A new breed of advisors and asset managers, dubbed ETF Investment Strategists, has emerged, according to research from iShares, providing expertise in exchange-traded portfolio construction and trading to investors seeking outsourced model portfolios.
“The movement toward specialized ETF investment management represents a true sea change for the ETF market, as advisors increasingly recognize that ETF Investment Strategists can help decrease time spent on portfolio issues, create more time for building client relationships, and yield distinctive advisory value via their delivery of model ETF portfolios,” stated Sue Thompson, Head of iShares Registered Investment Advisor/Asset Management Group at BlackRock.
According to the research, 68% of the strategists surveyed use ETFs in all of their outsourced portfolio strategies and three quarters of the managers who viewed their businesses as successful held at least 50% of their total assets in ETFs; those with 80% or more of total assets in ETF outsourced investment management were twice as likely to exceed their expectations for their business.
The research indicates that the most successful firms have from four to six strategies available through two to three product structures, mostly separately managed accounts and unified managed accounts.
And 86% of respondents said that marketing and distribution were a significant challenge, in particular, how to establish their message with clients and influence them to take action.
As the trend gains momentum, iShares projects that ETF Investment Strategists could manage $120 billion in assets by 2015. iShares currently tracks $46 Billion in ETF assets from more than 100 managers and more than 200 strategies. This eclipses the 25 managers and $5.8 billion in total assets that the firm tracked in 2008, the year that it published its first Guide to ETF Investment Managers guidebook.
Conducted from March 27 to April 20, the iShares research initiative involved quantitative and qualitative interviews with 130 randomly selected firms with assets ranging from less than $50 million to greater than $5 billion.