Brooke Southall

Questions one would want answered for such a product are:  a) what % of the ETF is active vs. passive, b) what are the passive elements benchmarked against (and probably the entire fund), c) what's the expense ratio.

From that one could determine whether it's worthwhile to pay for the bundle, or break those pieces apart and have them offered separately.   So, if the Equity fund is vs. Russell 3000 and 90% passive at 0.60% expense ratio one could proxy that with 90% Vanguard Index fund (0.05% or less fee) and the effective cost of the 10% active component balloons up to an effective cost of 5.5% annually!

Good questions and I added a couple of lines that help answer them above the sub-head "Expanding Arena"

Envestnet files to launch its first four ETFs and invents a category -- an active-and-passive approach it tried first with mutual funds

Envestnet

A look at the numbers shows that exchange traded funds are starting to move in lockstep with RIAs and vice-versa. RIAs invested $496 billion in ETFs in the 12-month period ended June 30, 2015 – that’s a $78 billion increase compared to the same period the year before. By comparison, the wirehouse channel added 20% fewer ETF assets, or $397 billion in the last year; granted, an amount that was $70 billion greater than its aggregate investment during the same 12-month period the year before, according to Broadridge Financial Solutions. RIAs that manage portfolios and make discretionary investment choices for their clients value ETFs because they provide advisors with easy access to market segments at a cheap price – an especially important factor for RIAs who are compensated on an asset-fee basis. Fee-based advisors appreciate ETFs’ tax efficiency, liquidity and broad exposure at low cost. Conversely, RIAs are a prized channel for ETF-makers like State Street, Invesco, PowerShares, Vanguard Group and BlackRock. ETFs are also a major ingredient in portfolios devised by robo-advisors -- essentially automated RIAs -- for the mass affluent who invest more than 90% of their assets using ETFs.

ETFs

The Chicago outsourcer is hopping on half a channel lane to sell house-brand ETFs that may make nifty 'sleeves' for model portfolios.

Envestnet files to launch its first four ETFs and invents a category -- an active-and-passive approach it tried first with mutual funds

Brian Patrick Murphy

Brooke Southall

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Envestnet files to launch its first four ETFs and invents a category -- an active-and-passive approach it tried first with mutual funds

Brian Patrick Murphy

Brooke Southall

Related Moves

March 20, 2024 at 1:25 AM

February 24, 2024 at 3:33 AM

January 9, 2024 at 4:09 AM

September 27, 2023 at 2:48 AM

RIABiz Directory

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