The Current and Future State of Model Portfolios
This article is relevant to financial professionals who are considering offering model portfolios to their clients. If you are an individual investor interested in WisdomTree ETF Model Portfolios, please inquire with your financial professional. Not all financial professionals have access to these Model Portfolios.
In early May, I recorded a podcast for the “GBI (Goals-Based Investing) Podcast Series” with Tony Davidow. Tony is the author of the recently published book, Goal-Based Investing: A Visionary Framework for Wealth Management, and is the host of the GBI Podcast series.
Tony and I both sit on the Editorial Advisory Board for the Investments & Wealth Monitor, a periodic industry journal of the Investments & Wealth Institute (IWI, formerly known as IMCA), that publishes on a wide variety of investment and wealth management topics. Tony is a former Chair of the IWI Board of Directors, where I am a Board member and current Vice Chair of Standards.
In this 15-minute podcast, Tony and I discuss a variety of topics. We begin with an overall assessment of the current market environment—what have been the drivers of recent market performance, and where do we think we go from here? Given the current “in favor” status of value and dividend-oriented stocks, we believe the WisdomTree products and models are very well positioned for this environment.
We then discussed technology and its role in driving increased advisor adoption of third-party model portfolios. Specifically, we consider how the availability of internal and third-party trading platforms, ease of implementation and use, and increased functionality have driven increased advisor interest and adoption of model portfolios.
We then turned our attention to inflation and what advisors and investors should be thinking about with respect to allocations that may help hedge the rising risk of inflation. We share our respective views on the current and future expectations for inflation, how that is impacting portfolio performances, and then share some ideas on how advisors may want to think about positioning their portfolios going forward.
Finally, we turn our attention to digital assets—the current state of play, how they may be used within a portfolio and how to fund them if that decision is made.
You can view the full conversation below:
Important Risks Related to this Article
For retail investors: WisdomTree’s Model Portfolios are not intended to constitute investment advice or investment recommendations from WisdomTree. Your investment advisor may or may not implement WisdomTree’s Model Portfolios in your account. The performance of your account may differ from the performance shown for a variety of reasons, including but not limited to: your investment advisor, and not WisdomTree, is responsible for implementing trades in the accounts; differences in market conditions; client-imposed investment restrictions; the timing of client investments and withdrawals; fees payable; and/or other factors. WisdomTree is not responsible for determining the suitability or appropriateness of a strategy based on WisdomTree’s Model Portfolios. WisdomTree does not have investment discretion and does not place trade orders for your account. This material has been created by WisdomTree, and the information included herein has not been verified by your investment advisor and may differ from information provided by your investment advisor. WisdomTree does not undertake to provide impartial investment advice or give advice in a fiduciary capacity. Further, WisdomTree receives revenue in the form of advisory fees for our exchange-traded Funds and management fees for our collective investment trusts.
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Advisors are solely responsible for making investment recommendations and/or decisions with respect to an end client and should consider the end client’s individual financial circumstances, investment time frame, risk tolerance level and investment goals in determining the appropriateness of a particular investment or strategy, without input from WisdomTree. WisdomTree does not have investment discretion and does not place trade orders for any end client accounts. Information and other marketing materials provided to you by WisdomTree concerning a Model Portfolio—including allocations, performance and other characteristics—may not be indicative of an end client’s actual experience from investing in one or more of the funds included in a Model Portfolio. Using an asset allocation strategy does not ensure a profit or protect against loss, and diversification does not eliminate the risk of experiencing investment losses. There is no assurance that investing in accordance with a Model Portfolio’s allocations will provide positive performance over any period. Any content or information included in or related to a WisdomTree Model Portfolio, including descriptions, allocations, data, fund details and disclosures, are subject to change and may not be altered by an advisor or other third party in any way.
WisdomTree primarily uses WisdomTree Funds in the Model Portfolios unless there is no WisdomTree Fund that is consistent with the desired asset allocation or Model Portfolio strategy. As a result, WisdomTree Model Portfolios are expected to include a substantial portion of WisdomTree Funds notwithstanding that there may be a similar fund with a higher rating, lower fees and expenses or substantially better performance. Additionally, WisdomTree and its affiliates will indirectly benefit from investments made based on the Model Portfolios through fees paid by the WisdomTree Funds to WisdomTree and its affiliates for advisory, administrative and other services.