In the managed-account space, exchange traded fund strategists are gaining traction among investors who want downside protection, packaging passively managed ETFs in actively managed portfolio strategies.
This new bred of managed accounts are investment strategies that typically hold more than 50% of portfolio assets invested in ETFs. ETF managed portfolios are being utilized as both stand-alone investment strategies and a complete, one-stop offerings. [ETF Managed Portfolios Gain Traction]
“You could probably do 85 percent to 90 percent of what a sophisticated stock and bond hedge fund was doing just with indexes,” John Forlines III, founder and chief investment officer of JA Forlines, said in a CNBC article.
According to Morningstar, ETF managed portfolios saw assets increase 40% over 2013 to $96 billion. BlackRock (NYSE: BLK) projects that the space could hit $120 billion in assets by next year as more investors look for ways to mitigate the effects of market swings.
“They are more tailored to the volatile world we are living in,” Katharine Earhart, head of the iShares Connect Program at BlackRock, said in the aricle. “In the past few years, what investors have seen makes them want to stay invested, but they see wild fluctuations in the market, and it is scary.”
While anyone can pick up an ETF through a click of the mouse, ETF strategists are offering ways to implement the investment tool to effectively managed risk.
“They are focusing on adding returns, but they are also providing superior risk management, and this aspect is often under-appreciated,” Scott Kubie, chief strategist at CLS Investments, said in the article.
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Max Chen contributed to this article.