Portfolio construction and execution were featured in a panel discussion on Day Two of the ETF Forum in Toronto on April 20.
Advisor was there live-tweeting the details; join us on Twitter for more live updates today, or click on #ETFforum to see all the tweets from the conference.
If you missed the panel, don’t fear, we’ve compiled the most interesting parts for you below.
Read: Active ETFs gaining momentum
Model portfolio construction and execution
This panel, moderated by Daniel Straus of National Bank Financial, featured Lewis Bateman, founder and CEO of Sphere Investments; Scott Boniferro, VP, global investment strategies, @InvescoCanada Powershares Canada; and Alfred Lee, portfolio manager, @BMO Asset Management.
Q. What asset breakdown is essential for a well-rounded portfolio?
Lee says asset allocation is the most critical step in construction; 60-40 is typical. On the retail side, starting with fixed income is standard
Bateman says fixed income is a safe haven but it hasn’t been producing returns you need to have in the low rate environment. You have to have equity, diversification, that’s why ETFs are being added to portfolios
Bonfire: You can get the same diversification by using factors, instead of just going global
Q. Are alternatives a viable asset class for diversification?
Lee: there are liquid alternatives, traditional alternatives like toll roads, airports. Just because ETF market is high, don’t need to put in ETF format
Q. How important are ETF fees in the market place?
Bateman: Anything below or higher than 50-basis points, that’s the marker point and you need to see what you get for what you pay. [Investors] need to have a global portfolio, we haven’t put a home bias on our fees – it’s a disadvantage
Lee: for 35 basis points, on an absolute level, even though it’s higher, is a good fee to pay