Just three months after leaving State Street Global Advisors (SSgA), Gus Fleites has landed at ProFunds.  Fleites will serve as Chief Investment Officer to the ProFunds family of index-based mutual funds effective August 29, 2005. 

Mr. Fleites, who will report directly to ProFund Advisors LLC's Chairman and CEO Michael L. Sapir, will have investment oversight responsibility for the more than 90 funds managed by ProFund Advisors.  In his new role, Mr. Fleites will also lead ProFund Advisors' exchange-traded funds (ETFs) initiatives.

Fleites recently left State Street Global Advisors, managers of the worlds largest ETF, the SPDRs Trust (SPY).  There was speculation that Fleites and senior SSgA leadership did not see eye to eye on the strategy for ramping up SSgA's ETF division. Fleites had been replaced by longtime SSgA stalwarts Greg Ehret and James Ross. (Free registration required to access these archived Journal of Indexes articles).

"We're delighted to welcome to our leadership team a professional of Gus's passion, drive and vision," said Mr. Sapir.  "It is rare to find someone with his range and depth of experience in ProFunds' core business of managing index-based mutual funds.  Moreover, he is one of the country's recognized leaders in the exchange-traded funds industry.  There's no individual better suited to assist us in meeting the needs of our investors, unleashing the unlimited potential of ETFs, and growing the company."

Fleites had been Senior Principal of State Street Global Advisors (SSgA), where he led a broad range of initiatives over his 18 years with the firm.  As President of SSgA Funds Management and Managing Director of its Advisor Strategies unit, he managed SSgA's registered investment advisor business, and oversaw the distribution and management of the firm's registered mutual funds, exchange traded funds, and managed accounts businesses.  He served as Chairman of the Board and President of SSgA's streetTRACKS family of exchange traded funds, Chief Executive Officer and a Director of the SSgA Funds, and a Director of the Select Sector SPDR Trust.

"ProFunds has always operated by listening to clients first and focusing on providing the tools they need to execute their investment strategies," said Mr. Fleites.  "That spirit has driven the firm to a number of firsts in the fund industry and provided investors with the largest lineup of indexed mutual funds[1].  I believe the culture of innovation at ProFunds sets the firm up to take a leading role in the next wave of index-based products, including ETFs."

William E. Seale, Ph.D., Principal, Chief Economist and previously Chief Investment Officer of ProFund Advisors, will work closely with Mr. Fleites.

"Gus not only strengthens our investment capabilities immediately in the areas which have been our main focus, but he can help expand our offerings through the breadth of global experience he earned through his long and varied career," said Dr. Seale.  "Gus has taken key leadership roles at every stage along the way, and has never stopped taking on new challenges. We're extremely fortunate to bring an investment veteran of Gus's caliber to our management team."

A Chartered Financial Analyst, Mr. Fleites earned his Bachelor's degree in Finance and Multinational Management from the Wharton School of the University of Pennsylvania and his Master of Business Administration degree in Finance from Babson College.

The buzz in the industry as of late has been that ProFunds is nearing the launch of ETFs based on its trademark leveraged and inverse products.  The funds have been in registration at the SEC for around three years.  It is widely believed that these products could meet with a good deal of success when they're launched, particularly if market volatility picks up a bit.  The move to real time, appeals to exactly the type of trader that has found the leveraged products useful in using the existing ProFunds products…but moves those into real time, opening the door for day traders as well as momentum investors.

The funds have languished in registration, because of the complicated nature of the structure, which would require the use of derivatives, and the accompanying tangle of regulatory authorities.  But now with BGI (iShares) registering to launch a commodities ETF based on futures, and an oil ETF based on futures already trading in London, these launches may not be far off.  There will certainly be some excitement about them in trading circle.  And the launch will be closely watched across the ETF industry.

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[1] ProFunds identifies the source of this statement as Lipper, October 14, 2004. Lipper defines "Indexed Fund" as an open-end mutual fund which is pure index, enhanced index or index-based, but is not an Exchange Traded Fund (ETF).