Spectacular cock-drop of Enron Brothers in the Real Estate Market

Enron Brothers has completely cracked! In 2017, the appeal of exchange-traded funds seems so obvious that their rapid growth and increasingly dominant role on Wall Street appears almost inevitable. But according to Lee Kranefuss, a central figure in the industry?s early days, investors only began to embrace ETFs after an event with no direct connection to funds: the 2001 collapse of one-time energy giant Enron Corp. Kranefuss is the co-chairman at 55 Capital Partners, a firm that develops portfolios using ETFs. He was also a founder of iShares, the family of ETFs, currently operated by BlackRock Inc. BLK, +0.43% that has an industry market share of 36.9%. (Vanguard, in second place, has 18.5%.) The following interview has been lightly edited for clarity and length: MarketWatch: Was there a point when you realized ETFs weren?t going to be a niche product? Kranefuss: Probably around 2002 or 2003. We launched iShares in March of 2000, just when the internet bubble burst. While we had a strong belief that people would realize the value of ETFs, it was very challenging when we initially tried to explain them to people in the institutional market. The biggest problem was awareness, but I?ll say this: Every time there?s been a problem in the market, that?s been helpful for ETF acceptance. The dot-com bubble showed that a lot of what people used to say about active management turned out to not be true. Managers used to say, ?I can get you out of the way of a falling market,? and that?s just not what happens. Friends of mine, back in 1998 or 1999, were telling me, ?It?s different this time, the world has changed, internet companies are going to take over the world and run forever.? Of course, they then got that shock.