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Tuesday, October 8, 2019

Third Avenue's Ex-Chief Plans "Index Disruptors"

Reported by Neil Anderson, Managing Editor

A former mutual fund firm chief has returned to the industry on the ETF side. And he's not going back.

David Michael Barse
XOUT Capital LLC
Founder, CEO
"The plan is for us to create a suite of other index disruptors," David Barse, founder and CEO of XOUT Capital, tells MFWire. "We're taking existing indices that are attracting flows ... and we're using a very intuitive process to eliminate the disruptees from the portfolio."

Yesterday, the GraniteShares [profile] team launched the GraniteShares XOUT U.S. Large ETF, powered by XOUT's first index, the XOUT U.S. Large Cap Index. Barse and his team partnered with EQM Indexes on the index and with calculation agent Solactive. And Barse confirms that he aims to use future indexes to power more GraniteShares ETFs.

GraniteShares, Barse says, "checked all those boxes" such as being a successful entrepreneurial firm in the ETF space, plus "they're well-capitalized." EQM is "also a young company that has had some success in creating other indices. Barse describes EQM's CEO Jane Edmondson as "a terrific person" and GraniteShares CEO Will Rhind as "a spectacular individual."

"Everyone I meet in the ETF space is a new person to me," Barse says. "For me, having the experience of being in a different but similar industry, judging the character of these people has been one of the most interesting parts [of the new venture]."

Barse, who spent 24 years leading the value mutual fund shop Third Avenue before leaving four years ago, launched XOUT on October 1, and he is the 100-percent owner. He describes ETFs as the future of the asset management industry.

"The mutual fund space is being disrupted by ETFs. The future is ETFs," Barse says, adding that he's not going back to the mutual fund side, either.

Yet, in addition to powering ETFs, Barse does have his sights set on another space: institutional investors.

"The holy grail is the institutional community," Barse says. "So if my index can be used by one of the institutions ..."

For now, Barse says, his "number one goal is to raise awareness." XOUT's index style is "just so intuitively simple," he adds.

"It's more important what you leave out of the portfolio than what you put in," Barse says. 

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