After years of witnessing assets bleed out and flow to rival exchange traded fund products, the mutual fund industry is seeing the upstart ETF industry move in on the managed accounts space.
ETF managed portfolios are beginning to attract more attention and assets from retail and intermediary investors, reports Steven Miyao for InvestmentNews.
Managed accounts allocate clients’ cash across various asset and sub-asset classes for a diversified investment portfolio that tries to generate market price appreciation while managing risk. Typically, the underlying assets are made of mutual funds, with core products comprised of proprietary and third-party funds.
According to Morningstar, ETF managed portfolios currently follow 530 strategies from 125 firms with $63 billion in assets under management. Underlying ETFs in the portfolios are mostly made of large, liquid, index-based ETFs. [ETF Managed Portfolios See Steady Growth]
While ETF managed portfolios may be tiny in comparison to mutual funds in the managed accounts space, the ETF industry can become a threat. Specifically, a number of firms with considerable market influence are promoting the use of managed ETF portfolios. For instance, Schwab, which owns the large Windhaven ETF managed portfolios, provides access to 15 firms. BlackRock sponsors over 200 firms that sell managed account portfolio solutions comprised of ETFs.