Charles Schwab Investment Advisory tops the list of the largest exchange-traded fund strategist firms, according to a new Morningstar report.
In the Chicago-based research firm’s fourth quarter ETF Managed Portfolios Landscape Report, it listed Schwab as the largest player in this space with $12.4 billion in assets within its 15 reported ETF strategies. As noted by Morningstar, Schwab leaped to the top during the fourth quarter after bringing under its umbrella the assets from ETF strategist firm Windhaven Asset Management, which it acquired in 2010.
As defined by Morningstar, ETF managed portfolios typically have more than 50 percent of portfolio assets invested in ETFs.
Vanguard Advisors was the second-largest company on the list at $10.8 billion within its 44 strategies. Vanguard experienced the most quarter-over-quarter growth as assets in its strategies increased almost $1.7 billion.
The rest of the top five strategists comprised BlackRock at $7.9 billion (40 strategies), State Street Global Advisors at $6.73 billion (20) and RiverFront Investment Group at $6.65 billion (16).
In all, Morningstar tracked 1,180 strategies with total assets of $123 billion as of year-end 2017, an increase of 7 percent versus the prior quarter driven by new investment strategies added to its database.
Morningstar noted that 12 of the 20 strategies with the biggest quarter-over-quarter asset gains were “plain-vanilla” stock/bond strategic asset-allocation portfolios.
“This marked a continuation in the shift of investor preferences in this space that was spurred by the implosion of a handful of highflying tactical strategies just a few years ago,” Morningstar wrote in its report.
Performance Issues
A large number of financial advisors have turned to ETF strategists in recent years to invest their clients’ assets, but the median performance of the players in this space—at least as measured by Morningstar—leaves much to be desired.