ETF managed strategists continued to attract assets in the second half of last year, according to Morningstar.
In its ETF Managed Portfolio Landscape Report for the third quarter of 2017, Morningstar’s analysts found that total assets in ETF managed strategies increased by $4 billion, or 3.7 percent over that period.
Morningstar defines ETF managed portfolios as any strategy that has at least half of its assets invested in ETFs. Through September 2017, the firm’s analysts were tracking 1,091 strategies from 179 firms encompassing more than $111 billion in assets.
Vanguard remains the largest provider of managed ETF portfolios, with its strategies accounting for $9.1 billion in AUM as of Sept. 30. Their closest competition came from Windhaven Investment Management, owned by Schwab Investment Management, which had approximately $8 billion in assets within its ETF managed strategies.
BlackRock enjoyed the greatest quarterly growth, adding nearly $1.3 billion in assets to its strategies to become the third largest provider of ETF managed strategies at more than $7.2 billion AUM. Clark Capital Management Group experienced the second greatest quarterly growth, adding nearly $811 million in assets for an approximate total of $5.4 billion in AUM as of Sept. 30, 2017
Strategies run by the five largest firms in Morningstar’s analysis accounted for $4.8 billion of asset growth, and newly launched and tracked strategies contributed $4 billion in assets to the ETF managed portfolio landscape.
Some of the asset growth within Morningstar’s analysis was offset by the removal of several large strategies from its list, the largest being two UBS global tactical allocation strategies accounting for more than $1 billion in assets.
Global all-asset strategies now account for 37 percent of the assets in ETF managed portfolios, the largest single category. While the median global all-asset strategy performed similarly to its benchmarks in the third quarter, Morningstar notes that ETF managed strategies still tended to lag their benchmarks on a trailing one-year basis.
Most U.S. and global equity ETF managed strategies fell short of their benchmark across every trailing period, according to Morningstar. The median U.S. equity strategy lagged its benchmark index by at least 3 percentage points across trailing one-, three- and five-year periods.
Five of the 20 fastest-growing strategies in the third quarter of 2017 were traditional stock-bond strategic asset allocation portfolios, continuing a shift that Morningstar believes was caused by the failure of several highly tactical managed strategies a few years ago.