While the core/satellite strategy has been useful in the past for growing ETFs, the time has come to change the way ETFs are marketed, says a new study from Financial Research Corp. (FRC). Increasingly sophisticated investors with diverse needs and a demand for downside protection mean that one-size-fits-all marketing is no longer adequate.
The study, “ETF Trends: Insider Insights on Distribution, Portfolio Construction, Risk & Regulation,” shows that some firms are working harder to define their target audience, while others are focusing on the client and behavioral characteristics.
Bob Jenkins, president of FRC, said in a statement, “In our interviews with industry leaders, we learned that the core/satellite approach has proven to be an effective way to introduce investors to ETFs. One important finding from our research, however, was that the terms ‘core’ and ‘satellite’ had different meanings to different people. ETFs and mutual funds are now used in both core and satellite, and so are active and passive strategies. RIAs are also blending strategic and tactical approaches, due to client demand for downside protection.”