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By Andrew Gogerty | 05-17-2013 10:00 AM

An Eclectic Approach to ETF Managed Portfolios

HAHN Investment Stewards CIO Tyler Mordy describes how his multidisciplinarian process based on fundamental, technical, and behavioral factors is adaptable across borders.

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Andrew Gogerty: This is Andrew Gogerty, ETF managed portfolio strategist for Morningstar. ETF managed portfolios continue to gain traction with advisors and institutions here in the United States, but this is not just a domestic trend. Other countries and other regions such as Asia, Europe, Germany, and even Canada are seeing growth in demand for these strategies. Joining me today from HAHN Investment Stewards is Tyler Mordy, chief investment officer.

Tyler, thank you for joining me.

Tyler Mordy: My pleasure, Andy.

Gogerty: ETF managed portfolios have really seen penetration with advisors in the United States in the last few years, but it’s a trend where the advisors are really leading the adoption rather than the institutions. How has it been in Canada? ETF managed portfolios are definitely available in Canada. Your firm specializes in them. What has been the adoption or the trends between advisors and institutions in your country?

Mordy: Well, Andy, I think it’s been the same experience for advisors in Canada. I call the period since 2008 a very introspective period for advisors, for institutions, and for portfolio managers. I think what happened during the ‘80s and ‘90s is that financial planning and investment management fused together, and I think the reality now is that people are learning that those are two very distinct activities.

Financial planning involving tax planning and so on and so forth, and investment management involving asset allocation, in some cases stock selection, and so on and so forth. So that introspective period lends itself to the question where can we best add value. And for the financial advisors, most definitely, I think they’re starting to focus on those things again like tax planning and so on and so forth. So, I think the trends are very similar in Canada as in the United States, and it’s a reorganizational period for the industry.

Gogerty: Well, let’s talk about that investment management piece as it relates to your portfolios. HAHN’s investment portfolios have historically had a global footprint, but there has been a material chunk devoted to the Canadian stock market, which isn’t surprising. How are you looking to deploy and distribute those strategies here in the United States?

Mordy: So, the first step in designing portfolios is always developing a strategic asset mix, and that again sort of harkens back more towards a financial-planning aspect, so designing a strategic policy mix that best matches a client’s risk/return objective. So, in Canada, we did anchor the portfolios a little bit more towards Canada and that would hold true for any country around the world.

So, the next step after that, and this is where the ETF strategist market as you know really shines, is the investment process. And in our case, and in many others' cases, it’s the tactical asset allocation. So, design the portfolio strategically and then utilize that investment management process in a tactical manner, and that process is the same. So, we can use that in Canada, the United States, Europe, wherever in the world.

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