Moreover, critics remind investors that ETF managed portfolios are not passive instruments as there is an ETF strategist buying and selling passive index ETFs in response to changing market conditions.
Lastly, Zoll points out that investors will find it difficult in comparing an ETF managed portfolio to a benchmark since there is no standardized way the portfolios are built and managed.
In light of these concerns, Zoll suggests that investors should take the time to thoroughly go over ETF managed portfolios with their advisors and ask if the portfolios are a good fit.
Investors should “question the advisor about why he or she wants to use them and what role the strategy will play within the broader portfolio,” Morningstar fund analyst Ling-Wei Hew, who tracks ETF managed portfolios, said.
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Max Chen contributed to this article.