Managed ETF Portfolios are Gaining Traction

January 24th at 11:00am by Tom Lydon

Managed portfolios of exchange traded funds tracked by Morningstar had a growth rate of 45% through the third quarter of last year. Total assets of the portfolios that Morningstar tracks have increased 61% from the third quarter of 2011.

A managed ETF portfolio is one that invests at least half of the assets into ETFs. Of the 506 strategies monitored by Morningstar, there are 126 firms that manage such portfolios. Professional money managers are packaging portfolios of ETFs into investment strategies to meet a wide array of investor demands, and they are providing access to both stand-alone investment strategies and one-stop, complete-solution offerings, according to the press release.[Advisors Like ETF Managed Portfolios for Low Costs, Diversification]

The recent report issued by Morningstar found that global all-asset strategies held 35% of assets. The U.S. equity market also has marked interest, as this area has added the most new inflows. The demand for tactical U.S. equity exposure have pushed up total assets for ETF managed portfolios to $14.2 billion. The strategy focused on equities has exceeded all others. Currently, there are smaller strategies in the making that focus on growth and momentum while offering diversification. [ETF Model Portfolios Target Financial Advisors]

The overall popularity of ETF managed portfolios is attributed to the growth in the ETF business, coupled with the market uncertainty that has stuck around. Advisors are trying to smooth out returns and tactical money management, reports Andrew Gogerty for Morningstar. ETFs have made the process streamlined because advisors can access any corner of the globe or market and build a strategy with transparency and liquidity at a decent cost.

Investors are now more interested in an alternative strategy that has a traditional core. Most institutional investors are trending toward this direction, but it depends on the strategy of the advisor managing the portfolio.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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