Separate accounts based on exchange traded funds, or ETF managed portfolios, are becoming the next big thing as more independent advisors shift away from underperforming mutual funds.
ETF managed portfolios are managed accounts that invest at least 50% of asset into ETFs. With the steady expansion of ETF products available, asset managers now have a wide range of investment options available to choose from, reports Jackie Noblett for the Financial Times. [How ETFs Have Evolved]
“There are enough different types of ETFs out there now to put together a pretty diversified portfolio for clients,” Loren Fox, senior research analyst at Strategic Insight, said in the FT article.
“Morningstar and academic research have shown that asset allocation is as important as security selection in determining portfolio total returns,” according to a recent Morningstar study, reports Conrad de Aenlle for MarketWatch. “A prudently constructed portfolio of ETFs provides wide asset-allocation options and low-cost diversification. ETFs provide transparency, intraday liquidity and portfolio consistency to strategists allocating among various asset classes and subclasses.”
ETFs are transparent investment instruments that may be traded daily on an exchange, similar to stocks. [Active vs. Passive ETFs]