Displaying items by tag: models
Model Portfolio’s Advantage May Be Off Script
Some advisors think of model portfolios as a tool for advisors that is rigid: a pre-selected allocation not to be tampered with. However, the model portfolio’s true advantage is that it brings an element of customization. This varies based on how an advisor implements the options, but overall because investors own the underlying asset, unlike a mutual fund they can add/drop for customization. This gives investors an edge for tax loss harvesting or tweaking to add a growth stock for example. To add to that models are relatively fee efficient particularly when it comes to their mutual fund counterparts while bringing most of the same options.
Finsum: A model portfolio can also be selected for its inherent traits as well and provide advisors with more flexibility than they are perceived to have.
BNY Develops Model Portfolios for UBS
BNY Mellon is one of the biggest asset managers with $2.3 trillion in AUM, and they are expanding their offerings by building model portfolios designed for the UBS Wealth Management USA clients. They will be particularly designed to deliver more reliable results during business cycles and geared toward meeting income-generation goals with clients. The range of portfolios will come in three different income varieties: stable, strategic, and a growth hybrid. They view this as a natural evolution of their business at BNY and they are well suited to deliver models to UBS to meet income goals.
Finsum: More investors are looking for income products and models are rapidly trying to adapt to this demand.
Fidelity is Expanding its Model Options
Model portfolios continue to grow in prominence among advisors. Every quarter, a higher percentage of advisors are adopting models and AUM has been growing considerably. Some evidence suggests a lot of the AUM growth is coming from some “power users” but the movement is still broad-based. On the back of that growth, Fidelity is expanding its suite of popular model portfolios. The company has launched Fidelity Target Allocation Tax-Aware Model Portfolios, which include nine equity and fixed income mixes, each versioned for I and Z share classes. The models are available through its managed account platform, Fidelity Managed Account Xchange (FMAX), and the Envestnet platform.
FINSUM: Models are making it easier and easier for advisors to manage money and save time, which boosts margins and enhances client service overall.
The Next Wave of Socially Responsible Models
Charles Stanley is diving deeper into ESG with a new suite of model portfolios geared at responible passive investing. Jane Bansgrove will manage the model portfolios and is the investment director of Charles Stanley’s responsible investment committee. Studies have shown that many have put more emphasis on ESG and sustainability due to the Covid-19 pandemic. The funds will be available across different risk levels with different target growth rates that correspond to them. They are designed to be low cost and efficient like many other passive ESG funds.
Finsum: Model portfolios are a natural marriage with ESG, because thematic investing caters itself to a model that can make selections.
LPL Adds to Wealth Models
It was only eight months ago that LPL was beginning a pilot program where they would test separately managed accounts, but now they are jumping in full force by allowing investors SMA strats in their Model Wealth Portfolios platform. This platform has grown to $83 billion in assets in recent years. These models will range in variety and flavor as well with some being developed by LPL while others will be from third-party managers. This strategy helps LPL give institutional-type options to everyday investors with lower fees.
Finsum: Models are moving from a buzzword to an important option for advisors.