ETFs

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.

Jon Stein: Personalized portfolios with specific stocks for specific clients that still track an index -- that’s clearly where things are trending

With Schwab in Motif mode, Jon Stein tells Bloomberg Betterment's ETF view is shifting, talks 'revolution,' but declines through spokesman to confirm any imminent shift to direct indexing

The New York robo's CEO pulls no punches in a Q&A about the impersonal nature of exchange traded funds, but observers say Charles Schwab & Co. may have forced his hand toward an accelerated direct indexing timetable.

July 21, 2020 — 11:16 PM by Oisin Breen

Brooke's Note: It seems we are about to witness something fascinating, namely, how well Betterment -- biggest of the free-standing robos -- can do what startup companies generally don't have to do -- play catch-up on an established vision. In this case, that vision revolves around direct indexing, where ...

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Phil Bak: [Vanguard] have been pulled kicking and screaming into ESG.

Long leery about ESG, Vanguard Group changes tune, launches ESG bond ETF and promises to 'evaluate' more -- as rival BlackRock barrels ahead in the category

Once viewed as a fringe element's domain, the Malvern, Pa., giant says it's swayed by how 'diverse' (read mainstream) investors are joining crunchier brethren to support a better world -- just as direct-indexing threatens all 'funds.'

July 21, 2020 — 3:45 PM by Oisin Breen

Brooke's Note: We all have Vanguard a little pigeon-holed as a mutual fund indexing giant of stocks. It is also, of course, a giant presence in ETFs, bonds and even active investments. But it took its time with ESG investing -- and perhaps for good reason. ...

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Dave Butler: We take the time to understand clients’ evolving needs.

Dimensional Fund Advisors finally launches ETFs, but as a 'defensive' measure as outflows mount, Morningstar says

The Austin, Texas, manager of $508 billion enters the exchange-traded fund market after advisor input reached critical decibel levels but also after its former CEO's ETF startup surpassed $1.5 billion in nine months

June 27, 2020 — 2:35 AM by Brooke Southall

Brooke's Note: There was never going to be a great time for DFA to add ETFs. The company sells a tight integrated package of intelligence to RIAs that includes investment management, practice management and marketing. The latter is essentially instruction on how to explain the ...

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Tim Buckley: We want to see active have a resurgence, but the only way it will happen is if pricing comes down.

Into the PIMCO void, Vanguard re-applies itself to active fixed-income funds and Bond Kings get a bitter taste of what the Peter Lynches of yesteryear learned the hard way

The Malvern, Pa. giant has only 24% of assets invested in bonds but nearly 40% of its portfolio staff are bond-directed as it seeks to exploit a world of high fees driven by fiefdoms and petty monarchs.

January 3, 2020 — 1:33 AM by Oisin Breen

Brooke's Note: This week Barron's rightly went whole hog in featuring Vanguard and its CEO, Tim Buckley. It just took a questionable angle -- namely that Vanguard is in survival mode now that the rest of the investment industry is competing with it on price. ...

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Walt Bettinger: I'd suggest it will play an important role in our company's future both on the retail side and potentially on the RIA channel.

Charles Schwab & Co. brings 'start-up'-style disruption to the $20 trillion mutual fund industry by zeroing out free fractional-share trade ticket charges

'We are on the offense at Schwab,' says San Francisco-based CEO Walt Bettinger, who may be leaving his own firm's margins undefended as he hands free fractional shares to friction-free blaze of disruption.

October 22, 2019 — 3:48 AM by Oisin Breen

Brooke's Note: You can be sure Chuck Schwab long since made a pact with himself that he would not fall into the trap he set for Wall Street. Yet arguably the Schwab chairman and founder is feeling the stabbing pain of Innovator's Dilemma as discount brokers get out-innovated ...

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Charles 'Chuck' Schwab: Eliminating commissions ensures my ultimate vision is realized.

After Vanguard instigated commission war in June, Charles 'Chuck' Schwab steps up to challenge in brilliant counterstroke that paints bull's eye on custody rivals in zero-sum showdown

The Schwab Chairman and Founder signs off on the $400-million write-off of revenues in a move the size of his legacy. After being booted in 2017 by TD Ameritrade for not playing the pay-for-play game, Vanguard went hard zero in June forcing Schwab to act but perhaps not this big

October 10, 2019 — 4:49 PM by Oisin Breen

Brooke's Note: The scenario that makes Chuck Schwab's decision to zero out $400 million a year in revenues is interesting four-dimensional chess. Schwab is deepening its subscription and freemium commitment in a way that delivers massive body blows to competitors at all levels. See: Schwab hopes to ...

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Eduardo Repetto: Looks similar but everything is different.

Former DFA CEO, Eduardo Repetto is starting a DFA 2.0 with big differences; it'll sell ETFs, avoid pure indexes and trade on factors year round

The Dimensional Fund Advisors ex-chief joins Patrick Keating, his former chief operating officer at DFA to tackle a crowded market with a niche identified

June 26, 2019 — 3:55 AM by Brooke Southall

Brooke's Note: The pivotal moment in my interview with Eduardo Repetto was when I asked why he wanted to start a new asset management business amid the biggest storm in the industry's history -- never mind yet another go in the smart beta and factor ...

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Eric Balchunas: Only four of the ten-highest revenue-generating ETFs are in the top 10 by assets.

J.P. Morgan may launch first zero-fee ETF as 2019 marks critical passive- and ETF-investing thresholds

The New York patriarch has an ETF registered with no-fee markings at a time when passive is set to surpass active and a mere $7 billion of revenue across 100 ETFs and iShares getting $2.9 billion of it

January 31, 2019 — 9:55 PM by James Picerno

Brooke's Note: One macro-lesson of life I am only too aware of is the answer to the question: How much worse can it possibly get? It can get a whole lot worse. If something is a problem, it needs to be addressed. Asset managers are asking ...

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Karin Risi: Our goal is to provide additional access and flexibility to our clients, not spur counter-productive, frequent trading activity.

Vanguard Group launches its free-trading super desk of 1,800 ETFs; now only if clients won't abuse the privilege

The Malvern, Pa. giant risks creating a casino but its clients are expected to stay responsible and use free trades for dollar-cost averaging, rebalancing and harvesting losses for tax purposes

August 21, 2018 — 6:26 PM by Brooke Southall

Vanguard Group made good today on its promise to remove trading costs on 90% of the ETFs trading on major exchanges -- effectively eliminating the one gripe some investors hold against the already beloved products.

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Robert Tull: It’s a free service today, but the operative word is today.

How Vanguard, BlackRock and State Street -- which manage RIA trillions of AUM for a pittance -- may artfully make the bill come due by beating active managers at their own game

The ETF giants' latest mutual fund-killing trick is free management of ETF portfolios -- perhaps the seeds of a massive freemium model

June 6, 2018 — 9:42 PM by James Picerno

Brooke's Note: Just when you think it can't get any better for RIAs looking to cut costs, improve quality and scale their businesses without making additional hires, it does. The bad news for RIAs is that investment management is no longer enough to compete long ...

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BlackRock recruited Michael Lane as it continues its quest to dominate the ETF market without chopping fees to nothing.

BlackRock poaches a DFA big to head its efforts to get RIAs to use iShares and connect more to BlackRock itself

The $6T New York manager gets Michael Lane to instill community building, Dimensional Fund Advisors-style, but it won't get him to leave Austin

June 2, 2018 — 2:16 AM by Dina Hampton and Brooke Southall

After 14 years at Dimensional Fund Advisors, Michael Lane is the new head of US Wealth Advisory iShares for BlackRock Inc., though he'll stay in his house.

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Paul Gamble is selling what academics do as he did at Financial Engines -- and that worked out.

After losing Lee Kranefuss and raising $10M, 55ip gets RIAs to buy Ph.D. smarts, though a critic calls it gussied-up market timing

Guided by an ex-Financial Engines ringer, Paul Gamble, the New York startup is now portfolio modeler for $100 million

April 19, 2018 — 10:38 PM by Oisin Breen

Brooke's Note: Your average RIA is about as excited about having a Ph.D. in mathematics manage client investments as they'd be about a Ph.D. in aeronautical engineering piloting their aircraft. Take DFA as a prime example of that premise: RIAs love how it lets the eggheads prune out malefactors but leaves ...

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Joe Duran: It allows them to be expensive and to expand. They’ll be able to take PAS and more aggressively market it.

Vanguard Group gets under RIAs' skin by launching ETFs supposedly aimed at helping them

Joe Duran says debut of up-priced, factor-based ETFs paves the way for fatter Vanguard RIA margins and broader U.S. wealth-management market share

February 22, 2018 — 3:55 AM by Lisa Shidler

Brooke's Note: Vanguard Group has always enjoyed the best of both worlds as an RIA vendor. It has slain competing managers by winning the most flow on one hand. On the other, its tactics for winning those assets are ethically unimpeachable so marketplace gains lead to few hangovers ...

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Tim Buckley: With mutual fund fees coming down, the highest fee is the advisory fee itself.

At Inside ETFs, Vanguard CEO skipped over ETFs to get to a hotter topic -- mass delivery of financial advice

In his first public speech, Tim Buckley warned that asset managers no longer have the target on their backs -- but advisors do

January 30, 2018 — 10:13 PM by Graham Thomas

Brooke's Note: It was stunning to see a new Vanguard Group CEO go to an ETF conference and not talk ETFs, despite having the mother lode of inflows product arsenal to crow about. Tim Buckley talked in great detail about financial advisors -- mostly RIAs, mostly ...

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Natalie Zahradnik: RIAs in particular can be early adopters of new products.

PIMCO's institutionalize-Bill-Gross effort culminates after three years in price hikes tempered by ETF migraines and fee cuts

The Newport Beach, Calif.-based manager notably jacks up charge for PIMCO Income Fund after it soars to $92 billion, which slowed its asset flows not at all as it zoomed past $100 billion

December 4, 2017 — 8:31 PM by James Picerno

Brooke's Note: PIMCO has three giant challenges: It sells mutual funds in an ETF era. It sells active management in a passive era. It is known as a bond investor but that may harm its efforts to expand into the green meadows of managing equities. Then, it added ...

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