Lee Kranefuss and his new team have officially entered the U.S. ETF business, and they have a mission:

"We intend to be the leader in redefining the basic building blocks of portfolio construction," Kranefuss, executive chairman of Source, tells MFWire. "What do investors need in order to construct good portfolios? What do advisors need to construct good long-term portfolios for clients?"

Kranefuss built up the giant iShares business years ago, before moving on. When the private giant Warburg Pincus, with whom Kranefuss worked, bought a majority stake in Source, Kranefuss joined Source to help spearhead their push to this side of the Atlantic. Source was launched half a decade ago as a joint venture of five giant banks -- Bank of America Merrill Lynch, Goldman Sachs, J.P. Morgan, Morgan Stanley and Nomura, who still collectively are minority shareholders -- and the shop is now the fifth-largest ETF provider in Europe, with about $20 billion in assets. (Kranefuss is now based in London.) Its first ETF for U.S. investors, the Source EURO STOXX 50 ETF (based on one of Source's most popular products in Europe), just launched.

"The entire model is a sole-purpose ETF company," Kranefuss says. "We live and die by our success in the ETF market. We don't have other lines of business."

Kranefuss describes Source's product development approach as open-architecture, open to indexing, "quasi-active" or active strategies. For example, in Europe Source teams up with Pimco on some fixed income products.

"We can go out there and partner with anyone," Kranefuss says. "It could be a big asset manager, or smaller players you may have not heard of ... We'll work with anyone on the product side."

That flexibility, Kranefuss says, contrasts with the situation of an ETF provider inside of a larger company. That company's resources can be brought to bear to help grow the ETF business, but that company might also restrict options in terms of partnerships, different products, and so forth.

"In the U.S., we're less likely to be teaming up with some of the other big managers who are selling the traditional alpha idea more," Kranefuss says, adding that he doesn't like the widespread active vs passive vs smart beta debate. "Everyone kind of got stuck on development since the financial crisis."

Some fundsters, Kranefuss says, chase "hot dot products," and they fall "into the trap of thinking that that's the model."

"There's been almost no portfolio-focused investment product development in perhaps the past six to eight years," Kranefuss says. He aims to change that. 

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