Despite overseeing one of the most successful exchange-traded fund (ETF) launches in history, Gus Fleites has left his post as chief investment officer of ProFunds and head of the ProShares ETF unit. 

Dr. William E. Seale, principal and chief economist at ProShares, will assume Fleites' responsibilities, which he held prior to Fleites' appointment in August 2005.

When Fleites joined ProFunds, the company's ETF plans had been languishing in registration at the Securities and Exchange Commission (SEC) for nearly three years.  The company wanted to launch the first-ever leveraged, short and short-leveraged ETFs, to echo its line of leveraged mutual funds, and was planning funds tied to four major indexes: the S&P 500, S&P MidCap 400, Nasdaq-100 and Russell 1000.

ProShares finally managed to launch the funds in July of this year, and they become an instant success: the funds gathered over $1.5 billion in assets, and were an instant hit among the hot money crowd, with trading volumes quickly reaching 1 million shares per day some of the funds.  (See here and here for more on the launch.) 

The company made plans to expand, too, filing papers with the SEC for the right to launch sixty-six additional ETFs across a range of size- and industry indexes.

ProFunds did not give a reason for Fleites' departure, and Fleites himself could not immediately be reached by phone. Something clearly soured the relationship, however, and we can only speculate on the cause at this time.  Were there conflicting views about the growth plan?  Perhaps a battle over the high expense ratios (95 basis points)?

Either way, the question now is whether Seale can pick up where Fleites left off, and continue to drive growth at the fund family.

There's no word yet on where Fleites will go next, but as one of the marquee names in the industry (he previously led the ETF effort at State Street Global Advisors (SSgA)), there are sure to be offers. 

Wait a second … is that Jonathan Steinberg of WisdomTree on the line???