Assets in ETF managed portfolios remained flat in the second
quarter, according to a new report.
But a dive beneath that bland finding reveals a more
interesting nugget about this fast-growing subindustry: Investor
dollars are increasingly concentrated in the hands of a select
The 10 biggest asset managers in the ETF space hold roughly
75% of industry assets compared with 67% a year ago, says
Morningstar's second-quarter study on the ETF managed portfolio
marketplace, released Friday. Overall, their portfolio strategies
held $102 billion in assets, up 28% from $80 billion in the
"The landscape is continuing to become more top-heavy," said
Ling-Wei Hew, an ETF-managed portfolio analyst with Morningstar.
"We're seeing some of the smaller firms drop off."
The exit of some firms and strategies contributed to the flat
asset picture in Q2. At the same time, existing managers expanded
their product offerings to fill in gaps in their strategies.
Risk-based allocation continues to be a favored strategy.
Since the 2008 financial crisis, ETF-managed portfolios have
built on their success in addressing downside risk.
ETF-managed portfolios typically have more than 50% of assets
invested in exchange traded funds
. The professional money managers who put these packages together
serve as a vital link between ETF providers and investors, and
between providers and the financial advisers who use managed
portfolios for their clients.
The services of third-party portfolio managers free up
financial advisers to focus on asset gathering, tax planning,
estate planning and managing the client's profile.
"It's a way for advisers to outsource portfolio management and
get institutional-type diversification," Hew said.
In 2013, assets in ETF-managed portfolios grew 40% vs. the 27%
growth for all U.S. ETF assets.
At the end of the 2014 second quarter, the 667 strategies from
145 firms tracked in the study held a total of $102 billion. More
than a third -- $36 billion -- was in U.S. equities.
The $34 million Athena Global Tactical ETFs portfolio was the
top-performing strategy over a three-year period, returning an
annual average 23%
. Its shares were up 10% this year at June's end.
While the $10 billion Windhaven Diversified Growth portfolio
was the largest strategy in the report, Good Harbor Financial's
Tactical Core US strategy showed the most asset growth in dollar
It picked up $4 billion in the trailing 12 months, hoisting
total assets to $9.6 billion and claiming the second spot for
Tactical Core US' 73% asset growth in that time frame lagged
other managed portfolios. The MIS Income & Growth ETF and MIS
Growth ETF strategies led the way in percentage growth, gaining
240% and 216% respectively.
F-Squared Investments, with $25.6 billion in assets, is the
largest ETF managed portfolio firm, followed by Windhaven
Investment Management and Good Harbor Financial.
The three companies accounted for eight of the top 10 largest
ETF managed portfolio strategies.
) acquired Windhaven in 2010.