Dave Shastri of Truss Edge, joins ETF TV to discuss the benefits of portfolio management solutions for ETF issuers

Presented by Truss Edge.

Margareta Hricova Welcome to ETF TV. Your insight into the world of exchange traded funds, issuers and investments. I’m Margareta Hricova and joining me today is Dave Shastri, Chief Strategy Officer at Truss Edge and Deborah Fuhr. Welcome.

Dave Shastri Thank you for having me.

Deborah Fuhr Thank you. Nice to have you on the show, Dave. Can you describe the role of Truss Edge in the ETF ecosystem?

Dave Shastri Truss Edge is a portfolio management solution that relies on providing technology that meets the needs of the portfolio manager, as well as all the supporting parts of middle and back office in the infrastructure for portfolio management. We’re able to provide tools to deal with the ETF distributors, with the ETF manager and with the infrastructure, which is quite important, the administrator and the custodians that are part of that platform and that support that issuer in distributing their funds and supporting their funds on a daily basis.

Margareta Hricova And what are some of the infrastructure challenges large asset managers often face when developing an ETF business?

Dave Shastri A large asset manager comes set up to support mutual funds, index vehicles, and in order to do that, they’ve created a lot of what they want from an efficiency point of view. But when you enter the ETF space, you deal with the market makers and APs that are forming your sales network. You’re dealing with the administrator and custodian that perform the backbone of your ETF custody operations, and you need those processes to work better seamlessly. The problem you have, of course, is that in order to do that, you will find that you have a lot of gaps in that process that need to be filled. And so one way of doing that is to create special tools and databases. And in the case of most firms, a lot of spreadsheets that of course you’re going to have a lot of problems, latency errors to deal with. And so the approach we have is to provide a seamless infrastructure that can integrate to your existing platform, your existing legacy infrastructure, work with that efficiently, and at the same time provide a seamless process for the investment firm to interact with the market maker, the sales channels that is quite intensive and of course requires a lot of intraday activity. And then at the back end, working with your administrator and custodian again, crucial because these are daily dealing funds and they have a tight set of deadlines.

Deborah Fuhr Are the challenges different for smaller ETF managers?

Dave Shastri Of course they have little experience with that kind of business and so our platform is there to provide a seamless infrastructure that’s an all in one, that can do everything that that manager needs. And we’ve done that with several managers so that they can run an effective ETF on a low cost basis. And things that they’re used to doing are enhanced by the tools that integrate your sales channel, integrate your administrator and service providers without you having to worry about all those things, what the PCF is for and what the UCF does or the PLF does. So essentially, we provide a roadmap so that you just slot in what your skill set is on the strategy side and deal with the sales infrastructure. Those are the things that you can do easily when we’re taking care of all those other processes.

Margareta Hricova Are there unique challenges ETF portfolio managers face?

Dave Shastri There are, of course, many flavors of ETF. You have index based ETFs. Increasingly, you see active ETFs, especially in the US and conversion of mutual funds and also new issues of active ETFs. Index based ETFs can either be physically or synthetically replicated, so you want to be able to support all of that within your platform. You don’t want different tools for those. And at the same time you have challenges even within the index based portfolio strategy. So, for instance, the need to foresee changes occurring in the index in the future, how that might affect your portfolio management, the ability to handle cash management, the UCITS fund for instance, requires a certain amount of cash and all those checks and controls that are necessary for regulation. Those don’t go away just because you’re running an index fund or an index driven fund. In an active fund, you also have to be able to handle adjusting your portfolio intraday and still keeping your sales network up to date. So, tools that we’ve developed in our platform handle those needs in dashboards for portfolio managers so that they can have at their fingertips knowledge of what’s going to happen in the strategy in terms of changes to the index, what’s coming in, what’s going out, and the ability to adjust for that, actively changing what’s going on in the portfolio, keeping completely up to date with your P&L, all of those tools, we have worked on a practical basis with our clients to provide dashboards and controls, checks so that they can know exactly what’s going to happen in their portfolio.

Deborah Fuhr That’s great. Thank you for joining us.

Dave Shastri Thank you for having me.

Margareta Hricova Thank you Truss Edge for sponsoring this episode, and to all of you for watching. To watch prior episodes and to see news from the ETF industry, visit us at ETVTV.net. Thank you.

ETV news does not provide investment advice nor recommend products.

Published on March 6, 2024