105 Deborah Fuhr: ETFs are Changing the Way the We Invest

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[00:00:01] Pierre Daillie: Hello, and welcome to the Insight is Capital Podcast. I’m Pierre Daillie, Managing Editor of AdvisorAnalyst.com. My special guest today previously served as the Global Head of ETF Research and Implementation Strategy and as a Managing Director at BlackRock. And prior to that, Barclays Global Investors from 2008 to 2011. She also worked as Managing Director and Head of the Investment Strategy team at Morgan Stanley in London from 1997 to 2008. And as an associate at the fabled Greenwich Associates. She has been working with investors, ETFs, ETPs index providers, exchanges, market makers, APs, regulators, and trade associations, as well as custodians, law firms, and accounting firms around the world since 1997. Her ETF research focused firm counts among its research and consulting clients some of the leading firms in the ETF ecosystem around the world.

She was the recipient of the 100 Women in Finance 2017 European Industry Leadership Award, the 2014 William F. Sharpe Lifetime Achievement Award for outstanding contributions to the field of index investing. And she was named one of the 100 most influential women in finance by Financial News over several years, most recently in 2016. She’s a founder and board member of Women in ETFs or WE for short, the first women’s group for the ETF industry founded in January of 2014. WE is a nonprofit organization that brings together over 4,500 members, including women and men in chapters, in major financial centers around the world to connect, support and inspire. Deborah Fuhr, Managing Partner and founder of ETFGI is with me today.

[00:01:48] Announcement/Disclaimer: This is the insight is Capital Podcast.

The views and opinions expressed in this broadcast are those of the individual guests and do not necessarily reflect the official policy or position of AdvisorAnalysts.com or of our guests. This broadcast is meant to be for informational purposes only. Nothing discussed in this broadcast is intended to be considered as advice.

[00:02:07] Pierre Daillie: Deborah, welcome to the show. It’s great to have you.

[00:02:10] Deborah Fuhr: Thank you. It’s great to be here and thank you for that. So I should add that we’re actually in two weeks time celebrating the 10th anniversary of ETFGI, the company I founded, which is amazing.

[00:02:21] Pierre Daillie: I’d love to hear, a little bit more about your background, your career, how you rose to the high echelons of the ETF industry in the earliest days the genesis of ETFGI. And I wanna make sure we get to talk about Women in ETFs as well before we, we part today.

[00:02:40] Deborah Fuhr: Yeah. So I guess, the backstory, a little bit before starting at Greenwich Associates is, I always up, was up for a challenge. And I actually was a lifeguard in Greenwich, Connecticut, where I grew up, and I was recruited to be on the softball team, the women’s softball team for Greenwich Associates. And I heard about Charlie Ellis, the founder, heard how difficult it was for most people to work with him. They typically lasted about six months and felt like it was way too much work. And so I set the challenge for myself to work with him. And when I was graduating from university, the person who was working with him as the associate had announced she was gonna leave. And I went up to him at the company picnic and said I wanted to work with him.


The head of HR heard about this and told me this was a huge mistake, but, [laughs].

I decided to do that. And, [laughs], it was definitely challenging, but it was great. I got the opportunity to travel all over the world with him. I was able while I was getting my MBA to set up consulting programs in Japan and manage them and learned a heck of a lot of stuff. But that’s how I decided I really wanted to not work in the US, but work overseas, which led me to eventually being in London, getting the job at Morgan Stanley on the Sales and Trading desk, getting involved with ETFs where Morgan Stanley had partnered with Barclays Global Investors and MSCI to create WEBS, World Equity Benchmark Series.

So those 17 MSCI benchmarks became iShares. And I had a great time, meeting investors, helping private wealth management within Morgan Stanley and traveling the world fixed income to go equities in Morgan Stanley. So ended up leaving, I joined Barclay’s Global Investors on the day Lehman filed for bankruptcy. So that day will stay in my mind forever.

[laughs]. Yeah.

Yeah. And we welcomed new clients based on that. And then when BlackRock bought BGI, I decided wanted to go back to the sales side, had an offer to be the Global Head of Delta One Strategy accepted that, resigned. And that bank, as they often do, reorganized like two weeks later, I learned that I wasn’t going to be able to speak to the press or do some of the things I thought I was going to be able to do, and decided to set up ETFGI, which as I said, is turning 10 years old. So pretty exciting. And, yeah

… and Women in ETFs came about really eight years ago. So January is the anniversary founded in 2014. And the idea that made sense for me was often when people come into the ETF industry, it is a simple product and it’s intended to be simple, but it’s the only democratic product out there where it’s used by, pension funds, hedge funds, advisors, and retail. And you need to know a lot of things to be able to talk successfully and understand and be successful. ‘Cause you need to understand regulation, tax a bit, you need to understand trading, benchmarks, asset classes, asset allocation the rules that people think about when investing et cetera. So I found that, when I were worked at Morgan Stanley, I was like one of 11 female managing directors. And so having people to talk to was really important.

I think network is important, right? So the goal of Women ETFs is to connect, support, inspire women in diversity within the ETF industry. And we actually now have 7,200 members in over 26 chapters around the world. So it’s pretty exciting to see the growth of the industry. We do mentorship, university outreach we have a speaker’s bureau to encourage events and the press to speak to women who are experts in their fields. And excited to watch the growth of young people grow their careers and stay in the industry and really enjoy the success that they can and should have.


[00:06:30] Pierre Daillie: The industry has certainly become far more dynamic than it was just a short 10 to 20 years ago. So I, I noticed that your time at Greenwich Associates was a footnote in your bio. But when I saw that, I thought, wow, Charlie Ellis, [laughs], what was, just what was that like working for sort of one of the demigods of finance?

[00:07:01] Deborah Fuhr: Yeah. It was really challenging, but it was also really rewarding.


Because often these heads of various firms would be calling me as this junior person, like in the office saying, how do I understand the data industry report? What does it mean? And to be able to talk to, some of the leaders that you would read in the press almost daily was pretty exciting, and he would take me to meetings. But it was also very challenging. So Charlie basically would get up at the crack of dawn, he’d come into the office in Greenwich, he … we all had little cubby holes, and he would drum, drop all the work that had to be done into a box, and I had to get stuff done and put back into a cubby hole that he would come late at night and collect, take home, he’d still be working. And it was this vicious cycle of making sure everything was up to date and being done. But it was a great learning experience. And the firm had a lot of interesting people working for it and great clients all over the world and it was a wonderful experience and but definitely challenging.

[00:08:01] Pierre Daillie: Yeah, I bet. And so you mentioned mentioned that you were one of 11 women who were managing directors at Morgan Stanley. Aside from, you mentioned that it was great to have people it was great to know that there were other people, other women in the firm that you could talk to but what was that like for you as a woman as a minority within the firm, a firm that was dominated by men, what was that like for you? Just in terms of the

[00:08:40] Deborah Fuhr: everyday.

Yeah. So that was 11 in Europe in the Equity Division. But yeah, I think, one, I grew up as a tomboy, right? So that was part of, I was happy to go be the pitcher on the woman’s softball team at Greenwich Associates ’cause I enjoyed being outdoors and doing sports. It didn’t bother me, but I did see how sitting on the trading floor, it often was hard to get time from people to talk to you when you had questions, right? They’re like, "Yeah, I’m busy. Come back."


And it wasn’t anything personal. It didn’t matter if I was, female, male or anything else it’s just, people were busy. And so I do think that one of the things I found about being overseas as opposed to in the US was, in the US often people will say to you, "I’ll call you if I need you." And I found that it was much more collaborative, people wanted to talk to you, to meet with you. In Europe and around the world, and having move from the US to Europe, and then at times going to Japan or going to Australia or, somewhere else in the world people really were in some ways surprised and in other ways really wondering like what does this person know?


[00:09:49] Deborah Fuhr: Morgan Stanley asked me to go out to Saudi Arabia and explain to the exchange and the regulator what are ETFs and how should they think about them? So I was really lucky that I raised my hand to be involved with ETFs at the time I did and really gave me the opportunity because no one else was so interested. When I started, there were 21 ETFs in $8 billion.


So clearly some successful guy is not gonna raise this hand saying, "Hey, I wanna do this."


I think that is one of the things that women often do, is they’re willing to get involved with things that aren’t a high profile areas in the beginning and try to work through it and grow with the opportunity. And to me that’s really played out. I think, ironically, somehow I don’t know why I was always allowed to speak to the press on my own. It’s like the PR people at Morgan Stanley and BGI BlackRock would say you know what you’re doing as long as you follow the guidelines, you go talk to people." that means I have a lot of relationships with people in the press.

And, I’d go to meetings with, BFT in London and I’d be there with out a PR person. And they were always a little bit surprised, but it meant I had a lot of direct connections with these people, which is why when I thought I was gonna join a bank to do, Delta One Strategy and then learned I couldn’t speak to the press, I knew that was not gonna be great ’cause you do need the press to talk a about what’s going on and to correct misunderstanding. ‘Cause I do think it used to be, people would talk negatively about hedge funds, now you find that people are very easily trying to blame everything and anything on ETFs with a bit of misunderstanding in what they might be doing. So I think you do need to make sure that you can get clear and accurate fat acts out there to the market and doing it through the press is quite useful.

[00:11:43] Pierre Daillie: Do you think your time at I’m not, just don’t wanna feel like I’m harping on your time at Greenwich, but, [laughs], do you think that your time at Greenwich really steeped you in this realistic objectivity about the markets that, that was so pervasive in Charlie Ellis’s philosophy?

[00:12:01] Deborah Fuhr: I mean he definitely was and is a fan of index investing.

He wrote the Loser’s Game. [crosstalk 00:12:07]

It’s a terrific

[00:12:08] Pierre Daillie: book. Like one of the quintessential classics. Absolutely.

[00:12:14] Deborah Fuhr: Yeah. Yeah. And the other one he wrote was I’m trying to think he did the, one of the first studies of the performance of active mutual fund managers relative to the S&P 500, which now S&P does.

The [inaudible 00:12:28] studies. So I do think his way of thinking, his analytic way of talking about the markets, doing questionnaires, producing reports clearly influenced my ability to do these things and how to think about and engage with people around the world. I was asked by him to go to Japan and figure out how to do the research, which meant I had to figure out what types of studies they were gonna do, who they were gonna interview, who would do that work on the ground and then put together all the questionnaires, et cetera. So that was a big kind of challenge and interesting thing to go to Japan, right? ‘Cause I don’t speak Japanese.

And actually, unfortunately I don’t speak any of their language, but just combined British American English. But yeah, I think I’d love challenges in trying to figure out how to make things work. So it definitely influenced me in many different ways and I would hope for the good. I do think probably the bad is he wasn’t great with work-life balance. And I think my, although I would say a lot of what I do as work, I also feel these people are friends and there is not this clear delineation of this is work and not work. But probably and able and willing to work longer than many people find is appropriate or convenient for them.

[00:13:53] Pierre Daillie: I’m curious to know what your observation your observations were from your time in Japan. The differences culturally in, in the economy, the markets, in the financial business, was there any key differences that you recognized when you were in Japan for instance?

[00:14:13] Deborah Fuhr: There definitely is a different culture in terms of work. So clearly that was a case where it was very difficult for females, especially Japanese females to be in, senior roles, significant roles in firms. You would often see them as really just the receptions who would greet you when you walked into offices. So I do think that was where I saw the real benefit of being a foreigner coming in, the men were quite interested to understand why and how this lady was a managing director.

But, and then I also think that you have to understand sometimes when people say, yes it’s yes, I heard you and not, yes, I’m gonna do something.

Or so I think you learn about the proper way, where to sit. Japan does have a lot of cultural nuances in terms of where you sit at a table who talks first, how to handle business cards. So yes, there a lot to learn which could be a whole podcast session on how to do [crosstalk 00:15:13]


[00:15:14] Deborah Fuhr: I’m sure I made a number of mistakes. I remember one time being up to dinner with some of my colleagues and the restaurant served fish in six different waves. And I was totally stuffed ’cause I don’t tend to eat huge meals, especially not when I’m traveling. And I understood that offering my food that I was too full, "Please you can have it," was flirting with someone and clearly it was not my intention. But yeah. [laughs].


So you do learn different things going along that you hadn’t even imagined you were gonna have to be aware of.

[00:15:46] Pierre Daillie: Amazing. I mean it- it’s it has, it has given you this it has really set the stage for what you’ve accomplished at ETFGI in terms of your global view of ETF markets. And, oh, I mean of markets in general but of course of how the ETF is transforming world markets as well. So Deborah from your 30,000 foot view of markets and ETFs, what are some of the key trends that you’ve discovered last year the last two years have been particularly interesting because of the pandemic and because of the way markets have performed what’s been going on?

[00:16:29] Deborah Fuhr: Yeah. I think one of the most important things was, regulators had, thought that if there was a lot of volatility, if there were significant creations and redemptions, especially in fixed income, ETFs were gonna fall over and not work. And so clearly, in 2020 we saw that there was a lot of volatility. There was a lot of creations and redemptions and ETFs, including fixed income ETFs worked very well. We also saw that the fed came in to use fixed income house, which I think gave them extra credibility as an investment product. And they were buying, high yield and investment grade corporate bonds. I also have seen that the types of products has expanded. So if we look at the types of products that have been popular over the past couple years, the COVID pandemic situation clearly demonstrated to many people around the world that with fewer planes, trains and automobiles going around the sky’s got a lot bluer and the sun was a lot clearer all over the place.

So the environmental acts and ESG came to the forefront on that basis. It also came to the forefront because of, Black Lives Matter diversity issues.

And we saw the yes become more important also, and of course governance. So I think ESG has been one which has been demonstrated as being important. And also diversity means better performance, you move away from group think. And so it’s been demonstrated that policies around HR in certain countries really have contributed it is to growing GDP. So I think the ESG theme has been very important. I think thematics is another area where for many investors, they want to be able to invest, they like that idea of, hey, I want a great idea. And it used to be buying individual securities. Some of the reforms around commission payments has caused brokers to write less research.

And so I think ETFs with the transparency and a lot of really smart people trying to come up with innovative ways of delivering new exposures to investors, thematic ETFs have allowed people to invest in disruptive technology, other trends changes because of demographics and they can still go out and talk to their … Not go out, maybe, but can talk to their friends about, hey, I just invested in X.

So whether it’s gaming or whatever. I think the other big change we saw was when COVID hit, if you look at … And I didn’t spend a lot of time watching TV, but I remember I back from the States on March 11th, 2020, and of course, the news was all about COVID. So I had my PC open and next to it I had an iPad watching CNBC. And it was impressive to me to realize that almost every is a sector or country or something happening, they were showing the names and tickers of ETFs as a way to represent this.

So clearly, I can remember back when I was at Morgan Stanley, I was excited when I got the FT to write about ETFs at the beginning of one year. And at the end of the year, I said, assets have grown and this has happened, and they’re like, we wrote about ETFs, we’re not gonna do it again. And now they’re doing it like all the time, like across the whole day. And I think for many people, especially men, they normally didn’t have a lot of hobbies they would do in their house, right?

For most men it’s, hey, let’s go out to a sports game or let’s go out to the pub or whatever. I think for many putting some money aside to, trade and invest and think about their finances, caused many people to think about ETFs.

And I think the other thing we saw was in 2020 Charles Schwab did a study of the US market and said 15% of investors in the stock market in 2020 were new investors. And so we see younger people coming into the markets. And so those younger people are thinking about ETFs in different ways. And I think again, ESG and themes fit there. And I would say also we’re seeing, because of regulatory changes, the use of model portfolios allow advisors to embrace that fiduciary responsibility. So that’s another growth area. I think robos have been important to the market in a bigger way than we realized because they’ve aided in financial education. So you look at the US and every day, 10,000 people turn 65 years old and not everyone knows about finance, right? You don’t call your brother or sister or your mom or dad or friends and say, "Hey, I’ve saved this much or I haven’t saved this much, or I don’t know how to do this."

So being able to go to a robo where you don’t have to say who you are allows you to become educated enough to have a conversation with a advisor. And the fact that most robos are using only ETFs, you learn about the benefit of, if you tend to invest in lower cost products over the long run, you’ll get better performance. It teaches you about asset allocation. It teaches you a little bit about benchmarks, but what we know is most people don’t wanna make a choice of doing anything without having that conversation. So that’s why we’ve seen the hybrid model of having the robo plus when you need to, or want to, the ability to talk to someone has really driven asset flow. So you look at Schwab, you look at Vanguard, that combined hybrid approach has really played to the advantage of the firm’s offering them.

So I think there’s a number of things that have happened. I think fixed income ETFs have grown. But overall, I think what people have learned is, it is hard to find hedge funds or active funds that consistently deliver alpha. And so you can generate alpha through asset allocation. I think that’s one of the big findings that has driven the ETFs industry. We ended 2021 with basically $10.3 trillion in assets and $1.3 trillion in net inflows. So it was a phenomenal year in terms of the growth and assets. Now some of that is ’cause the markets went up.

But of the other of it is due to significant inflows. Like we gathered over 530 billion more in net inflows in 2021 than we did in 2020.

[00:22:55] Pierre Daillie: Remarkable. I’m a little bit tickled by the, the way that you described this virtuous cycle of the ETF business. How, I felt for a very long time and having been around, be- being in the industry for 30 years or so that, that indexing itself not necessarily passive ETFs, but indexing in particular, which was gaining, popularity and has really exploded in the last 10, 15 years was making, was causing the business to become less exciting. It was, I grew, I grew up as an advisor in this business being excited about stories, about stocks, about names, about, talking to clients about specific opportunities in the market. And then when passive and I was gone from the industry from retail just around the time ETFs were starting to rise in popularity.

And I started to feel like yeah, it’s exciting in its own right passive investing. You can easily get excited about how and why passive investing works. But then it removes all the excitement on the other side of stock selection and active management, which was always a part of the dialogue when I was an advisor. But I feel like this virtuous cycle that you’re talking about has brought back the magic or the excitement of the market and it- it’s attracted younger investors who, for the, I think at some point around the, great financial crisis markets were, pe- people in the market that the chatter was that, how are we gonna get young investors in?

And, after this crisis, they’re just lo- you know, lost trust in the market, lost trust in the way things work. Do I, do I, this sort of cent- old, centralized not old, but archaic centralized way of thinking about markets and investing has given weight and given rise to this sort of, this new, I think overused term of democratized, [laughs] markets. And so it’s newly exciting now to see how tickers are used to describe markets, as opposed to referring to, the Zetradax or the FTSE 100, now people just call the tickers when they talk about those markets. And it’s exciting to see the ex- I think it’s exciting to see the reaction that tickers get in terms of, bringing people into the dialogue or bringing people into the conversation about investing.

And then the virtuous, the other element of the virtuous cycle, that’s really interesting where ETFs are concerned is this competitiveness that it has spurred between advisors and robos. And now of course, that’s given rise to hybrid use of, obviously where advisors are now using FinTech to their benefit in order to supplement, all of their traditional their traditional investment planning work and using model portfolios. Deborah great observations. And are there any is there anything in particular that you’ve been working on in terms of research that has yielded any interesting findings? I think you covered a lot of those things but if you had to choose, probably the most remarkable thing about what’s happening as a result of the ETF industry what would you say that is?

[00:26:53] Deborah Fuhr: I think one thing I would be remiss if I didn’t do is say, Canada rarely gets credit for having created and listed the first successful ETF, right?

Absolutely. Yeah.

March, 1990. So I think Canada has done a lot of things within the ETF framework that you rarely get credit for. Cannabis ETFs fixed income, leveraging inverse and of course the recent launch of real Bitcoin and Ethereum ETFs, that aren’t notes.

So clearly, I think the, there’s been a lot of discussion around the whole crypto space. And that’s relatively new. We’ve seen significant growth recently in assets, and I think that’s a space that we need to con continue to watch. But I guess what really probably sticks out for me is the number of people. ‘Cause if I go back just like you said many people ignored ETFs for many years.

And I think the thing that always makes me smile is colleagues that I’ve worked with over the years who really shunned them and wanted nothing to do with them now are, big advocates of using them. People are creating them, they’re selling them. And somehow they’ve forgotten kind of their past where they wanted nothing to do with them, right? I think that conversion from people who are like, I’m an active manager, I’ll never use them. If you’re not gonna go to the commission, I’ll never use them. If you’re not gonna whatever. And clearly the other study is completed is the number of institution that’s the, that use ETFs. So we’ve seen a significant growth in institutions. Now you might say what do you count as an institution? In the US, the STC requires that any institution that manages over $100 million reports their holdings to them on a quarterly basis.

So if you use that as a threshold that can count registered investment advisors, which manage over 100 million, right? But I think if someone’s managing that amount of money, the way they invest is more institutional and less likely to be based on just a friendly relationship with someone who convinced you to buy something.

So we do see that institutions still account for half of the assets invested in ETFs, and those institutions are all over the world. We also see significant growth in the number of mutual funds that are using ETFs. The big takeaway I would have is, we all have seen significant growth. You guys like cocky six, other people talks about innings and baseball. I would still say that there’s a big trajectory to go up in terms of the use, the types of products and the potential for ETFs going forward. And it’s important to remember ETFs, it’s a rapper, it’s a mutual fund with added benefits of being listed and traded on exchange. So it’s not an asset class. Inside of it in Canada, active strategies account for 23% of all the assets.

So that’s another thing that all long Canada has been a leader in the active space. ‘Cause if we look globally, only 4% of assets are in active strategy. So I think there’s a lot of opportunity where there’s tax benefits of, the ETFs in the US where we’re seeing large mutual fund complexes converting mutual funds into ETFs. So if we look at some of the largest new ETFs in 2021, they came from Dimensional Fund Advisor which is interesting because historically they only allowed trained advisors to sell their products or use their products. So this actually opens up their products to the whole world really well.

[00:30:33] Pierre Daillie: [crosstalk 00:30:33]

They democratized DFA. [laughs].

Exactly. That’s right. It was one of those things that people, and others, fable about in, I’m a DFA advisor and that was, that was like having a CFA. [laughs]. Exactly. And we see ETFs popping up in new jurisdictions around the world. We see them being registered for sale. I’m still, it’s funny because when I started back in ’97 talking about ETFs, I thought, like I had a two year job of educating people and writing research. And here I am, many years later and still feeling well, one excited about the opportunity and what’s happening in the people. But two, I still think that there’s a lot of opportunity to educate people and continue to grow and evolve the way ETFs can be used. I think, distributor ledger technology is going to enhance and change things. I think that fractional shares use of ETFs will allow them to get into define contribution plans where we’re not currently easily able to use ETFs. So there’s still big opportunities for ETFs in a, it’s just a better wrapper than using traditional mutual funds. It saves a lot of cost, it’s more tax efficient in the US.

[00:31:51] Deborah Fuhr: And yeah, so I think there’s still big opportunities going forward.

[00:31:56] Pierre Daillie: I wanted to ask you about what your observations were towards the end of the year in terms of how different factors we’re behaving, for example, the the sort of flip flopping between value and growth. That’s been happening in the context of the inflationary outlook. How are investors from the standpoint of observing flows how do you see investors behaving? Are they complacent about inflation or have they, have you seen sort of wholesale moves by investors to express a concern about inflation or is it behind the curve still?

[00:32:40] Deborah Fuhr: That’s a good quest- a good question. And I think one of the things that is unique about ETFs is you can see the flows very quickly after the end of the month where mutual funds takes weeks. So I think that some had been investing in inflation protected, fixed income securities that are packaged as ETFs.

So we’ve seen that end happening. We haven’t seen money going into gold the way we did a year ago. So I think if you look a year ago, there was significant inflows in all of 2020 into gold and commodity products. So about 63 billion. This year we saw net outflows. So that’s a little bit surprising, ’cause many would say gold is an inflation hedge and we didn’t see that. So I think what people are using is a bit different. And although I think people are concerned about inflation, many have been, I think, more optimistic on the fact that the markets I should say the economies are opening up and COVID’s getting better and therefore looking to invest in equity.

So the majority of money during 2021 really was going into equity exposure and a little bit into fixed income and net outflows out of commodities. So although people have been concerned about inflation and we see some money going into inflation-linked bonds-

… the majority money has been going actually into the US market, other developed markets. And I think also the other place where we’ve seen money move is, China has different views for people, but the local bonds have been included into many of the fixed income indices. And if you look at Chinese bonds, they’re yielding about 3%, which is much better than many other bonds. So we’ve seen many investors looking at investing through ETFs into, mainly in China equities as well as the bond market. So people are looking for income.

I think is another trend that we see which clearly if you go back the prior year many companies said they were paying out less dividends. And so we saw people moving away from higher dividend yielding ETFs this past year, we see money going back into those strategies. So I think income was probably something people were looking for and the participation of what they deemed to be markets recovering in a post-COVID reality. Although I think we’ve seen where are we with COVID and our expectations-


… continuing to move about a bit.

[00:35:07] Pierre Daillie: It goes to your point earlier about, 10,000 people a day retiring and, or sorry, was it 10,000 people a day turning 65 or 10,000 people a day?




Which was the the stand by, [laughs], for retirement age. But so we could see where the trend towards looking, continuing to reach for higher income growing. Are there any in terms of forward looking at looking forward at fund formations or ETF formations, wh- what sort of what, are there any trends that you’re seeing and what some of the upcoming new products might be that, that are in the pipeline?

[00:35:56] Deborah Fuhr: That’s a great question. So we know since 2013 in the US people have been trying to do spot ETFs, right? And so the SEC is not comfortable with that.

So I think many are trying to read the tea leaves to figure out when do they get comfortable with that? And many would debate whether futures are better than using spot. So I think that’s one that people are trying and keep changing the way they’re putting in proposals to the SEC to get approval. I think more broadly, what we’re seeing is as many of the active asset management shops that historically didn’t want to have ETFs have embraced the –

… and offered active products in the US, we are seeing that they’re now looking at how should they bring out products in Europe and around the world. And so I would say that most firms want to find economies of scale if they’re gonna offer products. And so they need to think about, does it make sense to take the US 1940 Act wrapper and try and bring it to Canada? Canadians would say better off having something that’s a low domicile Canadian structure, more tax efficient. Same is true, when you go around the world, if you’re buying a US listed ETF or a mutual fund, you’re gonna suffer 30% withholding. You can get some of that back, but you’re also likely to suffer us inheritance tax, which most people don’t like to pay tax if they don’t have to. So you them move to using the UCITS ETFs that are structures domiciled in Europe and can be sold really all over the world.

I think the other reason for that is, in Europe, we have the EU taxonomy, thinking about ESG and we have the regulations where all UCITS ETFs and mutual funds had been classified as Article six, eight or nine. And if they’re eight or nine, it means they’re some refer to it as light green or dark green. So as investors look for ESG and have a concern about green or pinkwashing embracing the usage wrapper where it is defined specifically, what does it mean to be article eight or nine. We are seeing the app being adopted around the world.

So I think, there’s interesting things happening in Brazil where they’re allowing foreign ETFs to be wrapped as BDRs. And for the first time Brazilians are investing outside of Brazil, which is the largest market in terms of assets in Latin America. Historically, they were just buying local debt. And so they need to understand asset allocation, investing in foreign markets, how to trade ETFs, how to think about this. So it’s fun and interesting to watch ETFs evolving everywhere in the world. And they’re all at different phases of understanding. And the exchanges and the regulators are trying to figure out, should they foreign products to be registered? Should they be listed for sale? How do they educate people? So there’s a lot going on, which is why I’m still excited about the product and like the research angle.

[00:38:51] Pierre Daillie: Yeah. I was thinking during our conversation about, what was the moment when you decided that ETFs was the direction you needed to go in, in your career? What was the, what was that moment? What was, like, what spurred you to put your hand up and make that decision at that moment?

[00:39:12] Deborah Fuhr: To be fair, I wanted a job at Morgan Stanley. They initially had come to me and asked me if I was interested in being part of the marketing team for the Equity Division. And the person who was running that ended up moving into technology. And then the role of coming in as the director of marketing for a product they had called OPALS and ETFs came about and I jumped at it and then just as I got involved and they started to take off. It was like so much fun, ’cause it was really entrepreneurial.


I was sitting next to a trade and we were like this little business developing products. We created pages on the Bloomberg terminal. So I used to have all the ETFs organized on a Morgan Stanley page. It was just great fun. And it was also funny because back in the day a candy that you might know as Starburst here used to be called Opal Fruits. So whenever I was doing a marketing road show or doing meetings internally, I would buy cases of these candies and hand them out as enticement to get people to come along. So when Opal Fruits became Starburst in the UK, they really like, "Hey, you have to change the name of OPALS to Starburst." I’m like, "Sorry, can’t do that." [laughs].


[00:40:21] Deborah Fuhr: But yeah, it was just fun [inaudible 00:40:21]. Fun and interesting [crosstalk 00:40:24]


[00:40:24] Pierre Daillie: was it was it serendipity or, did you just … I think you already had, I think in your because of your background you already had that in you, to you were already warm to the index, the idea of index investing and there was this wrapper. But I’m just, i- it’s, I’m always curious to know about the genesis of decisions, and that’s, that was obviously a decision that has factored large in your life in terms of where you’ve gone with it. And I’m, it’s very, it’s really interesting to hear about … Because you’re talking about like Brazil, for example where so much education is required and of course that’s what ETF, that’s where ETFGI comes in, right? That’s your, that is your mission, is to educate market participants on in whichever jurisdiction you’re holding your conferences on all of these changes. And there, there isn’t a better person to do it. [laughs].

No. Thank you.

I, think, I think that you’re a highly underestimated resource. I, I think that’s less so more recently probably in the last three, four, five years, you’ve really, I think you’ve really risen sort of front and center to prominence in the the global ETF market, in terms of people’s awareness of what you’re doing. But congratulations, I, it is exciting to we’re so excited to be affiliated with your conferences in terms of helping you to get the word, word out. And it- it’s gonna be very exciting to see what comes next. Deborah, before we go, I wanted to ask you about WE, because I think that’s a really important that’s definitely a really important initiative to talk about how has it transformed the diversity in the market in finance?

[00:42:43] Deborah Fuhr: I’m not sure if it’s def- transformed the whole market, but I do think for the ETF industry, which clearly touches on so many things, right? We talk about this ecosystem. You have investors, you have the providers of the products, you have index providers, exchanges, the banks and brokers, the law firms, the custodians, PR firms, media, et cetera. And I think early on, as I said, many women were happy to raise their hand and get involved. And you do see even within the bigger like law firms, cetera, which tend to often have more male partners, often it is the women that have put their hands up and have become real experts in this field and help to transform what’s available. So I think, we are not just for women though, I should say that, … from the beginning, I said, men have to be part of the membership. Men have to help, women advance their careers. So it’s not just for women. And it’s also not just about women, it’s about diversity, right? So there’s many other ways we need to think about this, but I do think it has helped people. The mentorship program, which I’ve been a mentor, but I have to say often I feel I learn as much from my mentees as I think they say they’ve learned from me. So it’s always give and take. And yeah, we have chapters, we have a few people in Nigeria, we have people in Kenya, so it’s fun and interesting to watch the growth and the activity.

So even in the past few years, when we haven’t been able to do many in-person events, we’ve had really interesting webinars on, professional development, on different products that are out there we’ve partnered with UN Women, Global Compact, Sustainable Stock Exchange, the ISC and World Federation of Exchanges to ring the bells to celebrate International Women’s Day, which is March 8th. If nine years ago or eight years ago I guess, we started and there were nine exchanges. Last year, we had over 100 exchanges, some were virtual, very few were in-person. We do events around that, so there’s huge opportunities to get involved, it doesn’t cost anything. And we also have to thank our sponsors. So corporate sponsors contribute money to help us be able to do the events that we do. And they can post jobs on our website. So they’re able to attract female talent and raise their profile. So hoping that 2022 means a few more in-person events and getting to see people. But yeah, I do think it’s made a difference and I’m hoping it continues to do yeah. It’ll be a relief to get back to some nor- normalcy and to be able to resume in person functions if ever. Hopefully it’s not too far away. I’m guessing it’s an understatement to say that your work with Women in ETFs has been gratifying.

Oh, definitely.


[00:45:43] Deborah Fuhr: I’ve met so many nice people and enjoyed the events and the camaraderie. It’s really been great and supportive. So yes, definitely, it’s been very fulfilling.

[00:45:57] Pierre Daillie: Deborah, I have one last question. And seeing as you were involved in athletics throughout your life, [laughs] it’s a pertinent question. Would you rather be the worst player on the best team or the best player on the worst team?

[00:46:19] Deborah Fuhr: Wow. I’m more likely to be the worst player on the best team than the best player on the worst team, honestly. I don’t know. I just enjoy being out there with the team playing. After graduating from university, I was on a master swim team. So it’s something you can continue doing being on team sports for forever, really. And I every day, try to go to the gym and do reform Pilates as part of a class. And that camaraderie of doing it together with fun instructors is something, it’s a great way to get out there and do something beyond. I need a break from ETFs occasionally.

[00:46:59] Pierre Daillie: Deborah, thank you so much. That was that was a great chat. That was very enlightening. I think there’s so much to take away from what we’ve talked about today. Thank you so much for your insight and your incredibly valuable time.

[00:47:15] Deborah Fuhr: It was great to be here. Thank you so much. And if anyone wants to join Women in ETFs, just go to the website and we’d welcome you with open arms to our events.

Terrific. We’ll put that in the show notes.



Listen on The Move:


Deborah Fuhr, Founder & Managing Partner, ETFGI joins us for a fireside chat about the work she is doing to further the evolution of the ETF industry. To begin, Ms. Fuhr sheds some light on the arc of her career. It's an 'aha moment' and it is her work history and background that provides an enlightening answer to the question "Who is Deborah Fuhr?"

From her early days at Greenwich Associates to her rapid ascent to the high echelons of Wall Street and The City in London, we get to understand from her why she was ultimately motivated to launch ETFGI, and her mission. She also launched Women in ETFs to bring together people in the ETF industry across the globe to champion our goals of actively choosing equality, diversity, and inclusion.

Deborah Fuhr has a had a front row seat in the investment, and ETF business, since it's beginnings, in executive roles, leading teams at Morgan Stanley and Blackrock/Barclays Global Investors, specifically in the earliest days of the first prominent ETF companies.

Fast forward to present, and ETFGI provides global ETF market research and consulting across all markets to a repertoire of the most prominent ETF companies, pensions and financial institutions.

We get to talking about the interesting trends that are shaping the way the world invests, the way we invest, and the attitudes that are shaping this long-term trend. Deborah Fuhr also sheds light on some of the ways in which ETF formations have been evolving away from once having been wrappers for passive index investing, into being an innovative wrapper for just about every kind of investment vehicle.

Finally we discuss WE, or Women in ETFs, its mission, and its success in championing the opportunities and benefits of equality, diversity, and inclusion in the ETF industry.

Where to find Deborah Fuhr:

Deborah Fuhr on Linkedin
Women in ETFs

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