In the separate accounts space, exchange traded fund managed portfolios are gaining traction as innovative investment products and services find a wider audience. Consequently, more financial advisors are partnering with ETF strategists to develop customized asset allocation tools.
On Tuesday, I was at the PowerShares and State Street Global Advisor’s ETF Asset Manager Summit in Chicago where the developing ETF managed portfolio landscape was a hot button topic.
According to Morningstar, there were 667 such strategies from 145 firms with $102 billion in assets under management as of June 2014, with existing managers still expanding on their current product offerings. ETF managed portfolios are investment strategies that hold more than 50% of assets invested in ETFs.
As more investors adopt ETFs and financial advisors begin shifting into ETF assets, there is greater need for assistance to maximize the potential benefits of the investment vehicle, compared to traditional asset allocations. [Advisors Carve Out More Room for ETFs In Client Portfolios]
In response, ETF strategists now provide alternative allocation methodologies to enhance a traditional stock and bond portfolio With 5-year bull, threat of rising rates, a correction on the horizon and currency risks, ETF strategists can provide a unique advantage for advisors and help avoid head winds.