The 3 biggest Challenges selling new ETFs to Advisors

By Guillermo Trias.

For all it takes to get an ETF off the ground—designing, de-veloping, launching, targeting and positioning it appropriately—those key measures are just the very first steps in a long and arduous path to success as an ETF issuer. The real challenge for issuers begins a few days after the launch: the moment of truth, when effective education and com-munication of the “why, how, what, where, and how much” becomes ab-solutely critical.

Over the last few years, this moment of truth has become more challenging than ever. Three significant barriers have emerged as the biggest challeng-es for issuers to successfully distribute their new ETFs and gather Assets Un-der Management (AUM):

First, new issuers and new launches are currently being confronted with a high level of skepticism surround-ing ETF launches that is difficult to overcome. Many advisors and sophis-ticated investors tend to believe that any new ETF is either a gimmick or a marketing game, even before examin-ing the investment thesis or confront-ing empirical data behind the new launch. Several initiatives can help with this initial skepticism right after an ETF launch and during the first months/years of an ETF’s existence:

  • Scheduling good one-to-one ed-ucational conversations between the brains behind the ETF and advisors to discuss the invest-ment thesis of the ETF and not the product itself.
  • Supporting the sales process with research pieces, white papers and videos explaining the investment thesis.
  • Sharing weekly or monthly blasts with the client/prospect base elaborating on the investment thesis and employing innovative selling/educational points.
  • Inviting prospects to educational webinars.
  • Securing the endorsement of prominent figures of the invest-ment management world or the specific ETF’s investment area or asset class.
  • Using social media innovative-ly to generate trust and support your product.

Second, a large majority of financial advisors will not have access to new ETFs during the first months (possibly first years) of existence. Gates are higher and stricter than ever for new ETF issuers and new ETFs to be approved at the major broker plat-forms. In general, new ETFs are not immediately available at the main wirehouses and independent broker dealers’ (I B/Ds) platforms. Approval will require significant efforts and ed-ucation from the issuer. More specifi-cally, to be considered for approval at the big 4 wires and some of the larger I B/Ds, new ETFs will be required to have:

  • Some minimum level of assets under management (min. Aum between 10 to 100 million de-pending on the platform and type of etf).
  • Some minimum daily liquidity (average daily volume between 10,000 shares a day to several hundred thousand depending on the platform).
  • Tight spreads (less than 25bps on average).
  • Last but not least, new ETFs will have to generate advisors’ interest for these platforms to consider the ETF for approval. It is special-ly challenging to generate interest among advisors when neither the new issuer nor the new ETF are approved.

The real challenge for issuers begins a few days after the launch: the moment of truth, when effective education and communication of the “why, how, what, where, and how much” becomes absolutely critical.

Even when the minimums and condi-tions above are met, approval at these platforms is not guaranteed. In some cases, the ETF might meet the min-imums but cannot be approved be-cause the ETF issuer behind the ETF is not approved yet due to its track record or current AUM (some of the platforms will require for an ETF issu-er to have at least 500 million in assets to be approved).

This limitation in the availability of the new ETFs at the major platforms poses a massive challenge for new is-suers who see their target universe of advisors reduced significantly (main-ly to the RIA channel).

Third, advisors are facing increased pressure across their various areas of business, including shifting demographics and client demands, increasing competition in their busi-ness, fee compression and increased regulatory scrutiny (i.e. DOL). Their business is becoming more complex than ever and they are required to wear many hats to successfully man-age diverse aspects of their business. As a result, more and more advisors are limiting the time they spend with ETF issuers and their sales forces due to the overwhelming amount of calls, emails, and meeting requests they re-ceive from issuers and wholesalers. Success selling new ETFs will require new issuers to use their best people, practices, and resources to convince advisors to secure good conversations with them. Moreover, new issuers will have to develop innovative ways of communicating with advisors and make sure that they bring a unique value proposition and clear solutions to their table.

Source: Big Tips Publication

ETFs aren’t in bubble mode

Exchanged traded funds have enjoyed great popularity recently, raising concerns in some quarters that they may be introducing froth to equities markets.  But not everyone is convinced. With other asset classes seeing upticks in inflows, bulls argue there is a lot more room for ETFs to run, boding well for ETF providers.

Read more

The Team at Dashboard Wealth Advisors expands its portfolio management capabilities

PRESS RELEASE FOR IMMEDIATE RELEASE

December 8, 2016 – Oak Brook, IL – The advisors at Dashboard Wealth Advisors (“Dashboard”) announced today that it has expanded its investment management capabilities by engaging with Tidal Growth Consultants (“Tidal”), a consulting firm headquartered in Manhattan, NY, providing Outsourced CIO services to financial advisors.

The Dashboard Team strives to continue improving its outstanding wealth advisory services to its clients by adding Tidal’s investment process rigor and a system of checks and balances to its portfolio management process.

Through Tidal’s outsourced CIO services, Dashboard is significantly growing the depth of its investment research and portfolio management capabilities, adding discipline and oversight to their team’s investment and wealth management process, and formalizing a structure of benchmarks and performance measurement.

“At Dashboard we use our experience and expertise to help ensure that our client’s life goals are met through our comprehensive financial planning process” said Scott Schuster, CFP®, CPA, Managing Director at Dashboard. “In Tidal Growth Consultants we saw a key ally to propel the expansion of our investment management capabilities to provide our clients with the best practices and strategies in the market and help them reach their financial goals.”

“Dashboard is in a unique position to help its clients with their financial and investment goals” said Guillermo Trias, CEO of Tidal. “They are a breath of fresh air in the highly commoditized financial advisory industry, providing high level personalized advice to their clients in a challenging and continuously evolving market environment.”

About Dashboard

Dashboard is an independent Firm headquartered in Oak Brook, IL with a team who specializes on providing highly custom and personalized wealth advisory services for investors, with a laser focus on financial planning. Its “dashboard” planning process allows their clients to focus on the entirety of their financial picture throughout their lifetime.

About Tidal Growth Consultants

Tidal Growth Consultants, a dba of Toroso Investments, LLC, is a group of finance thought leaders helping Financial Advisors seeking best practices in their investment process so they can adapt to the fast evolving needs of their clients and the ever changing landscape of market regulations”.

Press Contact:
Dashboard Wealth Advisors
Scott Schuster, Managing Partner
1520 Kensington Road (Suite 107)
Oak Brook, IL 60523
Tel: + 1 630-203-3105

What is Smart Beta?

What is Smart Beta?
Any ETF that follows a non- traditional market cap index in an effort to produce superior risk adjusted returns.
Smart Cost of Smart Beta
At Toroso We have developed a proprietary software to evaluate the cost of Smart Beta in a fast, efficient way. It is a Four Step Process that you can learn here, in our ETF Prism Report.

STEP I
Set a Benchmark
With a high correlation.
STEP II
Determine the Overlap
Make sure you are producing something that is different to give you the possibility to outperform.
STEP III
Calculate the difference
Apply the difference in active share to the difference in expense ratio.
STEP IV
Compare and Contrast
Smart cost should be equal or less than the expense ratio.

 

 

 

Disclaimer

This presentation has been prepared solely for the intended recipient and contains highly confidential and proprietary information that are of independent, economic value to Tidal Growth Consultants (“TGC”). By viewing this presentation, you agree not to alter the contents of this presentation in any manner prior to re-distribution without the prior written consent of TGC. This presentation does not constitute investment advice and the fact that a security may be mentioned in this presentation does not mean it is recommended or is a suitable investment for any recipient or to be recommended by any recipient of this presentation.

Different types of investments involve varying degrees of risk.  Registered investment advisers, financial advisers, family offices and registered representatives should be aware that by using TGC’s services, the investment return and principal value of securities they may recommend to client will fluctuate based on a variety of factors, including, but not limited to, the type of investment, the amount and timing of the investment, changing market conditions, currency exchange rates, stability of financial and other markets, and diversification.  There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment.  No investment strategy can guarantee profit or protection against loss in periods of declining values.  No assurance can be given that capital market assumptions will prove to be correct, and the difference between assumptions and actual conditions could vary materially.  

When a financial planning representative recommends exchange-traded funds (“ETF’s”) and other investment companies, they should disclose that such funds will indirectly bear its proportionate share of any fees and expenses payable directly by the underlying ETF’s or other investment company. Therefore, that portfolio will incur higher expenses. In addition, ETF’s are also subject to the following risks (i) the market price of an ETF’s shares may trade above or below its net asset value; (ii) an active trading market for an ETF’s shares may not develop or be maintained; (iii) trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are de-listed from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally; or (iv) the ETF’s may fail to achieve close correlation with the index that it tracks due to a variety of factors, such as rounding of prices and changes to the index and/or regulatory policies, resulting in the deviating of the ETF’ s returns from that of the index.

Financial Planning representatives should disclose to clients and prospects, as TGC is disclosing herein, that past performance is no guarantee of future results and every investment may lose money. No guarantees or assurances are or can be made as to performance of any investment.

Registered investment advisers, financial advisers family offices and registered representatives should consider the investment objectives, risks, charges and expenses of an investment strategy before using TGC’s services and prior to recommending any such investment strategies to its clients and/or prospects.  A prospectus and/or other applicable offering documents contain this and other important information about the investment strategy.  Investors should read the prospectus and/or other applicable offering documents carefully before investing. 

Certain of the economic and market information contained in this presentation has been obtained from published sources and/or prepared by third parties. While such sources are believed to be reliable, neither TGC nor its respective affiliates, employees and representatives assume any responsibility for the accuracy of such information. 

6 Best ETF Picks For Q4 And Beyond: Seizing Global Growth

 Source: Investors.com

Bid the lovely summer calm adieu. Most ETF investors watched their portfolios coast along for roughly two months until the financial markets sank and volatility spiked, all over again.

Stocks, bonds and even traditional safe havens came under selling pressure from an enigmatic Fed in recent trading sessions. As the Federal Reserve kept the market guessing about its next move on interest rates, portfolios hit a squall.

SPDR S&P 500 (SPY), a proxy for the broad U.S. market, ended 2.4% lower in the month ended Sept. 13 while setting fresh all-time highs along the way. The largest ETFs that invest in foreign-developed and emerging markets posted losses of 1.7% and 3.6% over the same period, respectively.

IShares Core U.S. Aggregate Bond (AGG) gave up 0.8%. SPDR Gold Shares (GLD), a commodity ETF, lost 1.3%.

 

And the shine came right off PureFunds ISE Junior Silver (SILJ), whose 210.7% gain year to date is unrivaled among nonleveraged exchange traded funds. It crumbled 17.9% in the past month, a laggard among ETFs.

A tough month held a few ETF market winners too. Among them were bank, energy and internet-focused funds, which advanced as much as 4%.

SPDR S&P Bank (KBE) pulled off a 3.4% gain in the month through Sept. 13, rising and sinking along with policymakers’ back-and forth remarks on a hike in short-term interest rates.

Among international ETFs, KraneShares CSI China Internet (KWEB) stood out, rising 3.7% as stocks like Alibaba (BABA) and Tencent (TCHEY) flew to their best levels in years.

In this environment, managing risk is key, writes Richard Turnill, BlackRock’s global chief investment strategist. He sees certain crowded trades sending short-term danger signals.

“We advocate reducing popular positions where prices have moved beyond fundamentals,” he cautioned, naming gilts, or U.K. government bonds, and bond proxies, such as utility stocks, as examples. He likes dividend growers and quality stocks — found in ETFs such as iShares Core Dividend Growth (DGRO) and Vanguard Dividend Appreciation (VIG) — in a shaky market.

The specter of volatility looms, too, in the minds of two money managers who spoke to IBD about their best ideas for successfully investing in ETFs in the final quarter. While braced for more potential pain, they are focused on finding pockets of growth in tomorrow’s markets. Here’s what they had to say:

Rob Lutts is chief investment officer at Cabot Wealth Management in Salem, Mass. As fee-only financial advisors, the Cabot team provides investment management services to typically high-net-worth individuals, as well as institutions. The firm focuses on growth-oriented investments and uses ETFs extensively in its strategies. Assets under management: about $565 million.

PICKS-PERFORM-Lutts-091616-company

Rob Lutts of Cabot has eyes on China and India for the best growth prospects.

We expect generally favorable but volatile stock market performance in the fourth quarter. Low interest rates and a stronger economy will generate real earnings growth in the S&P 500 for first time in many quarters. We believe the S&P 500 could trade at 2,350 by year-end.

VanEck Vectors Gold Miners (GDX) invests in global companies involved in gold mining activity. The price of gold had a nearly 50% corrective phase over the past five years. Central banks globally have created more than $12 trillion in fiat money over the last six years that will eventually stimulate a new phase of currency debasement and inflation. Gold is the only currency that cannot be debased by central bankers. Gold prices should rise as demand rises due to currency debasement. Mining companies will have high profits under this scenario.

WisdomTree India Earnings Fund (EPI) offers exposure to a country we like. The Indian stock market, as measured by the Sensex index, has appreciated an average of 17% annually from 1981 to 2015, including 1.5% in dividends. This is 50% better than the 11.4% annual growth seen in the S&P 500 index over the same time period, including dividends.

Prime Minister Narendra Modi has instituted structural changes to the country’s legal and regulatory environment that should allow a higher level of growth. We expect annual India GDP growth to increase to 8% or even 9% in the coming years. And we like this fund’s focus on earnings and sector exposure (oil and gas is 16%, banks 13% and diversified financial services 13%). We favor financial services, which may be the top sector in India. This fund has the highest weighting in this area.

KraneShares CSI China Internet Fund (KWEB) invests in the expansion of the Chinese middle class via companies in the online technology sector, like Alibaba (BABA), Tencent Holdings(TCEHY), NetEase (NTES) and Ctrip.com (CTRP). The 1.3 billion people of China love to use the internet, and these companies are making it happen. Ignore much of the negative hype around China — this fund holds some great growth companies. We don’t see the fund’s high concentration of assets in the top stock holdings as a big issue — these are top companies in the internet sector.

Michael Venuto is chief investment officer of Toroso Investments in New York City. The firm describes ETFs as the specialty of its three core business units — wealth advisory, asset management and consulting. AUM: $86.8 million.

PICKS-PERFORM-venuto-091616-company

Michael Venuto of Toroso calls China internet firms a great growth story.

We have maintained the position that without further monetary stimulus, U.S. markets are likely to be volatile and provide flat-to-negative returns. That said, we do see opportunities for returns in specific characteristics and unique market niches.

QuantShares U.S. Market Neutral Anti-Beta Fund(BTAL) provides a form of portfolio insurance without the decay and cost associated with many inverse and/or VIX futures-based products. The index behind BTAL is short the high-beta names in the S&P 500, while being long low-beta names. The position provided substantial protection during market downturns, and we continue to build the allocation, as further insurance is needed.

Direxion All Cap Insider Sentiment Shares (KNOW) combines a defensive screen with an alpha-producing characteristic. The index that this ETF tracks screens the S&P 1500 for aggressive accounting and other governance-based metrics in order to avoid future permanent losses of capital like Lehman Brothers or Fannie Mae. Then, it seeks potential alpha through concentrated overweights to securities with substantial insider buying. The ETF has a high active share vs. the S&P 500 and has provided stellar performance.

Emerging Markets Internet & Ecommerce (EMQQ) invests in companies that represent one the greatest growth stories of our generation, at over 35% annualized return on equity. Despite our general negative outlook on U.S. markets, one area where we see potential growth is the emerging market consumer. The beauty of this ETF is that it focuses on the Amazons (AMZN) (e-commerce) of the emerging markets rather than the Wal-Marts (WMT) (brick-and-mortars). The ETF has provided positive returns since inception while the broad-based MSCI Emerging Markets index has been negative.

ETF Prism Report

 

Disclaimer

This presentation has been prepared solely for the intended recipient and contains highly confidential and proprietary information that are of independent, economic value to Tidal Growth Consultants (“TGC”). By viewing this presentation, you agree not to alter the contents of this presentation in any manner prior to re-distribution without the prior written consent of TGC. This presentation does not constitute investment advice and the fact that a security may be mentioned in this presentation does not mean it is recommended or is a suitable investment for any recipient or to be recommended by any recipient of this presentation.

Different types of investments involve varying degrees of risk.  Registered investment advisers, financial advisers, family offices and registered representatives should be aware that by using TGC’s services, the investment return and principal value of securities they may recommend to client will fluctuate based on a variety of factors, including, but not limited to, the type of investment, the amount and timing of the investment, changing market conditions, currency exchange rates, stability of financial and other markets, and diversification.  There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment.  No investment strategy can guarantee profit or protection against loss in periods of declining values.  No assurance can be given that capital market assumptions will prove to be correct, and the difference between assumptions and actual conditions could vary materially.  

When a financial planning representative recommends exchange-traded funds (“ETF’s”) and other investment companies, they should disclose that such funds will indirectly bear its proportionate share of any fees and expenses payable directly by the underlying ETF’s or other investment company. Therefore, that portfolio will incur higher expenses. In addition, ETF’s are also subject to the following risks (i) the market price of an ETF’s shares may trade above or below its net asset value; (ii) an active trading market for an ETF’s shares may not develop or be maintained; (iii) trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are de-listed from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally; or (iv) the ETF’s may fail to achieve close correlation with the index that it tracks due to a variety of factors, such as rounding of prices and changes to the index and/or regulatory policies, resulting in the deviating of the ETF’ s returns from that of the index.

Financial Planning representatives should disclose to clients and prospects, as TGC is disclosing herein, that past performance is no guarantee of future results and every investment may lose money. No guarantees or assurances are or can be made as to performance of any investment.

Registered investment advisers, financial advisers family offices and registered representatives should consider the investment objectives, risks, charges and expenses of an investment strategy before using TGC’s services and prior to recommending any such investment strategies to its clients and/or prospects.  A prospectus and/or other applicable offering documents contain this and other important information about the investment strategy.  Investors should read the prospectus and/or other applicable offering documents carefully before investing. 

Certain of the economic and market information contained in this presentation has been obtained from published sources and/or prepared by third parties. While such sources are believed to be reliable, neither TGC nor its respective affiliates, employees and representatives assume any responsibility for the accuracy of such information. 

Mike Venuto comments on new Gold Hedged ETFs

By Cinthia Murphy
Toroso Investments
Published in ETF.com

The Rex Shares gold-hedged ETFs—new to market this month—attempt to solve a common asset allocation problem many advisors face: What to do about gold?

Most advisors today feel like they must own gold. Most do so because gold offers diversification and portfolio hedging benefits. It can even prove useful for short-term tactical purposes, such as when the need arises for a safe haven in times of turbulent market action.

But as an asset, gold doesn’t generate any type of earnings yield that compounds, or any type of income. For that reason, many advisors struggle with tying up capital in gold at the expense of other assets. An allocation to gold means a smaller allocation to something else.

Read more on EFT.com

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