WA MAGAZINE JanFeb PDF A - Flipbook - Page 11
FRESH FUNDS
FOR OLD
PORTFOLIOS
VERY FEW ADVISORS WERE EAGER TO
INVESTIGATE NEW INVESTMENT SOLUTIONS
FOR THEIR CLIENTS WHEN THE VIX WAS HIGH
AND INVESTOR MORALE WAS FRAGILE. NOW
THAT THE WORLD HAS CALMED DOWN A LITTLE,
IT’S TIME FOR THE INDUSTRY TO CATCH UP.
“S
TAY THE COURSE.= Nobody
wants to rock the boat when the
seas are stormy, so it makes sound
sense that the wealth management
community spent a lot of the decade so far following its own recommendation.
After all, the funds that looked great before
the pandemic didn’t change. While the world
pivoted, long-term performance should align
with the results we’ve seen in the past.
The efficient frontier doesn’t bend that much.
But two factors in the market are always in flux.
The first is your clients. They’re aging one
year at a time, and as their mood cycles between
panic and euphoria, they want you to pivot away
from visible threats while remaining open to
upside capture.
In other words, they want you to keep your
eyes open to what’s going on outside your office.
And that’s the second thing that keeps changing: throughout the market’s gyrations, the
world’s best asset managers didn’t even pause
their R&D.
If anything, the turmoil provided additional
motivation to innovate past the storm, not to
mention generating plenty of extreme data to
feed increasingly sophisticated algorithms.
Maybe you missed all that. We didn’t. Get
ready to go back to exchange-traded fund (ETF)
school and see what’s out there now.
RESET THE NARRATIVE
U.S.-based ETFs attracted over $1 trillion in new
assets last year, setting a record and marking a
pivotal shift in investor strategies for portfolio
construction. By November, total ETF assets under management had soared to $10.6 trillion, a
striking 30% increase since the start of the year.
The wrapper has won. People love the convenience, the transparency, and the flexibility. The
tax treatment isn’t bad either. And it gets better.
Scale generates efficiencies that push fees down
while attracting smarter and smarter ideas.
All this happened when the market as a
whole was still finding its footing after three
bear markets in five years. As animal spirits
recover, launches will multiply to catch the flow.
A less brittle tone also spurs the emergence of
new, specialized ETFs targeting niche needs.
Thematic ETFs focus on specific market
trends, buffer ETFs offer defined outcomes
with risk management, sector-specific products
slice the index funds differently. Everywhere,
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