IU: Do you think the opportunities for growth outside the U.S. are greater than within the U.S.?

Fuhr: The growth in tactical asset allocation and changes in regulations in Europe allow construction of funds that can invest in other funds, so we have funds of funds using ETFs, family offices using ETFs, as well as private banks.

Europe still has a long way to go in terms of growth, and I would note that we haven't even seen significant use of exchange-traded products by the retail investor sector in Europe yet. Asia and China is a large opportunity, and in the Middle East, there is considerable interest in developing an ETF market, and Latin America presents a growing opportunity. So yes, in many respects, there is more opportunity outside the U.S. That said, BGI has a large, well-established team in the U.S., and there are still opportunities for growth in the U.S., but the rate of growth will be higher in other markets.

As far as how my research team's focus will be delineated, I have to stress that we still need to sit down with  the CEOs from each region and agree on a plan of how my team can help in each market, and which markets, in particular, should be given greater focus in terms of client interaction.

IU: You alluded to the importance of developing industry standards as a primary focus for your team, regardless of particular markets. Do those definitions need to be global?

Fuhr: Trying to create industry standards begins with definitions for ETFs, ETNs, ETCs and exchange-traded products. Working through these definitions, and differences, will be an important part of taking ETFs to the next level, and involves transparency on the tax and regulatory issues I alluded to earlier.

And yes, it is a global effort. When we take this view of the world, we see the need for consistency of definitions, so no matter where an exchange-traded product is being used, its definition is the same. Many exchanges are now cross-listing ETFs from various countries. Japan is encouraging ETF providers to cross-list ETFs from Europe on the Tokyo Stock Exchange, for example, while the Mexican Stock Exchange already lists many products from other jurisdictions. Ultimately, the need for consistent definitions and transparency is critical for institutional and retail markets.

To date, there is no global ETF trade organization. Some existing mutual fund associations, such as the Investment Company Institute (ICI), are looking at ETFs, but I think it is still early days in terms of industry standards. It will require a combination of working locally as well as globally with all of the constituent firms.

And I think because no one company, or type of company—whether index provider, asset manager, broker or market maker—has every product to make available to clients; this is an issue about which all parties should be interested in working together to resolve.

IU: Given the rapid growth of the ETF space and the proliferation of product types and asset classes, is your new position at BGI one that you could have even imagined existing a few years ago?

Fuhr: I don't think so. The lines are really blurring. Many issuers of ETFs are also brokerage firms, so there have always been researchers writing reports, but they have tended to focus on one country or region.

When I started working with ETFs in 1997, there were 21 ETFs and $8 billion invested. In the early days when I talked to investors, they would say: "I'm an active investor, so I have no interest in index products," and others would say, "unless you are planning to pay me rebates, please go away."

The resistance was great, but now ETFs and exchange-traded products have been accepted both by retail and institutional investors—and by active as well as passive investors—as a useful tool and alternative to futures and program trading, among other instruments and trading strategies.

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