More advisors are utilizing exchange traded fund products in separate ETF managed portfolios, which are quickly becoming one of the fastest expanding areas of the managed-account industry.
Taking into account discretionary and non-discretionary assets and model portfolios, investment researcher Morningstar estimates that the total ETF managed portfolio space accounts for $40 billion to $100 billion in assets, writes Andrew Gogerty, ETF Managed Portfolios Strategist, at Morningstar.com.
Global strategies make up the lion’s share, accounting for $19 billion, or 72%, of the 370 ETF managed portfolio strategies with $27 billion in assets tracked by Morningstar. As of September 2011, assets under management have increased 43% over the previous 12 month period.
“The fiduciary standard will continue to grow as the standard for managing a client’s portfolio, and the shift to a fee-based compensation structure will likely follow,” Gogerty said, referring to the growing reliance on registered investment advisors. “This shift, for many, has led to the outsourcing of the money-management function to ETF managed portfolio firms.”
“With the demand for global, multiasset portfolios showing no signs of slowing in the near term, we expect this space to continue to dominate product launches in the short term as strategists get in on the asset land-grab over the next few years,” Gogerty added.
Additionally, Gogerty believes that mutli-asset, yield-focused strategies may dominate the space going forward, given the flexibility and global reach provided by the ETF investment vehicle.
For more information on ETFs, visit our ETF 101 category.
Max Chen 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.