As the equity market rally grows long in the tooth, some investors are pairing actively managed strategies with passive index ETFs to potentially enhance returns.
On the upcoming webcast Thursday, Feb. 15, Active or Passive? Why You Should Use Both!, Matthew Bartolini, Head of SPDR Americas Research for State Street Global Advisors, Larry Whistler, President and Chief Investment Officer at Nottingham Advisors, and Rusty Vanneman, Chief Investment Officer at CLS Investments, will outline best practices in portfolio construction and look to actively managed strategies to enhance a portfolio consisting of cheap, passive index funds.
For example, the SPDR DoubleLine Total Return Tactical ETF (NYSEArca: TOTL), which is an actively managed ETF backed by bond guru Jeff Gundlach and is also seen as an ETF adaptation of the flagship DoubleLine Total Return Fund (DLTNX), may act as a suitable alternative to the traditional Bloomberg Barclays U.S. Aggregate Bond Index.
Investors could also complement existing credit positions in high-yield and investment-grade credit with alternatives like bank loans that access floating rate, move up the capital structure and shortens duration exposure. For example, the actively managed SPDR Blackstone/GSO Senior Loan ETF (NYSEArca: SRLN) could help investors with better exposure as a manager is more freely able to weave in and out of the fixed-income market. Blackstone/GSO, which subadvises SRLN, is backed by one of the largest senior loan asset managers in the world.
ETF investors may also enhance their equity position through active strategies like the SPDR MFS Systematic Growth ETF (NYSEArca: SYG), especially in the extended bull market environment with lofty prices that make it harder to find areas of opportunities. SYG, which combines active stock selection by MFS Investment Management, tries to outperform the Russell 1000 Growth Index through fundamental and quantitative research. The MFS team uses fundamental analysis of individual issuers and their potential in light of their financial condition, and market, economic, political, and regulatory conditions to identify potential investments. Factors considered may include analysis of an issuer’s earnings, cash flows, competitive position, and management ability, according to a prospectus.
Financial advisors who are interested in learning more about portfolio construction can register for the Thursday, February 15 webcast here.