Steve Blumenthal talks to ETF Trends’ Tom Lydon at Inside ETFs Conference
CMG Capital Management Group CEO Steve Blumenthal took a lot of notes at Inside ETFs last week in Hollywood, Florida. We published a few top line thoughts from Steve last week in Takeaways From Inside ETFs.
In Steve’s weekly On My Radar – Go Ahead Angela, Make My Day – he shares more reflections on the Conference. An excerpt from Steve:
Reflecting on four days of non-stop sessions, media interviews and meetings at the Inside ETFs Annual Conference this past week, I thought I’d share several key takeaways.
Rock star advisor Ric Edelman believes older advisors will decide that making the changes to adapt to a world slowly shifting to online money management isn’t worth the considerable effort.
Steve here: Advantage to those advisors who weave advanced technology into their practices – not only to enhance efficiency and firm wide productivity but to effectively provide better client education and reporting tools to fully showcase your value proposition. I have some great ideas around this – just drop me a note.
Heidi Richardson, BlackRock’s Global Investment Strategist, sees “a bumpier road ahead for stocks,” Vanguard’s Joe Davis highlighted three headwinds facing investors: ultra-low rates, low spreads and high valuations; concluding that Vanguard has the most guarded outlook since 2006. Jeff Gundlach did not disappoint – believing the yield on the 30-year Treasury bond is headed to 2%. More on this within the body of this On My Radar.
ETFs are certainly growing at warp speed. Vanguard has just surpassed State Street Global as the #2 ETF firm by assets ($432.65 billion vs. $431.80 billion). BlackRock remains the world’s biggest ETF company with $756.42 billion. Combined, the three firms account for nearly 80% of the nearly $2 trillion invested in ETFs. Vanguard’s office complex is just four minutes down the road from our offices. Good news for the local economy.
Expect the fee compression in the space to continue. Vanguard’s funds are structured so that fund fees come down as their assets increase. Who would have imagined a 5 bps fee for exposure to the S&P 500 index? And BlackRock iShares has over 300 diverse ETFs you can use to create more balanced and broadly diversified endowment like portfolios. That’s good news for all investors, good news for ETF strategist firms like CMG and very good news for you and your firm.
Mark Yusco presented the following on the importance of portfolio diversification. Academic literature shows that 85% to 90% of a portfolio’s returns come from: Asset Allocation (“the largest driver of return”), Manager Selection and Portfolio Construction (“the most overlooked opportunity”) according to Mark. Share the following chart with a client who is upset that his broadly diversified portfolio didn’t outperform a particularly concentrated risk like the S&P 500.
See the chart, the rest of the story and important disclosures at On My Radar: Go Ahead Angela, Make My Day
Steve Blumenthal is CEO and CIO of CMG Capital Management Group. The objective behind all of Mr. Blumenthal’s work is to help advisors build better portfolios by allocating with a long term game plan that is risk sensitive and properly diversified. Mr. Blumenthal is a self-proclaimed “quant geek” with an analytical mind for the markets that helps him connect with everyday investors and industry experts alike.
