To provide our clients with high quality tailored consulting and research, we need to know the financial services industry and our clients. To build lasting and profitable relationships, we dedicate ourselves to staying not just current on, but ahead of industry trends. This blog is intended to share our industry insights and, at the same time, to capture feedback from our readers.
Joe complains to a business consultant that the direct mail campaign for his carpet cleaning business isn’t working. Dan, the consultant, asks who he’s mailing to and Joe replies with the nicest zip code in town. So Dan invites him to go for a ride.
They immediately drive through a neighborhood of newer cookie-cutter houses. Bikes and scooters are strewn about the lawns, with Toyota Camrys and Dodge Caravans parked in the driveways.
Dan asks if Joe knows this neighborhood. “Oh yeah, I’m here all the time. The builder put wall-to-wall carpet in these homes and the families with kids and pets often need it cleaned.”
They drive by an assisted living facility and sprawling garden-style apartment complex. “How’s business here?” Dan asks.
“I didn’t even realize these were here. But they probably just replace the carpet between tenants.”
I recently sat down with Stephen Clarke (President, Navigate Fund Solutions), Gene Needles from American Beacon and Jim Fitzgerald from Victory Capital to discuss Eaton Vance’s exchange traded managed fund – branded as NextShares – for an Investment News webcast (watch the video here).
We covered a lot of ground with some time spent on introducing the benefits of the new structure – or reintroducing the benefits depending on how familiar you are with NextShares. Very briefly, the exchange traded managed fund is a new actively managed fund structure designed to provide better performance relative to mutual funds via the reduction of portfolio expenses and other implicit costs. This is possible as the structure takes advantage of features more commonly associated with ETFs. These include:- Reduced operating costs - Reduced portfolio trading costs and cash drag - Reduced capital gain distributions via in-kind creations/redemptions
Investors will also have the... [read more]
Calling all asset managers! Are you thinking about ETFs? You should be! Do you have an ETF strategy? You need one! Why is that, you may ask? The answer is not immediately obvious. It’s not because of recent active manager performance woes relative to their passive counterparts nor the less than ideal sales trends in certain active asset class categories. It’s not the active v. passive debate!
Let’s make this clear, I’m not going the route of advocating for or promoting the value of index investing over active investing. In fact, I’m not going to discuss the merits of passive and active investing in any great detail. Yes, there are some bad actively managed portfolios. Yes, some indexed strategies have concentrated and unwanted risks. A prudent portfolio construction approach will take care of the active and/or passive choice for each allocation in a portfolio. I believe there is a place for... [read more]