Outcome-Based ETF Portfolios to Meet Clients' Investment Goals | ETF Trends

Financial advisors who are looking for customized ETF portfolios in the separate accounts space can turn to ETF model portfolios designed by ETF strategists.

“Toroso Investments was designed to be an ETF research firm, and when we build our ETF models, it’s all about security selection for us. That’s really the niche that we really play is knowing under the hood what’s really in an ETF,” Mike Venuto, CIO, Toroso Investments, said at Inside ETFs 2019.

Specifically, Toroso Investments has a handful of outcome-based managed accounts with distinct outcomes to help investors with various investment goals.

For example, the Toroso Sector Opportunity Strategy tries to outperform the S&P 500 Index while maintaining similar volatility, with 80% of the portfolio focused on 5 US Sectors/Sub-Sectors that exhibit the opportunity to grow faster than the market. The remaining 20% tries to opportunistically enhance up and down market capture, or collect implied volatility premium during sideways markets.

The Toroso Neutral Strategy focuses on equal weighting of four asset classes, including Equities, Commodities and other alternatives, Cash equivalents and Bonds. The strategy will try to navigate an economic environment of prosperity, inflation, recession and deflation, providing low volatility returns that protect clients’ purchasing power.

The Toroso Target Income Strategy tries to produce targeted yields, similar to owning individual bonds. By taking a barbell approach, the strategy’s higher yielding securities is meant to drive the majority of the yield and the low risk portion is conservative. Meanwhile, cash equivalents allow the portfolio to tactically increase allocations to higher yielding securities when markets permit.

Lastly, the Toroso Global Alpha Strategy is an equity ETF portfolio tries to outperform the MSCI All World Index (ACWI) while maintaining similar volatility. It employs smart beta and active strategies to include securities frequently absent or underweighted in traditional indexing in order to produce a high level of active share.

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