Displaying items by tag: models
A new breed of end to end third party operating models could provide handsome cost savings, spawn new and innovative business models and stoke up new streams of revenues, according to bcg.com. That outlook’s based on a new report, titled Scalable Tech and Operations in Wealth and Asset Management, by Boston Consulting Group and FNZ, a global end to end wealth platform.
“Wealth and asset managers are faced with a myriad of challenges, and it’s clear that partnering with end-to-end third-party operating models can yield benefits and create competitive advantage if done right, despite running counter to certain long-established practices,” said Akin Soysal, a BCG managing director and partner and coauthor of the report.
"Customer demands for personalized wealth solutions are steadily rising along the value chain, requiring wealth and asset managers to make further investments," noted Din Mustaffa, group chief strategy officer at FNZ, according to finance.yahoo.com. "It's important to note that while most of these changes will require technology as an enabler, operating models will also need to be adjusted to navigate the shifting landscape in a cost-effective manner."
According to survey findings published by Natixis Investment Managers, fund selectors are enhancing their model portfolio offerings. Natixis surveyed 174 investment professionals in North America who are responsible for their firms’ top-of-the-house selection of funds into which $18.7 trillion in client assets are invested among private banks, wirehouses, registered investment advisors, independent wealth managers, and other advisory firms. The findings are part of a larger global survey of 441 professional fund selectors, which was conducted in December 2022. Based on the survey results, fund selectors are enhancing their offerings because model portfolios help to streamline the investment management process (86%), enable advisors to spend more time addressing client needs (82%), and help to ensure a consistent investment experience for clients (77%) while managing risk exposure for the firm (78%). They also agree that heightened market volatility is accelerating advisors’ use of model portfolios (65%), while models enhance the alpha potential for their clients (62%). The survey also found that 58% of fund selectors are finding a greater need for specialty models to complement the core models that advisors use for building client portfolios. The types of specialty models include models with enhanced customization tailored to high-net-worth clients (46%), models with a focus on alternatives (42%), income generation (43%), tax management (38%); sustainability (34%), and thematics (28%).
Finsum:Based on the results of a Natixis survey, fund selectors are enhancing their model portfolio offerings to help to streamline the investment management process, and enable advisors to spend more time addressing client needs, while managing risk exposure for the firm (78%).
Advisors have been rapidly increasing their use of model portfolios to better address clients' needs. More astounding is that despite market volatility their inflows are up over $350 billion in the last nine months. Morningstar launched a list of their best model portfolios and taking the top of the list was BlackRock's long-horizon ETF with a Gold rating. Shortly after was BlackRock Target Allocation ETF, and then a slue of Vanguard models. Core, CRSP, Russel, S&P, and Tax-Efficient Vanguard portfolios also got the highly touted gold rating from Morningstar. They also praised BlackRock's team and their highly respected research processes. These are all great options for those who want to add models.
Finsum: Target date funds are some of the most intuitive models for clients and the easiest to implement.
It would be an understatement to say BlackRock has been a leader in ESG the last couple of years but the tides could be turning. There have been massive outflows from ESG in the month of May which has been unusual given the asset classes' widespread popularity where they topped $3.5 billion. BlackRock has been the main source of outflows from IShares ESG Aware MSCI EM and other popular funds. BlackRock has cut two of iShares most popular funds from seven of their ten models. This is potentially a huge blow, as it could signal the firms changing stance in ESG or it could just be smoke and mirror as asset allocations normally change. ESGs inclusion in many model portfolios has been key to its growing popularity.
Finsum: Are ESG investors really so skittish with the tightening in the economy; the long-term prospects for ESG still seem overwhelming.
Some advisors think of model portfolios as a tool for advisors that is rigid: a pre-selected allocation not to be tampered with. However, the model portfolio’s true advantage is that it brings an element of customization. This varies based on how an advisor implements the options, but overall because investors own the underlying asset, unlike a mutual fund they can add/drop for customization. This gives investors an edge for tax loss harvesting or tweaking to add a growth stock for example. To add to that models are relatively fee efficient particularly when it comes to their mutual fund counterparts while bringing most of the same options.
Finsum: A model portfolio can also be selected for its inherent traits as well and provide advisors with more flexibility than they are perceived to have.