The Vanguard Group has been growing in the exchange traded fund model portfolios in the separate accounts space, offering customized ETF managed portfolios to investors through financial advisors.
The Vanguard ETF strategic model portfolios has not been widely promoted but are quickly gaining assets as financial advisors access the strategies through the Envestnet and Cambridge Investment Research platform, reports Trevor Hunnicutt for InvestmentNews.
Vanguard began reporting its suite of ETF model portfolio offerings in the fourth quarter of 2014. It was the 16th largest ETF strategist in the space with 25 reported model portfolios and $1.1 billion in assets under management, according to Morningstar.
“It’s in direct response to demand from advisers, and to some degree advisers wanting to streamline and outsource,” Mike Lucci, a senior sales strategist at Vanguard, said in the InvestmentNews article. “For us, the value proposition is all about beta. It’s about low-cost, broadly diversified beta.”
Moreover, Vanguard’s partnership with Cambridge could also allow ETFs to make greater inroads into the retirement-plan market. Colleen Bell, first vice president for retirement and wealth strategies at Cambridge, said investors can access Vanguard ETFs through its retirement-plan serving division. Many may be attracted to the low costs associated with the ETF structure. For instance, the average expenses of the models range between 0.07% and 0.14% annually.
“The conversation around fees has become more sensitive and people do look for low-cost solutions that complement their own philosophy,” Bell said in the article.