Income-Oriented Completion Models Offer Growth Opportunity to Asset Managers and Model Providers

June 1, 2021 — Boston

This issue of The Cerulli Edge—U.S. Monthly Product Trends analyzes mutual fund and exchange-traded fund (ETF) product trends as of April 2021, explores asset managers’ desire to expand their product offerings, and discusses why outcome-oriented solutions may serve as an entry point for registered investment advisors (RIAs) into model portfolios.

Highlights from this research:

  • In April, mutual fund assets rose 3.7% to more than $19.6 trillion. Net flows were positive in April ($50.0 billion), although at a lesser scale than experienced in March ($61.0 billion) and February ($57.1 billion). ETF assets surged past $6 trillion during April, climbing 5.0% during the month to end at $6.2 trillion. In addition to April’s equity market performance, net flows continue to propel the vehicle’s assets, having added $75.3 billion during the month.
  • Over the last decade, financial advisors have become far more confident in implementing ETFs in client portfolios. This greater comfort, along with greater model use and fee compression, has spurred many large asset managers, including former mutual-fund-only stalwarts, to expand their product offerings to include ETFs. Cerulli anticipates vehicle diversification will continue in coming years, as asset managers hoping to gain size and scope will need to give their clients the ability to access their investment capital in the vehicle that best suits their needs.
  • Model providers may be better served providing targeted goals-oriented solutions that RIA practices can use to address specific needs than trying to contend with the sea of options competing for a limited market of true RIA outsourcers. Cerulli believes that income-oriented completion models are a meaningful growth opportunity for asset managers and model providers. The independent RIA channel may offer an ideal arena for establishing a foothold with its lower barriers to entry, especially for those with proven investment expertise that are launching new strategies.

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Note to editors

These findings and more are from The Cerulli Edge—U.S. Monthly Product Trends, May 2021 Issue.

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