ETFs have made it much easier for individuals to invest in alternative asset classes such as commodities. Further growth of alternative ETFs could be driven by use in separately managed accounts.
“We’re definitely seeing the growth of launches of separate-account strategies that are focused on alternatives, and I think this is going to be the next wave of popular strategies,” Morningstar ETF managed-portfolio strategist Andrew Gogerty said in an InvestmentNews report. “As the [alternatives ETF]space continues to grow and deepen, there will only be more ways to use them.”
These separate accounts are being constructed and managed for advisors at the request of clients. The alternative assets help manage risk and enhance performance. [How to Diversify with Alternative ETFs]
“The last couple of years, we’ve seen increasing investor interest in more-sophisticated strategies because the market has been very choppy and driven by macroeconomic factors, and less so on fundamental factors,” Todd Rosenbluth, an ETF analyst at S&P Capital IQ, said in the article.
In the group of the 500 largest managers from the ETF separate account space, Gogerty found that the ETF portfolios have expanded 34% over the past year to more than $45 billion. [Morningstar Reveals Alternative Investments Ratings]