Yield of Dreams

ETF Strategists Still the ‘Wild, Wild West’

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The ETF managed portfolio space now consists of 645 strategies from 150 firms and total assets of $86 billion. But it is still “the wild, wild west”—a fragmented and immature market, said Ben Johnson, director of global passive fund research during a panel at the ETF Virtual Summit.

Only three of those 150 firms control half of the assets in the space, and many of these firms started out as registered investment advisors, Johnson said during an ETF pundits panel at the summit, hosted by ETF Trends and RIA Database. These firms are “in uncharted waters,” and advisors should “proceed with caution,” he added.

These are high-turnover strategies, said Matt Hougan, president and global head of editorial at IndexUniverse. But the beauty of these strategies is that they can provide an institutional-style portfolio—something that is hard for advisors to build on their own. The hard part is, you have to find the institutional-quality strategists, Hougan said.

“There are performance-chasing yahoos out there.”

Todd Rosenbluth, senior director at S&P Capital IQ, said one problem with these strategies is that some may sound the same, but are actually very different. “Multi-asset income” is one example. Investors have to understand what they’re doing and whether the portfolio is right for them. 

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Casting a gimlet-eye on asset management issues.

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