As financial advisors become more accustomed to exchange traded funds, many are looking into ETF model portfolios in separate accounts to enhance their businesses and better help clients diversify to meet the challenges ahead.
“I think of this as a transformation going on in the industry, and it’s easy to understand why, right,” Sue Thompson, Head of SPDR Americas Distribution, State Street Global Advisors, said at the 2019 Schwab IMPACT conference. “You’re talking about advisors having a limited amount of time, and in fact, what they should be doing is spending more and more time talking to their clients, talking about life goals than having a model that is professionally provided by an investment manager. What a great way to actually get some scale in your business.”
State Street offers a range of ETF model portfolios, crafted by experts with each one designed and managed by the Investment Solutions Group. The strategies are backed by more than 90 portfolio managers, strategists and analysts, covering a range of investment outcomes to provide diversification opportunities across a variety of asset classes and risk profiles.
For example, the Strategic ETF Model Portfolios pursues optimal capital efficiency over a long-term horizon.
The Strategic Opportunities ETF Model Portfolios seeks to capture deviations in return profiles over an intermediate-term horizon.
The State Street Tactical Allocation ETF Portfolios seeks to capitalize on short- and long-term mispricing in the global equity and fixed income markets by overweighting asset classes that appear attractive and underweighting less attractive asset classes.
They also provide Outcome-Based ETF Portfolios that solve for a range of investor needs and desired outcomes, such as the State Street Global Allocation Target Risk ETF Portfolio, State Street US Equity Sector Rotation Target Risk ETF Portfolio, State Street Flexible Allocation ETF Portfolio and State Street Income Allocation ETF Portfolio.
Lastly, there is a Specialized ETF Portfolio that pursues targeted objectives with sophisticated strategies. The State Street Multi Asset Real Return ETF Portfolio seeks to provide thoughtful exposure to real assets, diversification and additional return by using State Street Global Advisors’ tactical asset allocation process to drive active positioning.
ETF managed portfolios are investment strategies that hold more than 50% of assets invested in ETFs and represented one of the fastest growing segments in the separate accounts space. Specifically, ETF managed portfolios typically offer three major investment themes: tactical, strategic and hybrid mix. The tactical offerings provide short-term plays to capitalize on investment opportunities that are forming, whereas the strategic play provides long-term allocation across sectors and asset classes. Additionally, the hybrid mix includes a combination of tactical and strategic elements.