New firm is offering index ETFs

This week, some prominent Philadelphians are getting into the retail-investment business. And three local IT guys are looking for new ideas to fund.

State adviser goes private:

Vincent T. Lowry, financial adviser to Pennsylvania state and local governments, is the brain behind a new company setting up exchange-traded funds tied to Standard & Poor's indexes.

"It was Vince's idea," said Sean O'Hara, president of month-old

RevenueShares Investor Services L.L.C.

, Paoli, which is marketing the funds to retail and institutional buyers.

Lowry, chairman of the funds' adviser,

VTL Associates L.L.C.

, is a 20-year veteran of Citigroup Smith Barney who says he brought Pennsylvania's then-state treasurer, Barbara Hafer, and other clients with him to VTL in 2004. While advising government clients, Lowry said, he has developed investment products for them to use.

For example, the

Philadelphia Board of City Trusts

had $38 million invested in stock-index funds that Lowry says he set up through

Valley Forge Trust Co.

last year, according to a report Lowry's firm prepared for the board. Other fund clients include SEPTA, the Commonwealth of Pennsylvania, and the New York City police and fire pensions, said O'Hara, a former managing director at Planco L.L.C./The Hartford.

How does Lowry keep his interests separate from those of his clients? "I don't take a fee from consulting clients for doing this," he said. "The key, in the eyes of your clients and the SEC, is how you manage potential conflicts."

Private equity for the masses?

Philadelphia real estate investors Michael C. Forman and David Adelman filed Feb. 22 with the Securities and Exchange Commission to raise $1.5 billion for a new fund,

Franklin Square Investment Corp.

, to offer private equity to the masses.

"The market for asset-based alternative investments has expanded dramatically," said Keith Allaire, an investment banker at Stanger & Corp., of Shrewsbury, N.J., who worked on the Franklin Square deal. Private equity is new to the market, which has been dominated by real estate. Target customers make at least $70,000 a year and have $70,000 already invested," Allaire said.

Franklin Square will be managed by

GSO Capital Partners L.P.

, of New York, which in January agreed to be acquired by hedge fund and private-investment manager

the Blackstone Group L.P.

The fund says it will pay dividends. It will not be traded on any exchange.

Not everyone salutes attempts to democratize private equity. "When you can't raise money in private-equity circles, who do you go to? The public," said Burton J. Greenwald, a Philadelphia mutual fund consultant.

"What Ira Lubert and Dean Adler are doing in the private-fund business for larger investors, we're going to do in the retail channel," Adelman said, citing Franklin Square's Cira Center neighbors, who run the $7 billion-asset

Independence Capital Partners

group.

Start-up matchmakers:

As of Friday, 94 would-be entrepreneurs had applied to

DreamIt Ventures

for 10 slots in a program to help bring start-up programs to market. Deadline is March 12. Visit

http://www.dreamitventures.com

to apply.

Steven D. Welch (who built valve-maker

Mitos Technologies Inc.

and sold it to Parker Hannifin Corp. last year), David Bookspan (sold

MarketSpan

and its legal-data service,

CourtLink

, to

LexisNexis Group

in 2000), and Michael Levinson (sold

PTS Learning Systems

to

Global Knowledge Network

in 1999) have been flogging DreamIt at business and engineering schools from Harvard to Pennsylvania State Universities.

"We've gotten plans for mobile-advertising platforms, things you can put in a cell phone. Plans for hyperlocal networking and product promotion. Three or four applications from around the gaming world. And widget plays, plug-in applications that can drop into places like Facebook. People want to know, how do we monetize these?" Levinson said.

Selected start-ups will get cash stipends while honing their business plans. On "Funding Day," they'll meet investors.