but it turned out to be a critically important choice.

JE: What would you say the challenges and benefits of working at both “small” and “large” companies are?
Bruce: Large companies offer lots of resources and lots of strategic assets to leverage as you are beginning to pursue new ideas.  Small companies must scrap much harder, but there is a payoff once you graduate to a going concern that is difficult to beat.
In either case, leadership is the most important thing.  I have been lucky to work for great leaders who could wire larger businesses to run with the mindset of smaller businesses and also to execute smaller businesses with the resources normally only available to larger businesses through strong financial backing.

JE: What has been the highlight of your career to date?
Bruce: 
I have been blessed to have many highlights including the unusual feat of ringing the opening bells on the NYSE, AMEX, NASDAQ plus the German, Swiss, Dutch, Italian, UK and Mexican stock exchanges.  I am tremendously proud that I have played a key role in building two of the top ten global ETF companies.

JE: Is there anyone in this industry you look up to, who has influenced you the most?
Bruce: 
Aside from Lee and Jono, I was lucky to collaborate with Nate Most, who worked as a consultant to iShares in the early days.
Nate had essentially invented the SPDR (apologies to the many others who had a hand in it) and he was a thoughtful, friendly, funny, and good-hearted man.  We worked on many product ideas together.  Nate worked well into his 90s and was a class guy.

JE: What is the best bit of advice you’ve received? And what advice would you give to those who are just starting in the industry?
Bruce: 
When times are uncertain and progress is uneven, stay tough and communicate clearly.  Nobody likes surprises.  Be honest and optimistic in assessing what you can accomplish.
For those starting in the industry, I would say find a business you believe in, you can influence and dedicate yourself to it for a while.

JE: What key skills do you think professionals need in order to be successful in the ETF industry?
Bruce: 
There is an immense amount of minorly differentiated product and many similar service models in the industry.  To be successful, find a new way to differentiate your firm that is valuable to your clients.  The best way to discover new solutions is to be constantly asking investors what problems they are trying to solve.

JE: If you had a magic wand, what one thing would you change in the ETF industry?
Bruce: 
I would make sure that anyone who questioned the ETF trading mechanism first fully understood how a mutual fund is priced at NAV at day end and executed.
They would then understand the value of being able to specify an executable intraday price and also would understand that all the transacting issues around high yield bonds and international stocks trading out of time zones, etc. are not unique to ETFs.

JE: Finally, let’s talk predictions. What trends do you think are going to define the industry in the next few years?
Bruce: 
As difficult as consolidation is to accomplish in the industry because of 1940 Act concerns and shareholder voting uncertainty, it is hard to imagine there will not be substantial consolidation among ETF providers, and for that matter, all of asset management, in the next decade.


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