David Abner is an executive vice president and head of WisdomTree Europe. He’s been involved with ETFs since shortly after their inception, and is the author of “The ETF Handbook: How To Value And Trade Exchange Traded Funds” and the “Visual Guide To ETFs.” Known for his expertise in trading ETFs, he has devoted much of his career to educating investors on how they can implement ETFs in their portfolios. Here, he speaks with ETF.com Managing Director Dave Nadig about the career path that led to the ETF.com Lifetime Achievement Award for 2017.
Tell us a bit about how you started in the ETF space.
It was in the mid-1990s when I first discovered ETFs. I was running the closed-end fund trading business at Bear Stearns, and as they were mostly unknown, ETFs came under my purview as listed basket products.
There were a variety of different products at that time with different structures, such as the SPDR S&P 500 ETF Trust (SPY), a unit investment trust and WEBS—World Equity Benchmark Series—which were later acquired and became the iShares country funds. It was a very small segment of products, and I was immediately intrigued. At that point in time, I was mostly working out how the baskets worked as well as performing arbitrage on them, in a similar way to how we traded closed-end funds.
It was probably not until 2000 that I really thought the products were innovative in structure and had real growth potential. Still at Bear Stearns, I convinced the firm to let me start building a dedicated ETF trading business, making markets for institutional customers (mostly hedge funds) and taking advantage of arbitrage between the baskets and the funds. It was a very valuable business at that time, because not many people understood the products, and the spreads were wide, but it was more challenging to trade the baskets. Many of the market participants we consider big players in ETFs were in their infancy at that time.
I identified a void and built a large trading business at Bear Stearns, and then in 2006, I was given the opportunity to build a more global business at BNP Paribas. I thought at the time that trading the ETFs that are listed around the world presented opportunities for arbitrage that were starting to get tighter in the U.S. because of increased usage by investors.
In 2008, I got to know Wisdom-Tree, which was still a small issuer, only two years old at the time. I really thought they were doing something special. I then made the move out of trading onto the issuer side—I knew this would be a personal challenge and I really believed in the growth opportunity in ETFs within the asset management industry. It was all new to me then, and now I’ve been at WisdomTree for 10 years, and it’s been a fantastic experience.
What’s surprised you most about your career so far?
I never anticipated becoming a trader or becoming a leading educator on the way that ETFs are utilized. After graduate school, my intention at Bear Stearns was to concentrate on technology and operational efficiency. This was the focus area of my degrees, after all. I had been there only about a year, working on automating their back office, when I met a group of traders that needed help with an automation project. They taught me how to trade so that I could help to automate their systems, and I just ran with it from there.
I can’t believe it’s now been 20 years that I’ve been working with ETFs, and yet there’s still so much education we have ahead of us. I still use a descriptive expression, “they’re like mutual funds except they trade on a stock exchange,” which resonates with most people, because they’ve heard of the older-style mutual funds. It grounds my belief that we’re still in the early innings in the growth of ETFs. Even at approximately $5 trillion in assets, they have a tremendous runway for growth ahead of them, fueled by new technologies and changes in investing behavior.