Keys Tinney
Managing Partner @ Blue Sky Asset Management

Keys Tinney spoke to Jobs In ETFs about what he enjoys the most in his role at Blue Sky Asset Management and what he thinks the biggest trends that will shape the industry going forward are.

do what you say you’re going to do, do it by the time you said you were going to do it, and say please and thank you – then work your tail off!

Jobs in ETFs (JE): Please tell us about yourself and your experience. How did you decide to pursue a career in the industry, what was the pivotal moment?

Keys Tinney (KT): I started as an advisor back in the late ‘90s and then sold my practice in 2007.  I then worked with a boutique M&A firm focused on working with RIA’s owned by Top 100 accounting firms.  In 2011, I co-founded a registered investment advisor in Denver, Colorado with the mission to help wirehouse advisors better serve their clients through independence.  In 2013, Blue Sky Asset Management spun out of that firm as a separate account manager to provide our risk managed investment strategies to advisors outside of the firm.

JE: What is the biggest challenge in entering the ETF business? 

KT: There’s a steep learning curve when jumping into ETFs. There are a lot of hoops a new entrant to the ETF space needs to jump through, ranging from all of the regulatory requirements that need to be fulfilled to considerations around branding and marketing. We’ve been able to surmount all those challenges without issue with the assistance of a number of service providers. We managed to launch in just about 6 months from when we made the decision to jump.

We’re particularly proud of our work in the area investor education. For the ETF industry as a whole, education is something that needs much more attention and resources. We’ve looked to make our sites, and, a repository of information that investors and advisors can use to better understand not just what we’re doing with our funds but how things like volatility, risk and inflation can impact their investments.

JE: And what do you enjoy most about running your own company?

KT: If my partners and I have an idea that we think is worth exploring, we have the flexibility and capability to conduct thorough research and due diligence and then make it happen, if we decide it’s worth pursuing. It’s a perk that comes from having one of the foremost experts on quantitative investing as a partner – David Varadi, CFA.

JE: What sets your firm apart from others?

KT: Coming from a separate account background and also having worked closely with high net worth clients as an advisor for a number of years, I’ve seen firsthand the kinds of questions and concerns that investors bring to the table when they’re thinking about their finances. A significant market drawdown isn’t just a bad headline or a blaring news report; it’s a delayed retirement or a college admission for their children that gets deferred. That’s why we focus so hard on the downside protection factor in so many of our ETF offerings. We understand the impact a lack of downside protection can have.

JE: What do you believe is the secret to success?

KT: Simple, as my dad taught me when I was a kid – do what you say you’re going to do, do it by the time you said you were going to do it, and say please and thank you – then work your tail off!

JE: You’ve launched a series of ETFs this year in January. Please tell us about the launch and any future plans.

KT: We launched five ETFs at the end of January 2017 under the QuantX brand. Four of them make up our Risk Managed suite, which is built around strategies we had previously only made available via separately managed accounts. The four funds are: QXMI, QuantX Risk Managed Multi-Asset Income ETF; QXTR, QuantX Risk Managed Multi-Asset Total Return ETF; QXRR, QuantX Risk Managed Real Return ETF; QXGG, QuantX Risk Managed Growth ETF.

This fund family is designed to provide different asset class exposures with a focus on managing downside risk. Each fund is designed to meet different investor goals; together, they’re designed to be used as building blocks to help construct a risk managed core portfolio. The further we get from 2008, the closer we are to the next 2008, and it’s our strong belief that not enough investors have incorporated true risk management into their portfolios. That’s what these funds are designed to do.

We also have a fifth ETF, XUSA, the QuantX Dynamic Beta US Equity ETF. We designed this as a “smarter” beta alternative to a traditional core long-term US equity ETF, as it seeks to provide enhanced returns with reduced risk versus the Russell 1000. The underlying index is constructed using forward-looking estimates of risk and returns from the options markets, with the end result being a portfolio of equities with the highest implied upside relative to downside volatility. It’s an approach that had never been packaged in an ETF before and one we researched thoroughly as we were building our initial suite of funds.

As far as our future plans?  Well we ARE a quant shop, so we are always doing lots of R&D.  David is truly an amazing talent when it comes to constructing investment strategies that help to provide better solutions to common portfolio challenges. I’d expect you’re going to see some new stuff from us as the year progresses.

JE: What would you say are the biggest trends that will shape the industry going forward?

KT: I think we’re going to see continued innovation coming out of the ETF space as investors better understand the benefits of the ETF structure, including tax efficiency. The lower cost for these funds generally means ETFs can provide key exposures and downside protection. A greater focus on education is something we think is going to help separate the funds that resonate from the ones that do not, which is why we’ve made education a core component of everything we do. We’re very excited to be a part of the ETF universe and are looking forward to continuing to build our footprint in 2018 and beyond.