After the F-Squared Investments fallout, investors have turned to exchange traded fund managed portfolios from more tried-and-true financial industry names.
There were 770 ETF managed portfolio strategies from 153 with $80 billion in total assets under management as of June 2015, according to Morningstar. Assets shrunk by 7% in the second quarter.
After admitting to overstating performance numbers, the F-Squared Investments bankruptcy largely fueled the contraction in the space. Over the second quarter, investors yanked $11 billion out of F-Squared strategies, and the firm is now the sixth-largest in the space, falling from the top spot just six months ago. [F-Squared Down, but not Out]
“Despite this major disruption, the remaining firms were largely unaffected as collective assets remained roughly steady. The net result was a further flattening of the landscape,” according to Morningstar. “As of the end of June, the 10 largest firms held 54% of assets, compared with 68% at the start of the year.”
Meanwhile, Charles Schwab and Vanguard helped pick up the slack. Ling-Wei Hew, a Morningstar analyst, argues that the F-Squared fiasco helped open the way for better-known shops to attract assets, reports Matthew Beaton for Ignites.
““[Y]ou know a Vanguard or a Schwab is not going to taint their reputation by doing the same thing that F-Squared did,” Hew told the Financial Times.
Charles Schwab Investment Advisory saw growth in its relatively new suite of Schwab Managed portfolios, which is distinct from the offerings managed by Schwab subsidiary, Windhaven Investments Management. Schwab Mangaed Portfolios grew threefold to $3.9 billion and is now the fourth-largest manager, according to Morningstar. Schwab acquired Windhaven in 2010.
Windhaven held $14.8 billion, overtaking the top spot from F-squared. Windhaven also boasted the top three largest ETF managed portfolios as of June 30, including the Windhaven Diversified Growth $7.7 billion, Windhaven Diversified Aggressive $4.5 billion and Windhaven Diversified Conservative $2.6 billion.
Additionally, Vanguard’s ETF model portfolios held $1.7 billion in assets at 13th place. [Vanguard Quickly Rising in ETF Managed Portfolio Space]
Among the other large ETF strategists, RiverFront Investments held $5.2 billion in assets, Stadion Money Management held $4.0 billion and Morningstar Inc. held $3.6 billion.
ETF managed portfolios are investment strategies that hold more than 50% of assets invested in ETFs and represented one of the fastest growing segments in the separate accounts space. Specifically, ETF managed portfolios offer three major investment themes: tactical, strategic and hybrid mix. The tactical offerings provide short-term plays to capitalize on investment opportunities that are forming, whereas the strategic play provides long-term allocation across sectors and asset classes. Additionally, the hybrid mix includes a combination of tactical and strategic elements.
For more information on the separate accounts space, visit our ETF managed portfolios category.
Max Chen contributed to this article.