WMIQ: How Advisors Balance Passive, Active StrategiesWMIQ: How Advisors Balance Passive, Active Strategies
Indexed ETFs remain a top tool, but advisors report healthy usage of actively managed ETFs and mutual funds for equities and fixed-income allocations.
Active strategies are all the rage, especially when it comes to new launches in the ETF space. By all accounts, active ETFs have accounted for 70% of launches this year alone, and assets in active ETFs globally recently surpassed $1 trillion.
That aligns with the findings from a new study from WMIQ on behalf of Envestnet, Active & Passive Investments in Portfolio Construction: What Advisors Are Doing Now, which revealed that advisors are using a healthy mix of both passive and active strategies when constructing client portfolios.
Indexed ETFs (85%) topped the list of the most used products among respondents, followed by individual securities (80%) and then several active ETF and mutual fund strategies.
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In addition, respondents expressed a preference for the active management of taxable fixed income (39%), followed by U.S. equities (39%) and international equities (37%). Overall, just over a third of respondents said they prefer a balance of active and passive management.
Regarding portfolios mixing active and passive investments, 29% use passive funds for core positions and active funds for opportunistic allocations, while 28% use a combination of active funds, passive funds and individual securities. Additionally, 12% use active funds for core positions and passive funds for strategic allocations, while 7% use a combination of active funds and individual securities, 6% use passive funds for all allocations, 5% use a combination of passive funds and individual securities and 3% use individual securities exclusively.
The study also found that 72% of respondents use third-party managed models for at least some of their clients, but that usage varied by advisor type. Only 53% of RIAs reported using third-party managed models compared with 87% of hybrids and 78% of IBDs.
The survey was conducted in July by WMIQ. It received 438 completed responses.
