“I don’t look at us as competing for the same type of clientele,” he says. “They have tilts in their portfolios, they omit certain parts of the market, they’ll actively reallocate capital as they see opportunities or risks. That’s a big departure from what our ETF models are attempting to do.”
A spokeswoman for BlackRock declined to comment. State Street’s Sue Thompson, head of Americas distribution for the firm’s ETF business, described strategists as “a very important client base,” and said that the firm charges similar fees on its portfolios to try to even the playing field.
Still, many ETF strategists are adopting novel methods to protect their businesses from the growth of the Big Three. Some firms are expanding their social media presence. Others are launching their own ETFs, while shops including 3D Asset Management Inc. offer podcasts. RiverFront Investment Group, one of the largest boutique strategists, produces weekly video commentaries.
Omaha, Nebraska-based CLS Investments started its podcast in 2015, and found it helped the firm reach new investors. “It has built a little fan base,” says Vanneman. “People have listened to it that we haven’t even contacted before and they’ve become clients.”
New Frontier’s assets have also grown, more than doubling in the last five years. Its indexes, which highlight the performance of its investment approach, attract extra attention.
“I would not be surprised if other ETF strategists realize these advantages and follow,” says Robert Michaud, New Frontier’s chief investment officer. “We’re not just doing the standard practices of asset management. We’re innovative.”
This article was provided by Bloomberg News.