On January 25, 2018

Inside ETFs 2018 with its more than 2,000 attendees, just finished in Hollywood, Florida yesterday. While there will be many articles discussing the conference’s sessions, I thought I’d share the most interesting (and random) insights I received upon meeting with our ETF providers during the conference:

    • Fidelity has done a great job of properly defining factors. They have also lower their factor ETF expense ratios to 29 basis points (bps) compared to the average 50 bps of their competitors.
    • FlexShares/Northern Trust is making the case that environmental, social and government (ESG) practices should be considered as a factor that increases the risk/return profile of portfolios. iSectors will do more work on this in 2018 and share it with advisors.
    • I look forward to seeing how Invesco’s PowerShares enhances BulletShares after the proposed purchase of Guggenheim closes. BulletShares is a group of defined-maturity exchange-traded funds in the investment grade and high yield corporate space.
    • Speaking of PowerShares, they have a great monthly Factor Dashboard that gives risk and return measurements of each factor, a valuation framework for them, and suggested implementations for a factor portfolio.
    • Deutsche Bank has both hedged and unhedged ETFs of China “A” shares. These are the companies that mainly serve the domestic Chinese markets. “A” shares are being slowly added to emerging market indices. Given the correlation characteristics between “A” shares and developed and emerging markets, I have asked them to provide iSectors with work that may lead us to believe that “A” shares should be their own equity class.
    • I met with three new ETF issuers: American Century, Alpha Architect, and Innovator. They all have interesting ideas to contribute to the creation of better diversified portfolios. Given the need for close monitoring of new and existing ETF strategies, financial advisors should license the research from ETF strategists, such as iSectors, on third-party platforms.
    • Finally, I urge advisors should watch my interview with Jill Malandrino of NASDAQ, recorded at the conference on Periscope TV. We discussed some of the ways advisors can protect client portfolios before the next market decline including the case for our Post-MPT Allocation* as a liquid alternative.










*The iSectors Post-MPT Growth Allocation is also available as an exchange-traded fund (ETF). For more information, visit https://isectors.com/isectors-etfs.

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