ETF Managed Portfolio Attributes Part II: Portfolio Implementation and Primary ETF Exposure Type
To review, there are four attributes: Universe, Asset Breadth, Portfolio Implementation, and Primary ETF Exposure Type. See the Attribute and Classification Summary matrix for an overview of the attributes and underlying options.
In this Solution, we highlight the Portfolio Implementation and Primary ETF Exposure Type attributes.
Selection decisions for this attribute are based upon a review of the degree of changes both within and among asset classes in a portfolio. As a result, changes to the cash/equity/fixed income/other allocation, as well as to a portfolio's U.S. /non-U.S. exposure, are considered.
Portfolio Implementation: Tactical
Tactical strategies engage in potentially large changes in the asset mix of a portfolio to capitalize on identified investment opportunities. These changes can be reversed or removed as market conditions change.
Classification is based upon analysis of past portfolios and information regarding a strategy's starting universe or list of potential investments.
Primary ETF Exposure Type: Sector
Strategies that primarily use equity sector ETFs, such as financials or energy, receive this designation. For fixed-income strategies, the portfolio will focus on and potentially hold more narrowly focused ETFs to gain exposure within the Asset Breadth attribute. A sector fixed-income strategy is typically one focused on a single sector such as municipals or Treasury ETFs.
Primary ETF Exposure Type: All-Inclusive
Any ETF that could fall under the Universe and Asset Breadth attribute for a given strategy could be included. For example, if a strategy was "U.S." Universe, "Equity" Asset Breadth, and "All-Inclusive" Exposure Type, then any U.S. equity ETF (sector, sub-sector, broad market) could be a potential investment.