Before founding ExponentialETFs, Phil Bak spent the better part of a decade with the NYSE's ETF division, helping other firms get their own funds listed smoothly. And while he enjoyed what he was doing, he had always really envisioned himself managing his own ETFs. For some time, Bak had theorized that consumer sentiment could be used as a lead indicator to generate outperformance.
Enter Dr. Claes Fornell, the world's foremost expert on measuring customer satisfaction. Since founding the American Customer Satisfaction Index in 1994, Fornell had collected reams of data on thousands of American brands from hundreds of thousands of consumers. A fellow Michigander, Bak arranged a sit-down with the University of Michigan-based Fornell to pitch his idea for an investable index based on Fornell's data, and as they say, the rest if history. In 2016, Bak finally took the leap and left his job at the NYSE to launch ExponentialETFs and the American Customer Satisfaction Core Alpha ETF (BATS:ACSI) - with Fornell's data underlying the fund's index.
Click play above to listen to the full conversation.
Topics Covered
2:45 - Why Phil decided to leave his job at the NYSE to launch his own ETF
5:20 - Why start an ETF based on customer satisfaction ratings (ACSI)?
10:15 - Quantifying, and then indexing, customer satisfaction
15:15 - Consumer choices vary greatly by sector - how does the fund account for that?
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18:30 - Going under the hood of ACSI to look at the specific holdings:
27:20 - Exponential’s other fund: Why reverse cap weight (RVRS)?
29:50 - Exponential’s plans for the future
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