WMIQ: How Advisors Balance Passive, Active Strategies
Active strategies are all the rage, especially when it comes to new launches in the ETF space. By all accounts, active ETFs have accounted for 70% of launches this year alone, and assets in active ETFs globally recently surpassed $1 trillion.
That aligns with the findings from a new study from WMIQ on behalf of Envestnet, Active & Passive Investments in Portfolio Construction: What Advisors Are Doing Now, which revealed that advisors are using a healthy mix of both passive and active strategies when constructing client portfolios.
Indexed ETFs (85%) topped the list of the most used products among respondents, followed by individual securities (80%) and then several active ETF and mutual fund strategies.
In addition, respondents expressed a preference for the active management of taxable fixed income (39%), followed by U.S. equities (39%) and international equities (37%). Overall, just over a third of respondents said they prefer a balance of active and passive management.
Regarding portfolios mixing active and passive investments, 29% use passive funds for core positions and active funds for opportunistic allocations, while 28% use a combination of active funds, passive funds and individual securities. Additionally, 12% use active funds for core positions and passive funds for strategic allocations, while 7% use a combination of active funds and individual securities, 6% use passive funds for all allocations, 5% use a combination of passive funds and individual securities and 3% use individual securities exclusively.
The study also found that 72% of respondents use third-party managed models for at least some of their clients, but that usage varied by advisor type. Only 53% of RIAs reported using third-party managed models compared with 87% of hybrids and 78% of IBDs.
The survey was conducted in July by WMIQ. It received 438 completed responses.
https://www.wealthmanagement.com/research-wmiq/wmiq-how-advisors-balance-passive-active-strategies
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