Some of the long-time and emerging pioneers of the ETF industry are profiled here. They have been at the forefront of ETF portfolio management, strategy development, market integration and investor awareness. Some have become leaders by growing portfolios based entirely on ETFs, while others are aiming to role out sector-driven investments that they feel will become the engines for these funds.

Today we feature one of our five to watch, Daniel Freedman, co-founder and managing partner of the U.K.’s London & Capital Group.

Since 1986, Freedman has been co-founder and managing partner of London & Capital Group, an investment advisory and fund management firm with $3.4 billion in assets under management. Using the SPA brand, London & Capital was the first U.K. firm to launch ETFs in the U.S. in October 2007, just one month after launching them on the London Stock Exchange. “ETFs are far more cost-effective than mutual

All six SPA ETFs use indices created by MarketGrader, a research firm set up in 1999 that reviews 5,700 listed U.S. companies and grades them on 24 fundamentals. Using sector, rebalancing and proprietary rules, the firm then ranks the companies in order. Through rebalancing, stocks that have become overvalued are replaced in favor of more attractive, undervalued stocks.

Freedman described MarketGrader’s products as fundamental, second-generation indices that provide exposure and performance without the limits of cap-weighted indexes, which tend to be dominated by the largest companies. In addition, each index is equally weighted, which ensures no one outperforming or underperforming stock will influence the performance of the index, he noted. He believes this methodology, coupled with the benefits of an ETF, brings something new and valuable to the market. “We believe that these second generation indices will be the future growth of the industry,” he added.

In the future, London & Capital will continue to work with MarketGrader.