Lee Kranefuss, CEO of Barclays Global Investors Intermediary & Exchange Traded Funds Business spoke this morning in San Francisco at the Tiburon Strategic Advisors CEO Summit.

Kranefuss discussed Barclay’s innovative business model which enabled it to claim the dominant market share in the exchange traded fund industry through its iShares offering; currently attracting 73% of net new assets among 116 ETFs.

Kranefuss explained, “We looked at the few ETFs available in the nineties and really liked them, but there just weren’t enough available. So we thought we’d create a modular building set thinking “somebody should have done this before us.””

He said that ETFs continue to provide a very attractive investment option and “experience” for institutions, advisors and individual investors. Tiburon’s Managing Principal, Chip Roame agreed saying that, “exchange traded funds are the fundamental biggest investment innovation since conventional mutual funds.”

“You need to look at areas where you can get excited…and commit fully” said Kranefuss. “Barclay’s loved index funds, but more than just the Jack Bogle approach where one index fund would suffice. We thought if advisors had the “Lego kit” they could build much more dynamic portfolios.”

He feels that it will be a while before we see ETFs available as investment options within 401k plans. “It’s a plumbing and motivation issue” he said.  Also, he feels actively managed ETFs are still a ways a way.

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