Final week, ETF business veteran Bobby Brooks joined RiverFront Funding Group, a world asset supervisor and ETF strategist based mostly in Richmond, VA, in a transfer that underscores simply how transformative ETF mannequin portfolios have been for the advisory enterprise.
Brooks will function president for the agency’s RiverShares ETF division, a quickly rising unit that helps not simply the expansion of RiverFront’s current mannequin portfolio enterprise, but in addition the long run improvement of the agency’s in-house ETF product set.
“ETF strategist companies like RiverFront have the distinctive perspective to know what monetary advisors are searching for in an ETF, as a result of they’re advisors themselves,” mentioned Tom Lydon, CEO of ETF Traits. “With Bobby’s expertise working so intently on this space of the market, I might anticipate him to be a giant assist to Riverfront in growing their ETF suite.”
ETF Mannequin Portfolios: A Quickly Rising Marketplace for Advisors
As an ETF strategist, RiverFront works with advisors to offer versatile, risk-managed funding options for monetary advisors and their shoppers.
On the coronary heart of RiverFront’s enterprise is its core Benefit mannequin portfolios, together with a line of ETF-only fashions, which goal each section of the funding cycle, from wealth constructing to wealth sustaining to wealth distribution.
These mannequin portfolios have attracted effectively over $eight billion in invested property, as of the tip of June 2021.
Throughout the funding business, ETF-based and ETF-only mannequin portfolios proceed to develop at an accelerated clip. A lot of the funding flows have gone towards “no funding administration (IM) charge fashions,” named such as a result of they carry no extra administration expense, past the expense ratios of the constituent ETFs. It’s now estimated that no-IM-fee fashions account for as a lot as two-thirds of all investor property in mannequin portfolios, in keeping with RiverFront.
RiverFront is at the moment growing a line of no-IM charge mannequin portfolios of its personal, says Brooks, noting that many such current fashions at the moment are offered by legacy ETF issuers, somewhat than by ETF strategists.
“I believe there’s actual demand for a agency like RiverFront, who has been managing portfolios of ETFs for years, to be a disruptor on this house,” mentioned Brooks in a phone interview with ETF Traits.
“You’re beginning to hear much less about particular person ETFs, and extra about how they match into fashions. Going ahead, I believe it is going to be all about how ETFs, as instruments, are put collectively into fashions to assist the consumer expertise,” he continued, citing the potential for outsourced mannequin portfolios to offer extra professional drilldown into themes, earnings era, and ESG subjects.
“Increasingly more advisors are saying, ‘Themes are nice, however they’re additionally extraordinarily risky,’” he added. “’Can somebody assist me handle my danger?’”
Energetic ETFs Come Into Their Personal
Presently, the agency’s RiverShares division additionally contains the 9 particular person ETFs that RiverFront sub-advises, however Brooks says the strategist additionally has plans to broaden into its personal house-brand ETF merchandise.
The agency is thought for its signature “course of over prediction” funding strategy—a clear, dynamic funding strategy pushed by a strategy that’s each systematic and simply repeatable. Packaging that inside an ETF wrapper simply is smart, says Brooks.
“The ETF has grow to be the software of selection for advisory practices,” he mentioned. “In the end, a number of the [RiverFront] IP may be delivered inside an ETF construction.”
Energetic ETFs, which permit managers like RiverFront to package deal their methods into an exchange-traded wrapper, grew exponentially in 2020, each in amount and in property invested, partially as a result of the ETF Rule, which launched late the prior 12 months, clarified and streamlined the method by which lively funds may come to market.
Energetic ETFs now complete greater than $262 billion in property invested. That’s a fraction of the $4.5 trillion invested throughout all ETFs within the U.S., however one of many fastest-growing corners of the market.
“I Need To Work With Folks I Like, Respect, and Belief.”
With greater than 25 years within the ETF business, Brooks has a wealth of hands-on expertise.
Again within the earliest days of ETFs, Brooks helped State Avenue launch its fledgling ETF gross sales unit, earlier than shifting on to PowerShares’s distribution group, the place he helped triple the issuer’s property throughout his tenure.
Most just lately, Brooks served as a senior govt at DWS.
Brooks’s relationship with RiverFront’s management group, together with president and CEO Pete Quinn and head of world technique Doug Sandler, pre-dates the founding of RiverFront itself.
“In my profession. I wish to work along with individuals I like, respect, and belief. The RiverFront group checks that field a number of instances,” mentioned Brooks. “They’re really the advisor to the advisor.”
For extra information, info, and technique, go to ETF Traits.
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.