Dudzinski Out At XShares

August 07, 2008

Anthony Dudzinski is out at XShares, the exchange-traded fund provider he co-founded in 2006.


Anthony Dudzinski is out at XShares, the exchange-traded fund provider he co-founded in 2006.

Dudzinski left his positions as chief executive officer of XShares Advisors, the ETF provider, and as president and board member of XShares Group, the parent company, on July 15. XShares also laid off a large part of its sales staff around the same time.

"I have decided to pursue some other opportunities," said Dudzinski. "While no longer an employee, I have signed a consulting agreement to help them implement their business plans. I have a long-term interest in their success. This new relationship allows me to do a lot of different things." 

He said he would continue to bring in new clients who would like to get into the ETF marketplace.

XShares is best known for the HealthShares ETF family, a group of funds that sliced and diced the health care industry into 19 specialized categories, such as cardiology, cancer, dermatology and orthopedic repair.

In partnership with the online brokerage firm TD Ameritrade, the company also brought to market the first target-date ETFs. Target-date funds are one of the fastest-growing segments of the broad retirement market. In general, target-date, also called life cycle, funds create a portfolio of stocks and bonds that gets progressively more conservative as the fund gets closer to the investor's target date for retirement. The TDAX funds were also the first ETFs to use both stocks and bonds in a single fund.

Busy Turnstile 

Dudzinski's departure marks a low point in a tumultuous year for the small New York firm. At the end of the first quarter, William Henson, the parent company's CEO, left for an extended leave of absence. A member of Grail Partners (itself an early investor in XShares), Henson lasted less than five months on the job with XShares. The reason for his departure was never given.

In April, the company hit a high point when its TDAX funds won the Most Innovative ETF Product in The Americas category at the Global ETF Awards. Voted on only by ETF industry insiders, much like the film industry's Academy Awards, the Global ETF Awards provide a look at what the industry considers the best in the field. 

That euphoria proved short-lived, however: In June, XShares closed down its AdelanteShares family of seven real estate ETFs. The REIT funds had the misfortune to launch in September 2007 just as the housing bubble began to deflate. By the time they liquidated at the end of June, the seven funds had only a total of $17 million in assets under management.

Dudzinski and XShares declined to elaborate on the reasons for his departure. When asked if it stemmed from a falling out over strategic differences with co-founder Jeffrey Feldman, one rumor circulating in the ETF community, Dudzinski said no.

"It had nothing to do with that. It's just the natural progress in the life cycle of a business," said Dudzinski. "To think that there is something there is just silly."

Joseph Schocken, founder and president of Broadmark Capital, a merchant bank in Seattle, took over as the interim CEO of XShares Group, when Henson left. He will take on the CEO responsibilities at XShares Advisors, also on an interim basis. No replacement has been named for president of XShares Group.



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