Alerian’s LaValle details the firm’s expansion from those MLP roots
The rise of thematic ETF investing has given indexers fertile grounds in which to grow their products. Index provider Alerian had its feet firmly in the Master Limited Partner (MLP) sector but after acquiring S-Network Global Indexes in 2020, and in terms of its own intellectual property, the firm has expanded into offering indices based on everything from Space to (with extraordinary market timing) Black Swan events.
David LaValle (pictured), Alerian’s CEO, explains that his background covers each part of the ETF world, having worked as a floor trader in the NYSE, building the ETF business at Nasdaq and then running a segment of State Street’s ETF business.
“Alerian’s legacy is based on a foundation of research and rigour,” LaValle says. “MLP was our particular expertise but it was not an asset class that was readily available to a broad range of investors.”
LaValle arrived in 2019, succeeding Kenny Feng, who had made the decision to create an MLP index to benchmark other asset managers’ performance. “Upon creating the first MLP index, they ultimately decided it was probably a great opportunity to create financial products,” LaValle explains. So, in 2007 the firm created an ETN based on MLPs with Bear Sterns, subsequently JP Morgan, and also launched a product with ALPS in 2010. The firm now has USD23 billion benchmarked to its suite of indices and over 200 customers worldwide.
“When I joined the firm in 2019, we had a strong desire to diversify our offering and position ourselves as a world class indexer,” LaValle says. “We still maintain our benchmark status in oil and gas MLPs but now we have a platform across global equities, broadened our number of clients and are currently in conversations with many new issuers to bring new products to market.”
One of the most notable of the firm’s launches is the S-Network Space Index (SPACE) - the new frontier, as described by ARK’s Cathie Wood. This benchmark is the first and only Certified Space Data Product recognised by the Space Foundation and is the underlying index to the Procure Space ETF (UFO), which is approaching its two-year anniversary.
The rise of the thematic, active ETF has been a marker for 2020. “For a very long time the active versus passive debate has been going on and I have always said it is active and passive and ETFs are an efficient way to use passive products to make active portfolio allocation decisions.”
LaValle says that he has long been a proponent of pure play themes such as Space, new technologies and different sectors.
“It’s all being chopped up and re-created over recent years,” he says, “today’s companies don’t necessarily fit into traditional sector classifications.”
Recent years have seen Alerian expanded into the European market, firstly, with the dividend weighted MLP strategy launched with HanETF and then the international version of Amplify’s Black Swan ETF, for the US market, and the firm has many more index launches planned for the year ahead, providing timely strategies to support products in energy, thematics and income.