ETF managed portfolios AUM up strongly, reports Morningstar

Jan 9th, 2018 | By | Category: Alternatives / Multi-Asset

Investment research firm Morningstar has published the latest instalment of its ETF Managed Portfolios Landscape Report. The report, which covers the third-quarter of 2017 and tracks 1,093 strategies from 179 US-based firms, found that total assets under management in the ETF managed portfolios segment increased by 7.5% in the period to $115.0 billion.

ETF managed portfolios AUM up strongly, reports Morningstar

Vanguard retained the top spot with more than $9bn in ETF managed portfolios.

ETF managed portfolios are investment strategies that typically have more than 50% of portfolio assets invested in exchange-traded funds. According to Morningstar, these portfolios represent one of the fastest growing areas of the managed-account universe.

Some $4bn of the quarter-over-quarter increase in assets was driven by the addition of new investment strategies to the Morningstar database. Goldman Sachs Asset Management made its debut during the quarter, reporting six ETF model portfolios, and Invesco, the parent firm of the PowerShares ETF brand, added 68 strategies to its stable of ETF strategies. Many of them feature the firm’s new PureBeta ETFs – plain-vanilla, cap-weighted funds targeting core asset classes.

Organic growth in existing strategies contributed the remaining $4bn in incremental assets over the three-month period. Assets overseen by the 25 largest firms increased by nearly $6.2bn during the quarter. BlackRock experienced the greatest quarter-over-quarter growth, as assets in its strategies increased nearly $1.3bn.

Vanguard retained its position at the top of the mountain with over $9.1bn in AUM across 44 strategies, having grown its AUM by $404 million over the quarter.

The other firms in the top five by AUM include Windhaven ($8.0bn across three strategies; q-o-q growth of $53m), BlackRock ($7.2bn across 31 strategies; q-o-q growth of $1.2bn), RiverFront ($6.3bn across 16 strategies; q-o-q growth of $344m), and State Street Global Advisors ($5.6bn across 11 strategies; q-o-q growth of $69m).

Morningstar once again notes that advisor demand contributed significantly to growth, as greater adoption of fee-based advisory models continues to tilt portfolios toward lower-cost, broad-based investments with a focus on asset allocation, for a larger part of client portfolios.

Five of the 20 strategies with the largest quarter-over-quarter increases in assets were plain-vanilla stock/bond strategic asset-allocation portfolios. According to Morningstar, this marks a continuation in the shift of investor preferences in this space that was spurred by the implosion of a handful of high-flying tactical strategies just a few years ago.

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