Five advisor-focused technology firms are seeing new model portfolios. WisdomTree announced it is adding “Modern Alpha ETF Model Portfolios” to model platforms at Carson Group, Orion, ETFLogic, Kwanti and Riskalyze as the ETF issuer grows its models business.
The “open architecture” models (meaning WisdomTree is including other ETF providers in its models) utilize active approaches and cost between 20 and 40 basis points, while waiving the strategist fee, according to Tom Skrobe, head of advisor solutions at the firm. The decision to announce partnerships with five firms at once was an effort to emphasize how focused on the model portfolio business the firm is, he added. The partnerships have all been in the works for a “few months.”
“The model space is exciting, period,” Skrobe said.
Indeed, ETFLogic launched its model marketplace in April, in its quest to become “an all-in-one portfolio analysis tool,” said Scott McKenna, marketing and sales director at the firm. Working mainly with independent advisors, the firm partnered with WisdomTree as the first ETF issuer to join its platform, said McKenna. This has since expanded to include Wilshire and Fidelity as partners too.
Orion is including the model portfolios on its Communities feature. The partnership with WisdomTree comes down to the gaps in products that Orion identifies on that platform, combined with where Orion thinks advisors will be going, said Rusty Vanneman, chief investment officer of Orion Advisor Solutions.
“We’re bullish on open architecture,” said Vanneman, who added that WisdomTree’s framing of its model portfolios as “modern alpha is super clever,” because the products are so similar to those built around factor-based smart beta strategies.
“Portfolios built using open architecture tend to perform better over time,” he said.
Christophe Gauthron, founder and CEO of Kwanti said that while his platform is “agnostic” in terms of providers, he expects to see more model portfolio providers using ETFs in similar fashion to WisdomTree going forward. Open architecture is not a huge trend at the moment, he said, but it’s still early and if advisors continue to demand diversification in the fund issuers included in model portfolios, the market will provide those solutions.
Riskalyze also cited market forces, specifically home-office demand, for including WisdomTree on its “Partner Store.”
For its part, Carson had specific objectives it wanted to accomplish with its models and had a “strong collaboration” with WisdomTree, said Skrobe. Carson did not clarify those objectives in time for publication.
WisdomTree expects to add its model portfolios to new platforms in the near future, as well as develop new portfolios. “We have a robust and rigorous institutional investment process, we are yielding model portfolios that address challenges for advisors and their clients and we build an extensive advisor support platform that advisors have gravitated toward to help grow their business and service clients,” concluded Skrobe. “WisdomTree is emerging as a major player in the third-party model space.”
