Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > Mutual Funds

ETF strategists eye tactical asset allocation

Your article was successfully shared with the contacts you provided.

A preference for tactical asset allocation strategies is the chief factor fueling advisors’ interest in exchange-traded funds, according to a new report.

So reveals Cerulli Associates in an August survey of U.S. monthly product trends. The survey examines changes impacting mutual funds, exchange-traded funds (ETFs), money market funds and new products.

More than eight in ten (82 percent) of the respondents rate “advisor appetite for tactical allocation” as a “large driver” of growth in the ETF space. In contrast, fewer than 60 percent of respondents rate the six other factors examined as a major driver.

Among them:

  • Advisor push to outsource portfolio allocation (58 percent);
  • Advisors appetite for ETF exposure but unwillingness to trade ETFs themselves (46 percent);
  • Low fees relative to other providers (45 percent);
  • Superior performance by ETF strategists (37 percent);
  • Inclusion in home-office controlled portfolios at broker-dealers (24 percent); and
  • Educational efforts by ETF sponsors (23 percent).

By channel, the report adds, fund providers distributed more than a quarter (28 percent) of ETF strategy assets in 2012 through the independent broker-dealer channel. ETF strategy assets also found traction among:

  • Wirehouses (21 percent);
  • Regional broker-dealers (16 percent);
  • Third-party vendors (15 percent);
  • Registered investment advisors (14 percent);
  • Direct channels (2 percent);
  • Bank broker-dealers (2 percent); and
  • Bank trust/private client groups (2 percent)

The survey observes also that more than two-thirds of ETF strategists (68 percent) expect their growth to outpace that of the wider market.

“The ETF strategist space is still very much in the early stages of growth, the report states. “A few large firms, including Innealta Capital and RiverFront Investments Group, are drawing most of the assets and attention from advisors and platforms.”

As of July 2013, the report notes, ETF assets under management stood at 1.5 trillion. This compares with $10.2 trillion for mutual funds.

However, ETF assets in July grew at much faster clip, hitting a 6.6 percent gain for the month. In contrast, mutual fund growth topped out at just 2.6 percent.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.