ETF Trends
ETF Trends
  • About $350 billion in assets globally are held in ETF managed portfolios
  • BlackRock projects ETF managed portfolios could double to more than $700 billion by 2020
  • ETF managed portfolios could also account for 19% of multi-asset strategies by 2020

The Exchange Traded Fund managed portfolio segment could help provide the next growth spurt in the ETF industry as multi-asset managers increase adoption of ETFs, according to a BlackRock report.

On Monday I met with Daniel Gamba, Head of iShares U.S. Institutional Business at BlackRock, during the Nasdaq closing bell ringing. He shared the results on their recent research regarding ETF Managed Portfolio assets and prospects for future growth.

BlackRock interviewed multi-asset managers at more than 40 asset management firms, which included asset managers, boutique asset managers, investment officers/consultants and retail insurers, and found that ETF managed portfolios and multi-asset strategies make up a much larger, and faster growing part of the asset management industry than previously believed.

They found that ETF managed portfolios now hold about $350 billion in assets globally, including $60 billion in separately managed accounts of retail model portfolios, and $290 billion in variable insurance trusts, mutual funds, collective trust funds, institutional separate accounts and UCITS.

Looking ahead, BlackRock projects that ETF managed portfolios could double to over $700 billion by 2020 as institutional investors increase allocations to these strategies. ETF managed portfolios could also account for 19% of multi-asset strategies by 2020, growing from the current 12.5% level.

“We expect to see dramatic growth in the ETF managed portfolio segment in the coming years,” Gamba said. “Asset allocators in particular have taken to building portfolios using ETFs because they offer cost effective and easy access to a huge range of markets, and enable them to meet their goals whatever they might be.”

Fueling demand for ETF managed portfolios, clients are actively asking multi-asset managers to increase ETF allocations in their portfolios. Managers are also expanding their investment base with ETFs to meet specific goals. More active managers are also adopting ETFs due to the many benefits of the investment vehicle, such as low fees, deep liquidity, tax efficiency and as replacements for futures and to access broad asset classes.

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.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.