On The Record
By Journal of Indexes Staff | June 30, 2005

An Interview With SSgA's New ETF Leadership Team

The departure of Gus Fleites from State Street Global Advisors (SSgA) sent shockwaves through the ETF industry. The indexing rumor mill quickly filled with questions. Was SSgA still committed to its ETF effort? Was it moving in a new direction?

The people responsible for answering those questions are the new leaders of SSgA's ETF and intermediary effort, Greg Ehret and Jim Ross, two SSgA veterans with decades of service at the firm. Jim Wiandt, editor-in-chief of the Journal of Indexes, posed these questions and more to Ehret, Ross and State Street's director of marketing, Gary MacDonald.

Journal of Indexes (JoI): Does the Fleites departure change anything in terms of the level of SSgA's commitment to the ETF effort?

Jim Ross: No, SSgA remains completely committed to the ETF marketplace. It is an essential element of the organization's culture and an important part of our history. We fully appreciate the value of our past successes and believe that our ETF business will play a major role in satisfying our future ambitions.

JoI: Can we expect a broadened sales effort from SSgA? I'm thinking in terms of a greater sales force and broadened marketing effort, of the kind Fleites had been talking about prior to his departure? If so, at what sort of level?

Greg Ehret: Unequivocally, we are looking to expand our ETF business. It is difficult to quantify a "level" other than to say any expansion will be meaningful and thoughtfully executed. The existing distribution resources at SSgA Advisor Strategies are significant and already include both a national sales force and full service marketing capability. We will seek to both augment and create greater leverage within the group to grow our ETF business.

JoI: What, if any, are some of the expected strategic and philosophical differences in approach we can expect from Greg and Jim, as compared to Gus?

Jim Ross: SSgA utilizes a team-based management approach, and strategy is set with input from all business owners, with a high premium placed upon collaboration. Gus was one voice in a process that ultimately required buy-in from both his business partners and direct managers. SSgA's ETF strategy is being supported at the highest levels of both SSgA and State Street Corporation. Greg and I will be the internal and external champions of our ETF business and integral components of the organization's strategic thought process.

JoI: Does SSgA have any intention of bringing in any outside leadership with Fleites gone?

Gary MacDonald: We are confident that Greg and Jim are more than up to the task and anticipate no leadership changes as their positions are permanent appointments. That said, we are always interested in strengthening and expanding our core capabilities and will consider adding talent and/or new skills to the team when and where appropriate.

JoI: Will the plan to purchase SPDRs move forward?

Jim Ross: SPDR is a unit trust registered under the 1940 Act and ultimately owned by its shareholders. State Street is the Trustee and we anticipate no change in that relationship.

JoI: Should we expect continuing ETF product innovation along the lines of GLD (the gold bullion ETF) from SSgA?

Jim Ross: Absolutely. We believe that there isn't a more qualified organization in the world to drive ETF product innovation. This should be readily evident when one considers our position as a founder and pioneer of the ETF industry, our global experience in complex and/or new markets (China, Taiwan, Hong Kong, etc.) and our history of introducing new product concepts such as sector and commodity ETFs. The collective technology/operations muscle, portfolio management breadth and thought leadership at State Street and SSgA have been, and will continue to be, fertile ground for innovation and excellence.

JoI: What will Fleites' departure change at SSgA?

Gary MacDonald: There should be no lasting impact to SSgA's ETF business. Gus was a talented individual and valued contributor to SSgA for many years. We wish him all the best in the future. However, teambased management has been a hallmark of SSgA for quite some time and the loss of one individual must be viewed in the overall context of the staff, resources and expertise already resident in SSgA Advisor Strategies. The team, now led by Jim Ross and Greg Ehret, is deep, wellresourced and experienced. Jim and Greg have nearly two decades of experience between them dealing with ETFs, and have been instrumental in SSgA's past and current ETF success. In fact, Jim was a member of the original State Street team that created the SPDR, the very first ETF, making him the longest tenured ETF professional at the firm.

JoI: How does SSgA plan to tackle the iShares juggernaut and the expanded Vanguard ETF effort?

Greg Ehret: The recent and anticipated growth in ETFs is well noted and we believe now that they have moved beyond niche status to qualify as a broader investment vehicle category in their own right. It's accurate to assert SSgA as the genuine ETF innovator. We have the longest history of integrated ETF development and management, and that has created a corporate environment where innovation thrives. We have always focused on ETFs as constructive portfolio building blocks presented alongside our other investment offerings. A hallmark of SSgA's success has been its ability to offer a broad array of investment strategies, which can be used to complement one another, and to work closely with institutional investors and financial intermediaries to create custom solutions tailored to their diverse needs. We see this holistic mindset and our accompanying capabilities as a key competitive distinction.

We have deep expertise in both passive and active management, longstanding and major commitments to both the institutional and financial intermediary marketplaces, and the best product development people and resources in the industry. We are very optimistic that our value proposition makes us uniquely qualified to align ourselves with professional investors and to deliver ETF solutions in the most pragmatic and powerful way possible.