According to a Morningstar news release, Managed ETF Portfolios are actively managed using a “core and explore” investment process, which combines “core” positions that provide exposure to broad asset classes in an efficient and low-cost manner with “explore” positions that seek to add value by taking advantage of opportunities in the markets. Selection of explore positions are based on a proprietary ETF-evaluation system developed by Morningstar Investment Services that combines macroeconomic and fundamental factors, the announcement said.
Among other factors, the ETF-evaluation system assesses the composition, structure, and liquidity of individual ETFs, and marries it to research on fundamental factors such as valuation and growth drivers of the underlying securities.
The product is offered exclusively through financial advisers, Morningstar said.
“ETFs offer investors exposure to specific segments of the capital markets in a diversified, low cost, and tax efficient manner similar to index funds,” said William Harding, director of research for Morningstar Investment Services, in the announcement. “Our new Managed ETF Portfolios combine these positive attributes of ETFs with our objective research, analysis, and portfolio management expertise in actively managing these portfolios to ensure they are well positioned given their risk and return objectives.”
Morningstar said Ameritas Investment Corp. and Centaurus Financial, two independent broker-dealer firms, recently selected the new product for use by their investment adviser representatives. Ameritas has 600 adviser representatives and Centaurus has 500.
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