Displaying items by tag: asset management

Assets in model portfolios grew by nearly 50% over the last 2 years. By fully or partially outsourcing the investment management function, it frees up more time for advisors to focus on building their practice, client service, financial planning, and prospecting. According to a recent survey from Cerulli, 12% of advisors are using model portfolios primarily, with 22% using a hybrid approach. 

In addition to benefiting advisors, model portfolios have become a major distribution channel for asset managers such as Blackrock. Among asset managers, Blackrock has the most assets in model portfolios at $84 billion. Blackrock anticipates model portfolio assets exceeding $10 trillion within the next 5 years, more than doubling from $4.2 trillion currently. Model portfolios comprised 50% of flows from US investors into iShares ETFs last year.

WisdomTree is another major beneficiary of the boom in model portfolios. Last year, the company saw a 100% increase in the number of advisors using its model and had asset growth of 40%. It sees model portfolios as a ‘key growth driver’ for the firm in the coming years.

As model portfolios become a larger presence in wealth management, there will be large shifts of flows in and out of various ETFs depending on decisions made by asset managers. For instance, JPMorgan found that ETFs that were held in its model portfolios had significantly more inflows than ETFs not in model portfolios, at $80 billion vs. $30 billion. 

Finsum: Model portfolios are forecast to exceed $10 trillion in assets within the next 5 years. They are becoming increasingly integral for advisors and asset managers. 

The financial industry’s not just casually tweaking its monthly expense reports and wolfing down popcorn, watching as things unfold, you know.

On contraire. As it sachets toward holistic wealth management and “goal based” planning, the industry recognizes the importance of acquiescing asset management to third party strategists has mounted, according to wealthmanagement.com.

Meantime, the need to accomplish that mission is spiraling. While advisors within larger firms already can access model portfolios, now, additional options are available to their counterparts.

And, hey, model portfolios tout more than a few advantages.

For example, there’s ease of use. “Model portfolios can be used as a complete solution for investors that prefer a hands-off approach to achieving their investing objectives,” said Colby McFadden, CEO of Quiver Financial, an Investment Advisory Firm in San Clemente California, according to forbes.com.

Another: diversification. The need for a thick wad of money to pluck down on multiple asset classes? No need, said Mark Kennedy, president of Kennedy Wealth Management in Calabasas, Calf. Some can have a minimum as low as $10,000 to start.”

Interest in directing indexing’s, well, titan

Direct indexing has drawn the attention of the titans of the asset management industry – and the reasons are obvious, according to wealthytrails.com.

Do tell.

Will do. There’s been a steady erosion of the fee management of mutual funds and exchange traded funds stemming from the escalation of ETFs themselves. Room is scant for addition products with more than 2,000 US ETFs and 5,000 US equity mutual funds, based exclusively on a universe of just 3,000 stocks. There’s a search for new revenue generating business areas by the industry. What’s more, interest by clients in customized portfolios, which is burgeoning, is on the radar.

Asset managers, shucking aside a commingled vehicle, execute direct indexing on the behalf of clients by assuming positions reflecting a representative samples of underlying index constituents, according to impactinvresting.com.

What does this approach yield? Customization, which abets flexibility. That includes pinpointing the index to track and exposures to circumvent -- or avoid – and potential tax advantages. That way. You can opt for the actual ingredients and directly call the underlying equities your own. Consequently, you don’t have to make purchases elsewhere.

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At Magnifi, we are breaking through those “roadblocks” the same way Uber has. We understand it can be challenging in today’s crowded markets, our revolutionized platform, which produces over 300k search results each day, provides you with a unique opportunity to stand out with both financial advisors and individuals to drive sales and strengthen advisor relationships.

This email address is being protected from spambots. You need JavaScript enabled to view it. today to further discuss how Magnifi can generate 50,000 search results for your fund each month!

Model Portfolios got some widespread skepticism thrown their direction when a group of academics wrote a paper criticizing their usage. The points centered around conflicts of interests and the fee structure. However, model portfolios are templates for investing and so their optimization might not be the ‘perfect’ formula for everyone. Additionally, of course funds are going to include their own products in model portfolios (even if they have higher fees), because they believe their products are superior. In fact, funds would be violating their fiduciary duty if they didn’t honestly think their own ETF was a better product at a slightly higher fee structure.

FINSUM: Cherry picking better-performing portfolios after the fact is an unfair advantage; many model portfolios have different risk factors.