Supergrowth for model ETFs — but advisers behind the curve

Massive increase in assets since 2008; more complicated offerings cow some

May 24, 2012 @ 12:03 pm

By Jason Kephart

ETFs
+ Zoom

It seems that the only thing growing faster than the exchange-traded-fund industry is the model-ETF-portfolio industry. Assets in model portfolios with at least three-quarters of their investments in ETFs have grown to $46 billion, a 650% increase from 2008.

BlackRock Inc.'s iShares business, the largest provider of ETFs, projects that assets in model ETF portfolios will continue to rise as retail investors seek out alternatives to traditional long-only strategies. The models also help professionals make the best use of ETFs as portfolio construction tools. Assets could hit $120 billion by 2015, according to iShares.

“Advisers have to either be the expert or find one,” said Sue Thompson, head of iShares' RIA Group. “As the ETF landscape has gotten more complicated, not all advisers feel comfortable building their own portfolios.”

It really is the portfolios, not the use of ETFs, that's drawing advisers in. iShares counts more than 100 today, up from 25 in 2008, and they are overwhelmingly tactically driven by macro calls. More managers are making ETFs the preferred tools for their models because they allow quick movement in and out of the market and they have ability to buy large swaths of assets in a single purchase.

“When you're building a global-asset-allocation portfolio, the best ammo is ETFs,” said John Forlines, chief investment officer at Forlines Global Investment Management.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

Fireside chat with new firms at Fuse

Fuse continues to attract new fintech firms to the event every year. Hear directly from the newcomers of Asset-Map and Quik! as to why they chose to attend.

Video Spotlight

Are Your Clients Prepared For Market Downturns?

Sponsored by Prudential

Video Spotlight

Path to growth

Video Spotlight

Path to growth

Latest news & opinion

Massachusetts blasts SII over nontraded REIT sales

Securities regulator says SII Investments failed to supervise agents over suitability.

Top 10 financial firms ranked by investor satisfaction

Find out which firm took the top slot for overall investor satisfaction for the second year in a row.

What not to say to clients when the markets drop

Here's what advisers should steer clear of saying the next time stocks turn downward.

SEC bars former rep for alleged share price manipulation

George Thoreson tried to keep penny stock's price high to enable Nasdaq listing.

Nevada fiduciary law raises concerns among retirement professionals, brokerage industry

Critics complain that it conflicts with ERISA and SEC rules and has potential to spur other states to pass their own version of a fiduciary rule.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print