News | 08.24.20
Wall Street Creates $3 Trillion Whale in Model Portfolio Boom
The popularity of model portfolio investing is booming, and model rebalancing is suspected in a series of dramatic flows recently into several funds. Broadridge Financial Solutions estimates that model portfolios held about $3 trillion by the end of the first quarter, with a significant chunk in ETFs. “The liquidity and general flexibility of the ETF wrapper allows model managers to make sizable trades without disrupting the underlying markets, in most instances,” said Morningstar's Ben Johnson. The boom is a reflection of an increasingly competitive world for both financial advisors and asset managers. By promoting their own pre-packaged strategies to advisors, money managers exercise more sway over which funds are recommended and where assets flow. And advisors can spend more time on areas of the business like client retention.
Read the full article on Bloomberg.