Managed Portfolios: The ‘Wild West’ of the ETF Industry
December 4th at 8:00am by Max Chen
The exchange traded fund industry is growing up, but the ETF managed account segment is just getting started.
ETF Trends’ Tom Lydon sat down with Ben Johnson, Director of Passive Funds Research at Morningstar, and Matthew Hougan, President of IndexUniverse, to discuss ETF strategists and the growth in the ETF managed accounts space.
“Some of these guys are great, really high quality portfolios, well thought-out processes,” Hougan said. “I’m very excited about this space.”
Hougan, though, cautions that investors should take a longer look at the structure and strategy of the ETF managed portfolios as we are in a changing market.
“I worry that investors get too tied up with track records,” Hougan said. “A lot of these ETF Strategists have phenomenal track records between 2008 and 2010 period. We’re in a new era, with potential rising rates and different environment.”
The space is still relatively new. A group of ETF managed portfolios tracked by Morningstar now include 645 strategies from 145 firms, with $80 billion in assets under management as of of June 2013.
“It’s still very much the wild wild west,” Johnson said. “If you look at the data that is available and hold that up against the data that’s available for ETFs or traditional mutual funds, if you look at the standards, and even back office, basic infrastructure that’s required or exists for some of these places, investors almost have to turn due diligence back on its head when they are assessing some of these strategies.”
Watch the video below to see the full interview with Ben Johnson and Matthew Hougan.
To view past video interviews, visit our video section.