Donald Luskin - Biography and Achievements

Biography and Achievements

On his blog, Luskin states he "attended Yale in 1973-1974; dropped out to rejoin the real world as soon as possible."

After college, Luskin worked for several years as a creative consultant to Los Angeles companies such as Mattel and Teledyne, and motion picture studios Warner Brothers and LucasFilm. He and two colleagues developed a series of all-night treasure-hunts, one of which was adapted into the Walt Disney motion picture Midnight Madness.

Luskin's investment career began in 1979, when he started a hedge fund while an options market maker on the Pacific Stock Exchange. As his fund grew and evolved, he became a market maker on the Chicago Board Options Exchange (where he helped pioneer index options trading, executing the very first OEX contract) and the New York Stock Exchange, where he traded the first option contract in the NYSE's history.

In 1984 Luskin joined Jefferies & Co., a brokerage firm. There as senior vice president, he invented POSIT, a crossing network enabling institutional investors to exchange entire portfolios with each other. POSIT was later spun out of Jefferies as a separate publicly traded company, Investment Technology Group.

In 1987 Luskin joined Wells Fargo Investment Advisors, a division of Wells Fargo Bank, as senior vice president in charge of investment management and trading. He became vice chairman when the firm merged with Nikko Securities in 1989, becoming Wells Fargo Nikko Investment Advisors. When the firm was acquired by Barclays Bank in 1995 and became Barclays Global Investors, Luskin became chief executive officer of the firm's global business in mutual funds. Over Luskin's eleven years with the firm, assets under management grew from $69 billion to over $500 billion. Luskin was responsible for numerous innovations in index funds and quantitative investing -- including the development domestic and international quant-active funds, every one of which outperformed its benchmark over Luskin's tenure—and the creation of the first sector ETFs. Luskin created the LifePath family of mutual funds, for which he is the named inventor on a US patent.

In August 1999, during the tech bubble, Luskin and partner Dave Nadig started the MetaMarkets Open Fund, the first mutual fund to publish trades and list its holdings in real-time via its website. This "transparency" and "openness," Luskin and Nadig said, was a step forward in the financial world, equivalent to the political revolutions and international democratic transformations of the 1990s, because it leveled the playing field for the average investor and overthrew "financial elites." MetaMarkets.com, the venture-backed company that Luskin and Nadig founded to operate OpenFund, was hailed by Fortune magazine as one of the "coolest companies" in America in 2000. Their model was dismissed by some analysts as being a "gimmick," having nothing to do with investing per se: "They brought chat boards to life in a mutual fund." At its peak, OpenFund received $45 million in investments, and the fund's biggest positions included companies like JDS Uniphase and Extreme Networks. At the end of 1999, OpenFund was among a handful of the best-performing mutual funds in America. After the market top in March 2000, the valuations of technology companies collapsed and many OpenFund investors redeemed their shares. The fund was shut down in the summer of 2001, after losing much of its investors' money. Published reports note that the open fund lost over half its value.