ETF Managed Portfolios

ETF asset managers use the investment vehicle to construction a managed portfolio that typically holds assets mostly invested in ETFs. The professional asset managers package portfolios of ETFs into targeted strategies that meet certain investor demands while providing access to a one-stop, complete-solution investment.

Mitch Reiner, Chief Operating Officer and Investment Advisor at Capital Investment Advisors, Wela Strategies, believes advisors can utilize ETF asset managers’ intellectual capital for market commentary, perspective and client communication material, among others, as a way to efficiently utilize one’s time.

“Most strategists offer a multitude of information that they encourage their advisors to leverage and use with their client-base,” Reiner said in a research note. “Leveraging this will maintain relationships, lessen workload requirements on the advisor and be the motivation to proactively reaching out to clients, improving client satisfaction and potentially referrals.”

Experienced asset managers provide diversified and structured asset allocation model with a disciplined investment strategy. The portfolios can cover technical trading programs with ETFs, maneuver bull or bear markets and address the rising rate environment, which essentially leaves advisors to focus on managing client relationships while utilizing a third-party provider to support investment decisions.

In a a CLS Advisor IQ Series research note, Todd Clark, CEO of CLS Investments, pointed out that “strategists are a key part of that implementation, as they bring a deep understanding of the ETF marketplace and contribute their trading expertise to construct model portfolios of ETFs, while managing the day-to-day research, trading, and operations.”

Brooks points out that the average wire house or financial advisor with a 10-year business has an average over 250 different mutual funds held collectively by clients. Considering the underperformance in mutual funds as a whole, ETF-based asset managers offer an attractive alternative. Brooks adds that the “shift is on.”

At the ETF Asset Manager Summit, the “Panel of Peers” was the highest rated session, which suggests advisors want to learn from their peers. “Building A Sales Team” was the second highest rated session, followed by the panel on “National Accounts Sales Strategy.” The summit was notable in that attendees were not inundated with product conversations as the panelists focused on the business of ETF managed portfolio growth.

Anyone can seek out these ETF managed portfolios. You can ask your brokerage or advisor. Some brokerages may offer their own ETF managed portfolio strategies. For instance, Schwab is steering clients toward its own WindHaven ETF managed portfolios, which is garnering around $100 million in inflows per week.

Financial advisors are attending the Morningstar ETF Invest Conference this week in Chicago.

For the last two years, I attended the BlackRock iShares Connect Conference. At the conference earlier this year, BlackRock also identified ETF investment strategists or managers who delivered expertise in ETF portfolio construction and trading to investors who wanted outsourced model portfolios.