Speaking to InvestorDaily, AltaVista head of sales and corporate development Michael Turner said the use of ETF model portfolios – and their ability to add real value over and above the benchmark – is being hampered by the narrowness of dealer group APLs.
"In order to get superior ETF model portfolios (which we feel we have) one needs to have the ability to invest in all available ETFs," he said.
“APLs are not widening sufficiently and this retards the options available to advisers,” said Mr Turner.
But that said, there is scope for AltaVista’s model portfolios to be “customised” to an existing APL, he said.
With the advent of FOFA, there is “no doubt” advisers are being questioned about ETFs and low-cost portfolios, said Mr Turner.
“If you want to provide proper portfolios to clients, APLs need to be broadened. It is not about the size of the issuer, it is not about the past performance, it is not about the spread: it’s about the underlying investment merit of the ETF,” he said.
Mr Turner also announced a “menu-like upgrade” to AltaVista’s suite of ETF-only strategic asset allocation model portfolios that will be delivered via two product streams.
“Each product stream delivers an array of pure equity exposure, equity income and diversified portfolios with nominated minimum suggested investment amounts,” he said.
The models can be ‘dialled up’ or ‘dialled down’ depending on the client type, and structured to suit $20,000, $50,000 and $100,000-plus allocations, said Mr Turner.
AltaVista is a quantitative-focused ETF research house whose clients are primarily IFAs and independent dealer groups, said Mr Turner.
The company’s model portfolios derive from research coverage of 53 equities-based and the 10 fixed interest ETFs across seven issuers, he said.
AltaVista looks closely at the individual securities that underpin ETFs and views tracking error as a “waste of time”, he said.
