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  • Writer's pictureSunil K Pai, CFA

Getting More Bang for Your Investment Buck - Rethinking ETFs

Busy month for us as we launched two new products that came out of client interest and what they want rather than us putting together products that we think clients should invest in.

That's a perspective that a lot of investors potentially miss out on is the idea that their advisor should be delivering as much towards the client's stated interest rather than just advising on what's easier for the advisor.

For example, one client wanted to be more socially conscious as they put their money to work. So, we put together using the same tried and true ARBi process a portfolio of 30 ESG-rated stocks that handily provides exactly what the client wanted and meets our needs as advisors to maintain proper diversification and get a great risk/return tradeoff. Client happy, got what they want, with substantial gain in performance potential over commonly available ESG-focused ETFs.

Product number two harkens to what we discussed last month in terms of how we would replace high-priced ETFs with our our own variation of the ETF itself. Basically a replication of the ETF (AADR in this case) using our tried and true active process. In so doing, we have now the ability for the client to reduce their underlying annual cost load (AADR charges 0.88% annually) and get much better performance potential. A total win for the client.

Note all of the above is delivered seamlessly into a client's managed account, either qualified or non-qualified setting, and save for the tax consequences (for non-qualified accounts), is of great benefit to them over simply buying into the ETFs that are being thrown around wanton by the big issuers.

This is where we believe the next bastion of investment management needs to go is to make investing more customizable and flexible to meet the needs of the individual investor rather than throwing products out into the exchange traded space and hoping someone will buy into them.

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