Recently I wrote a blog about the commercial importance of targeting women as a separate market segment in the ETF industry. In the blog I mentioned an interview I had with Deborah Fuhr, one of the co-founders for a 2 ½ year old group called Women in ETFs.
Deborah is a financial services industry veteran with a distinguished career in quantitative portfolio management. She was one of the pioneers of women on the investment side in the ETF industry. She was very gracious with her time, and the following are some excerpts of our conversation.
My Conversation with the co-founder of Women in ETFs
How did you come up with the idea of creating a group for Women in ETFs?
“The idea was to start a group that would make it easy to connect like-minded women together. To support them in learning and education and inspire them to get into this business and to see that they can make a career within the ETF Industry; whether it’s asset management, becoming an investor or using the products.”
What has the response been like?
“We’re now just over two years into this and we have over 2,000 members. It’s for both men and women, because I think it’s very important for men to be engaged and to support the advancement of women. So about 10% of our members are men.”
Tell me about what the group does in terms of activities?
“We have educational events, professional development events, webinars, breakfasts, various types of in person meetings. Some of our members have said it’s helped them to improve their career path, definitely helped from a networking, educational point of view.”
Part of your mission states ‘(Our) mission is to further the careers of women today by leveraging our collective skill and ambition.’ How does this play out in the group?
“For many people coming into the ETF industry either you’re new to it as an experienced person, but having not worked on ETFs, or new to the industry and don’t know ETFs. It is often challenging for people to have a safe and comfortable source of information where you can ask questions that you might feel are things you should know already.”
“You need to know about a lot of different asset classes. You need to know about developed, emerging and frontier markets. You need to know about fund regulation, about trading, settlement, and tax. Different distribution channels and different client needs. How to compare using ETFs to traditional mutual funds, to segregated accounts. To using futures and structured products. And what’s happening in the U.S. is very different from what’s happening in Canada, or Europe or Asia or Latin America.”
The growth of ETFs has been phenomenal. What do you think that’s attributed to? Is it just robo-advisors?
“I think ETFs are a uniquely democratic product where you find institutions are using them, financial advisors and retail. And clearly in the robo space, most robo-advisors are making use of ETFs because they are very cost efficient. They also allow you to invest in small sizes into many different types of exposures and the ability to daily make inflows and outflows is also quite important. So we have seen that the robos in most countries are making use of ETFs.”
What do you think the future holds for ETFs?
“We’re clearly seeing that ETFs have become alternatives to using futures so they’re being used in different ways by different types of investors. They’re covering new asset classes and new markets. I think we’ll continue to see more growth in the use of ETFs, especially in the US. because ETFs are more tax efficient than traditional mutual funds and that makes them attractive. And by listing them on the exchange means you’re saving as much as 60 basis points of fund admin and transfer fees.”
What about index construction methodologies?
“I don’t particularly like the term ‘smart BETA’ but I think we’re seeing investors look at academic research which shows that there are different ways of constructing indices with the goal of delivering better returns than market cap indices over long time periods and how to manage risk – probably better to call them factors and multi factor indices. But most people refer to it as ‘smart BETA’ so I’m calling it that just so people get what I’m saying.”
What do you think the biggest challenge will be for the industry going forward?
“I think the biggest challenge that the asset management industry faces is the changing demographic; that people are living longer, social security is not going to cover the needs of retirees. So the industry has to think about how to offer products for the de-cumulation phase of life as opposed to the accumulation of assets.”
“I think education, financial literacy among younger people is important.”
Thank you Deborah.
If you work for an asset manager and would be open to an interview with Kurtosys, please contact us or tweet us @kurtosys.
Deborah Fuhr is the managing partner and co-founder of ETFGI, an independent research and consultancy firm launched in 2012 in London offering paid for research subscription services. Previously, she served as global head of ETF research and implementation strategy and as a managing director at BlackRock/Barclays Global Investors from 2008 – 2011. Fuhr also worked as a managing director and head of the investment strategy team at Morgan Stanley in London from 1997 – 2008, and as an associate at Greenwich Associates.
Ms Fuhr is one of the founders and on the board of Women in ETFs, and one of the founders and on the board of Women in ETFs – Europe chapter. She’s on the board of Cancer Research UK’s ‘Women of Influence’ initiative to support female scientists. Ms. Fuhr is on the editorial board of the Journal of Indexes (United States), Journal of Indexes (Europe), and Money Management Executive; the advisory board for the Journal of Index Investing; and the investment panel of experts for Portfolio Adviser, the FTSE ICB Advisory Committee, the NASDAQ listing and hearing review council, the International Advisory Committee for the Egyptian Exchange, and the University of Connecticut School of Business International Advisory Board. She holds a BS degree from the University of Connecticut and an MBA from the Kellogg School of Management at Northwestern University.