Investment research firm Morningstar has published the latest instalment of its ETF Managed Portfolios Landscape Report. The report, which covers the first quarter of 2017 and tracks 950 strategies from 169 US-based firms, found that total assets in these strategies increased a whopping 17.6% over this period to $99.7 billion.
As of the end of Q1 2017, Morningstar reports that assets in ETF Managed Portfolios offered by US-based firms amounted to $99.7bn.
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.
The strong net gatherings of $14.9bn marks the fourth consecutive quarter of growth in the ETF managed portfolios space. Though organic growth in this space perked up after having stalled in the final quarter of 2016, Morningstar notes that approximately $8.8bn of the $14.9bn quarter-over-quarter increase in assets was driven by the addition of new strategies to Morningstar’s database.
The report notes a significant proportion of the remainder of asset growth was driven by the continued momentum being enjoyed by four of the five largest operators in the space. Vanguard, RiverFront, State Street, and BlackRock added a collective $2.3bn in assets to strategies that had been included in Morningstar’s database as of 31 December 2016. The three largest ETF providers now occupy three of the five top spots in the ETF Managed Portfolios league table.
Seven of the 20 strategies with the largest quarter-on-quarter increases in assets were 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.”
Global strategies, which account for about 36% of all assets in ETF managed portfolios, gained back some ground relative to their blended benchmark in the first quarter although the median strategy was still lagging its benchmark on a trailing one-year basis at the end of March.
Elsewhere, US equity strategies are getting left in the dust. The median strategy in the category has lagged the Morningstar US Market Index over the trailing one-, three-, five-, and 10-year periods. The median strategy’s shortfall was nearly 4 percentage points on an annualized basis over the trailing one-, three-, and five-year periods. According to Morningstar, managers in this group are clearly struggling to keep pace with a US stock market that has a full head of steam.
This quarter saw Columbia make its debut into the ETF Managed Portfolios universe; the firm’s three strategies have collective assets under management of $3.4bn.