Displaying items by tag: model portfolios

SEI is adding 3 new strategies to its lineup of model portfolios, using ETFs from Dimensional Fund Advisors. Now, SEI offers 24 model portfolios, encompassing a broad range of categories and styles. 

SEI launched its model portfolio offerings in 2022. Currently, the firm manages about $1 trillion in assets which include hedge funds, mutual funds, and separately managed accounts. As of June 2023, the firm had 7,400 independent advisors using its platform. 

In a statement, SEI said that the additional offerings would increase flexibility and help investors meet their objectives. It sees upside in combining SEI’s expertise in asset allocation and breadth of advisors with Dimensional’s fund management and research. 

Asset managers are increasingly boosting their model portfolio offerings for advisors. Currently, about $5 trillion of assets are managed by model portfolios with expectations that this figure will exceed $10 trillion by the end of the decade. 

Model portfolios give advisors and investors access to sophisticated strategies for minimal costs. It also allows advisors to spend less time on portfolio management and more time on servicing clients and growing their business. 

Finsum: SEI is adding 3 ETFs from Dimensional Fund Advisors to its model portfolio lineup. In total, SEI now offers 24 model portfolios to its advisors.

Category: Wealth Management; 

Keywords: #clients; #advisors; #model portfolios;

For Bloomberg, Nir Kaissar shares his thoughts on why Blackrock’s model portfolio business is lagging in terms of adoption, and why he believes this will continue. The purpose of model portfolios is to simplify the investing landscape for investors and advisors given the abundance of funds to build a portfolio. 

Now, Kaissar believes that there are too many model portfolios which is creating additional unnecessary complications for advisors. Some advisors will stick to model portfolios from a major asset manager like Blackrock or Vanguard given a strong brand name and lower costs. 

Currently, model portfolios account for about $4.2 trillion in assets, and this is expected to double over the next 5 years. While Kaissar sees this as a positive for investors due to lower costs and more transparency, he doesn’t share the industry’s optimism about the growth trajectory of model portfolios since many advisors don’t have a financial interest in recommending the product for clients. 

In fact, many advisors would be giving up revenue if they moved all their clients into model portfolios. This is also reflected in mutual funds having an average annual expense ratio of 1.3% per year,, while model portfolios’ average expense ratios tend to be between 0.15% and 0.3% per year. Given the incentives, Kaissar believes that growth in model portfolios will fall short of expectations.

Finsum: Model portfolios are a booming part of the wealth management industry. Yet for many advisors, the incentives don’t support full adoption.

Okay, now, stop drooling. Say what?

This: over the next five years, the model portfolio realm of money management’s expected to swell to a $10 trillion business by Blackrock Inc, according to finance.yahoo.com.

You say coaches are masters at plotting strategy? Well, in this care, the strategy, where asset managers and investment platforms gather packages that are ready made and sold to financial advisers, current is on course to expand from approximately $4.2 trillion according to Salim Ramji, global head of iShares and index investments at the asset manager.

“It’s going to be massive,” he said on Bloomberg Television’s ETF IQ. “It’s the way in which more and more fiduciary advisers are doing business, and, as a result, that’s the way in which we’re doing business with them.”

Also significant, when it comes to money management, plucking money into the model portfolio commands a special corner, according to advisorhub.com.

Blackrock, a plethora of competitors like Vanguard and Charles Schwab are reaping the benefits stemming from the popularity of bundling funds into ready made strategies. 

In RealMoney, Jim Collins, the founder and President of Excelsior Capital, discusses his DEATH model portfolio which bets against hype-fueled companies via short-selling and put options. 

The portfolio has a 74% gain over the past year, even managing to hold onto impressive gains despite recent strength in equities. It has a simple construction of 10 equally weighted positions. The guiding principle behind the company is to bet against shaky companies with lofty valuations. 

Some examples include Teladoc Health and SelectQuote which were among the best-performing stocks in 2020. However, this resulted in valuations that reached absurd levels. Collins believes that one factor in these stocks’ gains were inflows into Ark Investments’ family of funds as these were two of its largest holdings. Now, these stocks are falling back to Earth in terms of valuation and stock price, while Collins sees more downside. 

Collins believes that these short-selling opportunities emerge when analysts and fund managers stop applying basic principles of valuation to their holdings. He cites Peloton as an example given its massive valuation that was similar to a software company despite the company being in the business of selling exercise equipment which is historically a competitive, low-margin business. 

Finsum: Even with recent strength in equities, Jim Collins continues to see opportunity on the short-side. His DEATH model portfolio is constructed to bet against 10 of the most hype-fueled companies in the market. 

Talk about the quintessential utility player.

What can model portfolios do? The wind up and the pitch: by leveraging research, market insights and a deep well of experience, these offerings, crafted for clients by asset managers salted away time for advisors, allowing them steer the focus onto clients, according to etfdb.com.

That said, the questions hanging in the stratosphere, according to WisdomTree Investments research, is the way in which advisors, on behalf of clients, enter the terrain of model portfolios. Not only that, which clients will most enthusiastically embrace working with an advisor all in on the models.

“Smaller accounts” might be the way some advisors kick things off – or they might do so with tax exempt accounts. 

Meantime, scoop de jour: investing’s a tough enough nut to crack. Meaning you need every advantage you can leverage.

For example, socking money into a model portfolio means you’ll be packing the insights of indust4ry experts who not only know their stuff – but, heck, in all likelihood, they designed them, according to smartasset.com.

After all, prior to tabbing the assets for each portfolio, financial advisors and investment managers, for the most part, tap their analysis as professionals and deep will of research to generate investment strategies that show that detail’s king.