Truss Edge targets new European ETF providers
Dave Shastri, the 18-year veteran of Bank of Bermuda and alternatives fund administration generally, is chief strategy officer of Truss Edge – a business designed to offer support to fund managers and one that is targeting the ETF industry.
Founded in 1999, Truss Edge was originally the in-house front to back real time system for a global multi strategy fund.
Shastri says: “They built a core system that grew from the front office through order management, execution and settlement down to accounting and valuation.”
The manager stopped managing the fund, effectively making the system redundant, but the operations and development teams who knew the business picked it up and found clients who continued to use it, building it into the business it is today.
Shastri says: “This is a captive business that was never designed to go out to the market, but the name is a reflection of who we are – a support to the investment manager. And we have good relationships with the administrators we work with because we take all the pressure off the investment manager and deliver and reconcile all the data to the administrators.
“We represent an efficiently run manager with clean data which is something that not every manager is delivering in a consistent way,” Shastri says.
One of those managers for whom Truss Edge has been working is ETF Securities, now owned by Legal & General Investment Management, which has brought the firm into the ETF space.
“The platform has lent itself well to providing straight through processing for ETF managers,” Shastri says and the firm is now actively targeting European fund managers who want to expand into launching ETFs.
“Managing unit cost is a huge part of the ETF business,” Shastri says. “You have to have a more efficient process and we are highly automated within the whole process from receiving, the creation of new units, to creating new orders to filling the orders. It’s completely automated and runs like clockwork.”
Shastri prefers not to discuss fees for the Truss Edge ETF product but acknowledges that the move in the market in terms of fees is a race to the bottom, citing a proposed ETF which is free and makes its money out of the stock loan opportunities.
Shastri’s lengthy career administering hedge funds makes him comfortable with this notion.
“We are going to see more ETF assets managed with strategies that are more alternative. There is lots of talk of esoteric things which will probably end up in an ETF,” he says.
“One of the things that is happening is a lot of managers want to start an ETF.”
Truss Edge will work with traditional fund platforms that want to create an ETF and is focusing on Europe because that is where they feel the catalysts are.
“We know at the industry level that the European industry is much smaller than the US and we know it will reach that level because the consumers are similar with a similar wealth profile. You can imagine a lot of asset managers will have to create an ETF and we provide a full system doing all of it from end to end with a high degree of automation.
“If you have a large scale system used to processing your systems, turning your guns on this specialist ETF product which runs at a totally different unit cost to the rest of your business is tricky – why not get a service that can solve that for you.”
Truss Edge will work alongside other ETF white labelling or support firms. “We are doing the shovel work,” Shastri says. “Other firms are the engineers.”