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September 13, 2016 at 08:26 AM
Baby boomers, take heart: investing for and going into retirement has gotten easier—and mostly cheaper—in part due to ETFs and technology.
This was one theme retirement fund experts voiced during a panel at the Morningstar ETF Conference in Chicago.
Scott Kubie, chief investment strategist with CLS, which has $7 billion in assets—mostly in 529 plans and 401k funds—pointed out no matter what people say they are saving for, “everyone is investing for retirement.”
Will McGough, vice president of portfolio management of Stadion, which has managed retirement plans since the 1990s, said his firm launched a new plan called StoryLine, which is “robo-like” by allowing investors to choose from “glide paths” on screen to tighten their risk profile.
Bob Smith, co-founder, president and CIO of Sage, which has $12 billion AUM, said he certainly believes ETFs have a role in retirement planning, for example in cash balancing, one of the fastest growing areas.
Morningstar’s Christine Benz moderated the session, asking whether cost was the rationale for ETFs in retirement planning when index funds might accomplish the same.
Kubie answered that when CLS does its risk budgeting on a portfolio, “ETFs tend to have strong history; a steady methodology, even if it’s a quantitative or a smart beta strategy, that gives us a greater degree of confidence on how much risk we’re taking on in the positions.”
He said CLS liked ETFs too because of the democratization they brought to the market. “ETFs are the best place to get access to a very wide number of asset classes that weren’t available before…having these tools makes ETFs more attractive [and makes] managing the risk more precise.”
Smith agreed: “It levels the playing field, unequivocally. It gives [participants] access to market areas they’ve never had before, such as commodities, real estate, etc., but you must be able to scale. What I can do for a $50 million institutional client, I must be able to do with a $50,000 client. That’s the beauty of ETFs: I can scale that.”
