Displaying items by tag: model portfolios

While model portfolios, of course, help pare down some of the labor inherent to the analysis of all investment positions, some advisors, nevertheless, outsource some – or all – of the investment management responsibilities by tapping third part model portfolios, according to flexshares.com.

Unlike funds, among other traditional investment vehicles, external solutions like third party portfolios provide financial advisors leeway over a gambit of aspects of managing a portfolio. They include  underlying holdings, asset allocation, rebalancing frequency, and trading.

“Advisors are typically seeking a holistic, cost-efficient, outcome-oriented solution from a trusted brand. Our models seek to provide a robust framework to navigate global markets and offer a straightforward means to help advisors build scale, enhance client service and satisfy regulatory expectations,” according to Melinda Mecca, director of Investment Solutions, Northern Trust Asset Management.

Also referred to by some RIA in the industry as the separately managed account, they’re used by investment advisors for accounts with higher AUM or asset under management, according to  synertree.io.

Now, trade and asset allocation decisions are beyond the wheelhouse of an RIA, but should have the chops to know the product without in extensive insight into each security within the model portfolio, the site continued.

Potomac Fund Management’s model portfolios are reaching a larger audience as its strategies are now available on the FMAX and Amplify platforms. FMAX stands for Fidelity’s Managed Account Xchange, which is an investment platform that connects advisors to portfolio construction solutions. Amplify is another wealth management platform that provides advisors with portfolio and client solutions. This follows a recent announcement by the company that its strategies had launched on the Orion Portfolio Solutions platform. The demand for strategy diversification has skyrocketed as advisors deal with the current bear market. The downturn has led advisors to embrace multiple strategies to build and preserve wealth for their clients. Potomac’s strategies are designed to “win by losing less” which may help financial advisors build portfolios to help protect against market risk. The company’s suite of model portfolios allows advisors to match the right strategy to each investor’s needs.

Finsum: Potomac Fund Management’s model portfolios, which help advisors diversify against market risk, are now available on more platforms.

Made up of a diversified group of assets built to generate an expected return, model portfolios also come with risk, according to smartasset.com.

With your financial goals squarely in the cross hairs, a host of portfolios typically are offered by financial advisors or investment managers. With these portfolios, investors can leverage simple and effective investment methods under minimal management, the site continued. 

Certainly, it seems, the popularity of model portfolios is hardly lukewarm. Within the landscape of the financial product distribution landscape, among advisors, their burgeoning use carries formidable power, according to brainbridge.com.

These portfolios, over time, are automatically rebalanced based on evolving market conditions or client needs. According to MMI, these models always have been a linchpin of the $6.5 trillion advisory solutions industry. Most prominently, they’ve played a big role in packaged mutual fund advisory programs, the site stated. That’s where discretionary investment management is outsourced by an advisor to an internal investment committee/research team at a distributor.

Creating the portfolio evolves around a plethora of decisions, according to forbes.com.

Through diversification, a model portfolio positions you to hedge your risks.  

In an ideal world, the brains behind the portfolios are financial advisors. Their role’s to oversee the portfolios daily, allowing you, the customer, to be hands off.

Financial Advisors are spread thin when it comes to the services they provide and are increasingly turning to outsourcing the investment management practice to concentrate on client relations. Many advisors are being increasingly tasked with tax planning and strategy, estate planning, lifestyle management, charitable planning, and college funding and need to free up time for these activities. On top of that RIAs need to actually grow their clientele which means they need to utilize portfolio construction technology like model portfolios to build on their clientele. A good tip to look for when searching for an outsourcing provider is if they provide high-frequency analysis for you and your clients.

Finsum: Models are a great way for advisors to leverage technology while upping contact with their clients. 

Vanguard is expanding their model portfolio selection for their ‘LifeStrategy’ brand on two fronts an MPS Classic and MPS Global. The MPS will have a total of five model portfolios which will be based in index funds giving a variety of risk preference choices to investors. The least risky models have a 20% equity exposure while escalating all the way to 100%. The MPS will definitely favor UK investments in both bonds and equities, but the global funds will be strictly a market cap weight. Vanguard is hoping the development of more model portfolios will deepen their relationship with financial advisors, by giving them better options to suit their end clients needs.