Managed portfolios of exchange traded funds previously came with high account minimums which may have turned some investors off. Advisers are beginning to reverse this trend and are aiming for a wider slice of the market.
“Since these are essentially separate accounts put together by institutional-level portfolio managers, it can take $100,000 or more to qualify,” Scott Burns, head of ETF research at Morningstar, said. [ETF Managed Portfolios: The Next Big Thing?]
Advisory firms manage all-ETF portfolios for some investors, but the catch is relatively high account minimums. As more individual investors show interest in ETFs, the higher account minimums are not suitable. In turn, some of the larger advisory firms are lowering account minimums to help target a bigger investor pool.
The catch is that the minimums are applied to each account, so if an investor had enough to cover the management services but not enough in retirement or other accounts, they could not get complete management, reports Murray Coleman for MarketWatch. [Why Separate Account Managers Like ETFs]
Some advisers have stayed away from the managed-portfolio approach and are tailoring research to cater to clients assets. Some observers within the industry think it may be a bad idea to cater to less-affluent investors which would equal less profit margin and waning growth in the managed ETF portfolio market. [ETF Model Portfolios Should Come With More Education]