Displaying items by tag: model portfolios

Tuesday, 07 November 2023 02:48

Model Portfolio AUM to Reach $10 Trillion by 2028

In an interview with Bloomberg, Salim Ramji, Blackrock’s global head of iShares and index investments, spoke about the growth of model portfolios, and why he believes that assets under management (AUM) are projected to more than double over the next 5 years from $4.2 trillion to over $10 trillion.

Ramji commented that “It’s going to be massive. 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. It’s really just changed from being a cottage industry to being something that’s a real force for every fiduciary wealth adviser in the United States.” 

Model portfolios are typically composed of ETFs and other funds that are bundled into pre-built strategies. An indication of the growth of model portfolios is that changes in allocations can be seen in trading volumes and fund flows data. For iShares, model portfolios comprise more than half of flows, while they accounted for a third of flows 2 years ago. The company expects similar traction for model portfolios in its international markets as well.

Blackrock’s bullishness on model portfolios is noteworthy as it is the largest asset manager in the world with $9 trillion in AUM and also the largest ETF issuer. 


Finsum: Blackrock is forecasting that assets under management for model portfolios will exceed $10 trillion over the next 5 years. 

 

Published in Wealth Management

Natixis Investment Managers conducted a survey with CoreData Research of more than 11,000 global investors in March and April of this year. It found that individuals invested in portfolios overseen by professional asset managers had less stress, were more trusting of advisors, and more financially confident. 

 

Overall, the survey revealed that only 11% of model portfolio investors were stressed, while 23% of non-model portfolio investors were stressed. Additionally, 45% of model portfolio investors were confident about their finances while only 24% of non-model portfolio investors were. 

 

The survey also revealed that 78% of model portfolio investors saw volatility as an opportunity. In contrast, only 47% of non-model portfolio investors felt the same. 70% of model portfolio investors felt that inflation meant it was time to invest more, in contrast to 40% of non-model portfolio investors. 

 

For advisors, it’s particularly relevant that 97% of model portfolio investors trusted their financial advisors when making decisions in contrast to 73% of non-model investors who said the same. 

However, only 51% of wealth managers and advisory practices in the US plan to offer third-party model portfolios. 

 

The survey also revealed that model portfolios free up time for advisors by outsourcing portfolio management. This means more time for client services, financial planning, and prospecting. 


Finsum: Natixis conducted a recent survey about model portfolios. Here are some of the major findings.

 

Published in Wealth Management
Tuesday, 24 October 2023 07:02

Finding the Right Model Portfolio

Model portfolios can help many financial advisors save time and focus more energy on their clients. They are based on the research, experience, and work done by asset managers and have been shown to offer better performance with less volatility during periods of market turmoil. 

 

The category is rapidly expanding with 18% growth over the last 5 years and expectations that total assets will exceed $10 trillion over the next 5 years. These offerings can also be customized according to every client’s circumstances. 

 

In terms of the best way to introduce model portfolios to clients, WisdomTree’s research shows that the best results are with smaller and tax-exempt accounts, where there may be less hesitancy when it comes to trying a new approach. 

 

The research also indicates that younger clients who are more open to risk will be quicker to embrace model portfolios. In contrast, clients who are closer to retirement age are less likely to change course. However, more than 50% were willing to use model portfolios if properly explained. 

 

The research also suggests that clients will be more willing to use model portfolios if the experience and credentials of the asset manager are emphasized.


Finsum: Model portfolios offer many benefits to advisors. The primary one is it frees up more time for client service. 

 

Published in Wealth Management
Wednesday, 18 October 2023 11:23

Model Portfolios Free Up Time for Client Services

Often, there is a mismatch between how an advisor spends his or her time, and what drives ultimate success for the practice. By embracing technology and model portfolios, advisors can free up more time to invest in activities that build their business such as client service, marketing, and prospecting.

 

Surveys show that client retention and satisfaction are ultimately linked to frequent communication. However, many advisors are spending a chunk of their time managing portfolios and researching investment ideas. In fact, some research indicates that advisor-managed portfolios underperform especially in more volatile markets. 

 

Now, there are increasingly more complicated and sophisticated investment options which increases the burden on advisors and further compromises client services. With model portfolios, advisors can outsource large parts of the process such as research, portfolio management, and onboarding while providing more options and better performance. 

 

By outsourcing this function, advisors can also reduce costs and create greater efficiencies. Model portfolios can also help in other areas such as tax management which is another priority for clients. By centralizing information, it can identify opportunities across portfolios and lead to a more personalized experience. 

 

Ultimately, model portfolios are a way for advisors to leverage technology to drive better outcomes for their clients and business while creating a more efficient practice.


Finsum: Model portfolios offer many benefits to advisors. The primary one is it frees up more time for client service. 

 

Published in Wealth Management
Wednesday, 18 October 2023 11:03

Strive Asset Management Moves Into Model Portfolios

Strive Asset Management, the upstart asset manager which was founded by Republican presidential candidate Vivek Ramaswamy, is launching its own model portfolio offerings. Strive is seeking to compete with Blackrock and Vanguard by solely focusing on economic factors when it comes to investing rather than also accounting for non-economic factors like ESG.

 

Strive’s model portfolios would also have the same investing and voting style as its funds. In its filing, the company said, “Strive engages in advocacy intended to encourage public companies to focus on economic factors in maximizing value for shareholders. This may include submitting or supporting shareholder proposals at public companies, advocating for changes in management or corporate structure at public companies, and a wide variety of corporate and/or public engagement.”

 

Its model portfolios would use existing Strive ETFs and one third-party ETF. In terms of fees, Strive would only receive its ordinary ETF fees and not charge any additional fees for its models. Currently, the asset manager has launched 11 ETFs with expense ratios between 5 and 49 basis points.

 

As of last month, these 11 ETFs had just over $1 billion in assets. The company aims to appeal to conservative-minded investors who are turned off by focus on ESG and other non-economic factors when it comes to investing and shareholder initiatives.


Finsum: Strive Asset Management is launching model portfolios as it looks to compete and take market share away from more established asset managers.

 

Published in Wealth Management
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