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Welcome to Morningstar's ETF Managed Portfolio Center

A comprehensive resource for advisors on one of the fastest growing segments of the managed account space.

Andy Gogerty, 06/20/2012

The growing depth and breadth of exchange-traded fund offerings in the past half-decade have given rise to investment strategies that use them as the primary portfolio investment vehicle. ETF managed portfolio strategies have more than 50% of portfolio assets invested in ETFs and represent one of the fastest-growing areas of the managed-accounts space.

The launch of this center for advisors and institutional decision-makers follows the successful release of Morningstar's ETF Managed Portfolio Landscape Report in January 2012. This report provided a comprehensive look at those ETF managed portfolio strategies currently reported in Morningstar's separate account database and examined key trends in the space (click here for the report).

Growth in assets from increased advisor demand is being driven by multiple factors:

  • The fiduciary standard continues to move forward as the baseline philosophy for managing a client's portfolio. 
  • The growth in the fee-based model is tilting portfolios toward lower-cost, broad-based investments for a larger part of client portfolios, with a focus on asset allocation.
  • ETF strategists allow advisors to gain access to institutional-type diversification and portfolio management through outsourcing, allowing them to focus on gathering and retaining client assets and managing the overall financial profile.

Morningstar is dedicated to providing research and tools to help advisors better understand and evaluate this growing landscape and select the proper strategies for client portfolios.

The industry's response to the initial landscape report has been tremendous. We anticipate tracking more than 500 strategies with $42 billion in strategy assets through March 31, 2012. We'll be analyzing potential new strategies that have been added to our separate-accounts database for inclusion in this universe in the coming weeks.

The ETF Managed Portfolio Center is composed of three main sections, which are outlined below.

Main Page

The center's landing page contains a wealth of analysis of the ETF managed portfolio universe. Upcoming articles and analysis will focus on ETF strategist firms and their product offerings for advisors and institutions, as well as commentary on industry trends and developments. The page also contains a Solution Center that provides educational slideshows on key topics for those new to these strategies.

Morningstar will also feature selected video content offering perspectives from these asset managers, ETF providers, and other industry executives. Finally, this page will host a forum for ETF strategists to share their own commentary and perspectives with investors.

ETF Managed Portfolio Universe Screener

Using the link at the top of the center, registered users of MorningstarAdvisor.com (registration is free and can be done here) can access Morningstar's proprietary ETF managed portfolio screener. Our ETF managed portfolio screener universe is composed of all separate-account strategies in our database that meet our outlined portfolio criteria. We will continuously update this universe as new strategies are added to the database.

The screening criteria allow advisors (click here to go to the screener's main page) to focus their search for one or more potential ETF strategists and their portfolios. The initial filters include Morningstar's proprietary ETF managed portfolio attributes, as well as metrics related to strategy asset size, inception date, provider firm, and GIPS designation. Morningstar will be expanding the criteria set over the course of this year, and we will highlight the new functionality in upcoming commentaries.

As you whittle down the universe, be sure to use the "More Data" button at the top of the results section to sort and filter your selected set of strategies by multiple data points.

Strategy Snapshots

The individual strategies populating the results section of the screener will include a link to a snapshot for that strategy. The snapshot provides a standardized display of basic information, allowing for easy comparisons across various ETF portfolio strategies. The snapshot also includes manager-provided narratives on each strategy, including a manager's investment philosophy and insight into portfolio construction.

Advisors and other investors desiring enhanced capabilities should consider our software platforms Morningstar Office or Morningstar Direct, which offer a broader set of tools to conduct research and analysis.

Future Developments

Morningstar will be expanding the ETF Managed Portfolio Center's content and analysis in the coming months. Our road map includes analysis of asset flows, portfolio changes, and operational due diligence on individual firms and strategies. We will also expand the criteria for the screener and the number of strategies in the universe. Our database will increase to approximately 500 individual strategies in the coming weeks as we review new investment strategies and portfolio holdings and assign portfolio attributes.

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