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ETF Industry Founder Exits PowerShares

Jim Wiandt and Olly Ludwig

Ben Fulton, managing director of global ETFs at Invesco PowerShares, has decided to step down from his post at the end of April, ending an eight-year tenure—and perhaps an entire phase of early ETF industry development—during which the Wheaton, Ill.-based exchange-traded fund company grew from an upstart into the fourth-biggest ETF issuer in the world.

Fulton’s resignation may mark the end of an era in the ETF industry. As ETFs have grown into a nearly $1.5 trillion industry in the U.S., the original founding senior management of the big four sponsors, including iShares under Barclays Global Advisors and now BlackRock; SPDRs under State Street Global Advisors; Vanguard; and PowerShares have largely changed.

Gone are Lee Kranefuss from iShares; Gus Sauter from Vanguard; Gus Fleites from SSgA; and Bruce Bond and now soon Ben Fulton from PowerShares (Jim Ross, Gary McDonald and others, who have been at SSgA since the beginning of ETFs, are still there). And in are Mark Wiedman at iShares; Tim Buckley at Vanguard; and now Andrew Schlossberg at Invesco PowerShares.

Fulton, 51, stressed in an interview with IndexUniverse that he was keen on stepping down while he still had time to develop the next chapter of his career, and that he chose not to leave his post until he was certain that the company was in an optimal position. He won’t be replaced immediately, but Andrew Schlossberg, head of U.S. retail distribution and global ETFs, will assume Fulton’s duties.

Andrew Schlossberg has co-headed Invesco PowerShares’ management team since Bruce Bond resigned as president and chief executive officer of PowerShares in 2009. “This is my decision,” Fulton said in the interview. “But it’s my natural time,” he added, declining to discuss his next moves.

“It’s an inflection point, and I looked around and said:‘You know what? We’re firing on all cylinders, we’ve got an incredible leadership team, it’s a great situation, Andrew’s been in the business and understands it. It’s the right time for me. If I really want to do something, I’ve got enough runway to do it. Net-net, I’m hoping it’s framed as a happy story.”

Fulton’s time at PowerShares in the post has been marked by rapid expansion of assets under management, and a growing reputation as a provider of index funds that go slightly off the beaten track and into the realm of “intelligent beta.”



The firm’s $77 billion in assets make it the No. 4 U.S. ETF firm, with about 40 percent of that money in the seventh-largest ETF, the PowerShares QQQ Trust (QQQ), which is based on the Nasdaq-100. More recently, PowerShares has been behind some of the splashier ETF rollouts in recent years.

“Of the all the ETF launches in the last couple of years, only a handful have crossed $1 billion, and two of the largest successes are from PowerShares,” Fulton said, referring to the PowerShares Senior Loan Portfolio (BKLN) and the PowerShares S'P 500 Low Volatility Portfolio (SPLV).

BKLN has raked in more than $3 billion since its launch in March 2011, while SPLV has gathered $4.4 billion since its May 2011 rollout. Both benefited from investor nervousness in the wake of the Great Recession that left fixed-income yields paltry and created aftershocks of market volatility.

“When we started PowerShares, the whole idea was that we didn’t use ‘off the shelf’ indexes. SPLV is a perfect example,” Fulton said. “Off the shelf” indexes refer to the bigger market benchmarks that predate the ETF, such as the S'P 500 Index. The S'P does have several ETFs tied to it, but many other benchmarks aren’t so investable, and PowerShares led much of the work to make indexes investable.

Fulton, who was previously president and CEO of the former Claymore Securities, joined PowerShares in late 2004 as a consultant and became a full-time executive in 2005. The company was founded in 2002, and was acquired by Invesco in January 2006. It had $3.5 billion in assets at the time of the Invesco acquisition.

Fulton ascended into his current role as global head of ETFs in 2009, when Bruce Bond resigned as president and CEO of PowerShares. The company’s assets had grown to $40 billion by that time.

Since that 2009 appointment, Fulton has reported to Andrew Schlossberg, who, again, will assume Fulton’s duties at the end of the month.

Both Fulton and Schlossberg said the ETF industry, though 20 years old, is very much in its early days, and that many investors have yet to start using them.

"We’ll continue to build on the legacy that’s been built over the past 10 years, which we see as one of Invesco PowerShares' great strengths,” Schlossberg said. “We believe this is early innings. Going forward, we’ll continue to focus on providing unique and innovative ETFs that meet investors’ needs."

Fulton declined to discuss what exactly he planned to do next. But he did say he would remain in the ETF industry, though not as a sponsor.


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