ETF managed portfolios usually have more than 50% of portfolio assets invested in ETFs.
“They represent one of the fastest-growing segments of the managed account universe,” Morningstar says. “Professional money managers are packaging portfolios of ETFs into investment strategies to meet a wide array of investor demands, and thanks to the continual development of individual ETFs they are providing access to both stand-alone investment strategies and one-stop, complete solution offerings.” [Fee-Based Advisors Driving Growth of ETF Managed Portfolios]
However, Zweig cautions that it’s important for investors to check the fees and composition of ETF managed portfolios to understand exactly what they’re buying.
After underlying ETF fees, custodial expenses, transaction costs and management fees, an ETF managed portfolio can cost 1% to 3% of assets annually, he writes.
He also warns investors to take theoretical, “back-tested” performance with a grain of salt because the strategy hasn’t been implemented in the real world.