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Ink dry on check, Vanguard Group is set to disrupt ETFs and other index funds-- using (mostly) RIAs that manage $3 trillion--to unleash its direct-indexing SMA subsidiary

Just a day after Franklin Templeton bought RIA DI software provider, Canvas, the $8.3-trillion Malvern, Pa., giant announced it closed on its purchase of Just Invest today.

Author Brooke Southall October 2, 2021 at 8:51 PM
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Tom Rampulla: We are excited to integrate Just Invest’s personalized indexing offering into our intermediary business.

IRAKLIS KOURTIDIS

IRAKLIS KOURTIDIS

October 4, 2021 — 3:50 PM
"Most everyone else was renting various pipes" - that's correct. Let me point out two things that may be less obvious to non-software-developer people. a) Managing thousands of accounts at a time requires a different degree of automation (scalability, etc.) than managing a single lump of money does. b) Most technology nowadays is of the "grab data from database and shove onto a web page" variety. However, doing direct indexing correctly requires mathematical optimization, which is a niche skill that even good software developers don't normally have. Apart possibly from financial planning (I haven't spent enough time on that to have an opinion), I think it is the most complicated problem you can solve in wealth management. Iraklis Kourtidis Rowboat Advisors, Inc.
Brian Patrick Murphy

Brian Patrick Murphy

October 4, 2021 — 6:22 PM
Iraklis' comments are spot-on, and I'll add a bit of my opinions as well. The DI acquisitions we've seen over the last year (Just Invest, OpenInvest, Canvas, etc.) are all about scaling portfolio construction across many accounts. This itself is just the tip of the iceberg and there are plenty of other things that need to be built out - perhaps by the same firms, but more likely by others. For example, risk profiling continues to be viewed in a semi-static way - essentially static except for time. It's the "glide-path" approach that all target date funds use. But glide-paths (and more importantly, risk profiling more generally) is actually sub-optimal - the correct approach is to re-calculate the appropriate risk profile (based on bond/stock durations) at every point in time and rebalance accordingly. This adds subtle shifts in exposures around the "glide-path"...but no one's doing it yet. Or adding individual security alpha forecasts to the mix... Fun to watch and plenty of companies to build around these trends.

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March 25, 2023 at 1:32 AM

Biz Briefs: Fidelity says humans beat robots, even for Gen Z • Joe Lonsdale's Opto starts signing RIA test-drivers • Vanguard launches oddly delayed fund • Wealthbox hires, and Dynasty buys

Fidelity wins Delta Airlines business with sweetener • Opto pairs-up with Riskalyze and Merchant • Moonfare raises $15 million • CAIS bucks real estate trend • Vanguard launches "curious[ly]" delayed fund • WealthBox, Dynasty, and others buy and hire.

March 8, 2023 at 3:28 AM

Biz Briefs: Schwab puts checks for $52 million in mail to robo-RIA customers allegedly misled about cash allocations • BlackRock blacklisted (again) • iShares beats NZAM-exiter Vanguard • Fidelity makes first acquisition in eight years • CFP board realizes Moms don't like CFPs

BlackRock gets Kentucky coal in stocking, and Vanguard keeps skating; iShares inches above -- by 2.8% -- Vanguard's annual net new ETF asset haul; Fidelity takes "natural next step" for stock plan business; new CFP chair outlines plans and the DOJ is set to become a major Robinhood shareholder..

January 13, 2023 at 3:01 AM

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