Folio Institutional launches model portfolio service

Folio Institutional has rolled out a service that allows its RIA clients to tap into model portfolios run by other advisers who hold assets in custody at the firm.

The Model Manager Exchange has an initial group of 150 model portfolios from 35 financial professionals.

Folio initially is offering the exchange as a free service for all its 375 registered investment advisers, as well as the dozen broker-dealers who use its platform.

The firm doesn’t disclose assets run under the models, but Folio spokesman Mark Bagley said that 45 to 50 advisory firms have signed up to use portfolios run by other advisers since August, when the firm did a soft launch of the exchange.

“We expect that number to swell now that we’ve had the public announcement,” he said.

Many advisers who have their assets in custody at Folio were already doing subadvisory work for other advisers, said Greg Vigrass, Folio Institutional’s president. On the flip side, many advisers “were looking to use a subadviser or looking to outsource [investment management] to other entities,” he said, so the exchange “seemed like a natural fit.”

Mr. Vigrass said that the strategies used by Folio advisers run the gamut from traditional equity allocations to quant models, aggressive tactical models and income-producing strategies. Folio doesn’t disclose the assets that it has in custody, but the amount is in the “multibillions,” he said.

Parent company Foliofn Inc. was founded as an online discount brokerage in 1999 by Steven Wallman, a former commissioner at the Securities and Exchange Commission. The firm formalized its institutional business about seven years ago.

Mr. Vigrass said that assets held in custody by advisers now amount to about 75% of the firm’s total.

E-mail Dan Jamieson at [email protected].