Displaying items by tag: model portfolios

According to a recent ThinkAdvisor article, 2022 is expected to be another record-setting year for launches and fund flows, mostly actively managed ETFs. Interestingly, RIAs are seen introducing their own ETFs, based on their proprietary investment models.

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BlackRock shook up the investment world when he declared global capitalism would make it easier to find a green-way forward. However, it is black rocks model portfolios that really piloted the ESG plane. BlackRock inserted ESG right in the middle of the model portfolios which give many investors easier access to sustainability, and some became ESG investors without even trying to. This vision is what made ESG become the fastest growing investment trend by giving it to clients in a pre-packaged easy to invest format. However, ratings are suggesting some green-washing as 154 of the 155 companies in the S&P 500 don’t actually site emissions reductions as a factor, so BlackRock has crept in on owning lots of fossil-fuel guzzlers like Chevron and Exxon.

FINSUM: Biden admin might want to step up the regulation if it wants to hamstring the greenwashing on Wallstreet.

Model portfolios are being adopted by advisors at lightening speed, and that is turning itself into one of the fastest growing asset classes. This year model portfolios upped their holdings to $4.9 trillion, almost a 29% increase from the prior year. Companies like BlackRock have really leveraged model portfolios to fight inflation and changes to their portfolios yielded billions in inflows earlier this year. They aren’t just used to hedge against inflation they are being used to pick out ‘fallen angel’ corporate bonds which have a chance to ditch their junk bond status. Model portfolios allow for these tweaks which can more rapidly adjust to the macro changes in the economy.

FINSUM: Model portfolios give investors wider access to more quantitative methods which can outperform in the more volatile times like we are in now.

2021 has posed its fair share of risks to the average portfolio: emerging market disruption, Covid-19 resurgence, slowing economic growth, and rising inflation. However, model portfolios are the solution advisors can utilize to mitigate this risk. Often sought after for their ability for advisors to utilize in order to spend time deepening relationships with clients, a suite of model portfolios have popped up targeted to mitigate risks. For example, EQM Capital launched a variety of modular model portfolios that are risk-based ETFs to better suit clients’ portfolio objectives and preferences.

FINSUM: Model portfolios are expanding and changing in a variety of ways, and this means they can better suit their clients whether that's for their risk level or ESG expansion.

(New York)

Morningstar has added a lot of coverage to their model portfolio universe this year. Earlier in 2021 they expanded their coverage of ratings to 1500 model portfolios, an increase of 50%. Of all those funds reported on, only two of them took home their coveted gold rating: the Vanguard CORE series and the BlackRock Target Allocation ETF. Vanguard was noted as having highly diversified index funds and rarely making portfolio changes. Other funds that got acclaim, such as their silver rating, include American Funds Growth & Income and the American Funds Tax Aware Growth & Income series.

FINSUM: The world of model portfolios has grown nearly as dizzying as that of ETFs so these Morningstar guides are a big help.