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.”