The Model Portfolio Marvel: Bundled Products Are Taking Off | ETF Trends

Model portfolios are efficient avenues for advisors to deliver broad-based, cost-effective exposure across many asset classes. In the financial community, the concept of these bespoke allocations is taking off.

Exchange traded funds make for ideal foundations for model portfolios and as such, many ETF issuers are among the biggest names in the model portfolio segment. WisdomTree is part of that group as its Modern Alpha series of model portfolios features one of the deepest benches in the industry.

Broadridge Financial Solutions Inc. calculates that these model portfolios now account for $3 trillion in assets under management as of the end of the first quarter, with a significant chunk in ETFs, which have been a go-to investment vehicle for their cheap and efficient nature. More growth is expected for model portfolios.

“Model portfolios are the latest example of the growing influence of bundled financial products on modern markets,” reports Dawn Lim for the Wall Street Journal. “Financial advisers typically use model portfolios to meet investors’ goals quickly, rather than building a portfolio specifically for that person. They can sometimes override the preset investments.”

Unique Flavors and ETF Pre-Packaging Have Their Perks

The boom reflects the increased demand among financial advisors to streamline their businesses to allow for more time with clients since these pre-packaged portfolio strategies save time on investment allocations.

For its part, WisdomTree offers some of the most unique model portfolios on the market, including concepts mirroring endowment strategies, fresh approaches to the 60/40 split, and a new model portfolio emphasizing disruptive growth investments.

Advisors looking for a new way of accessing technology investments can consider the Disruptive Growth Model Portfolio.

“The WisdomTree Disruptive Growth ETF Model Portfolio targets structural growth themes that are believed to drive innovation across different industries and segments of society in the future,” according to the issuer. “The themes and affiliated ETFs selected for inclusion will typically have above-market growth projections. The model portfolio seeks maximum long-term capital appreciation and may include both WisdomTree and non-WisdomTree ETFs.”

Increasing the allure of WisdomTree’s model portfolios offerings is the fact that nearly all of the ETFs across the firm’s model portfolios, including funds from other issuers, are established, liquid funds.

“Investor advocates warn that the multitrillion-dollar force comes with risks for consumers. Firms in the model-portfolio business face few regulations when it comes to reporting performance to potential clients. Some models contain unproven fund,” writes the Journal.

For more on how to implement model portfolios, visit our Model Portfolio Channel.

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.